SoundExchange Offering ‘Small’ Webcasters Rate Hike Veiled As Bargain

In several weeks’ time we may see what the future of Internet radio looks like. Good. Bad. Ugly. All of the above. Time will tell.

Right now, everything carries with it a shade of grey. The fees. The year-to-year timetable. The fees. Why do I say grey?

Well, because SoundExchange, “the nonprofit group that collects the fees on behalf of hundreds of major and independent record companies (CNET),” said last Tuesday (apologies for the delay in mentioning this bit of news) that it is willing to offer “below market” rates for Internet-based entities dubbed…well, “small.”

According to Anne Broache of CNET News, this measure, meant to exercise fairness by SoundExchange and its partners would more or less keep the royalty rates the same as they’ve been all along to keep in accordance with “a 2002 law called the Small Webcaster Settlement Act.”

There’s some fine print, however. SoundExchange does not give small webcasters - categorized as businesses managing “gross revenue of up to $250,000” – an easier ride forever. The group’s general counsel Michael Huppe stated that the party will end in 2010. (Though in not those exact terms.) Any webcaster(s) recording figures higher than $250,000 would be subject to higher rates: 12 percent of all gross revenue, retroactive to 2006.

There’s reason to take issue with the clarity and logic of SoundExchange’s offer, however. On the one hand the nonprofit illustrates that small webcasters will continue to pay what they have paid for 13 years. On the other, it states said webcasters would be required to pay rate hikes retroactively to 2006. If small webcasters are supposedly being guaranteed no change until 2010, as long as they fall under the $250,000-or-less quota, why would they have to pay more on fees from 2006 and on? If the rates haven’t been increased for so many years, why would they claim an increase was signed, stamped, and dated for 2006?

You’re not alone if you happen to feel suspicious about SoundExchange’s most recent efforts to assuage Internet broadcasters over impending rate hikes. I myself can’t quote understand why those collecting the royalties cannot institute a reasonable rate hike that promises to match the webcasting industry’s gradual growth without having to push for retroactive collections. Then again, the recording industry and its allies have never been ones to play fair, have they? I can’t imagine they’d want to break tradition now.