Sound Exchange Extends Offer to Small Webcasters

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Sound Exchange Extends Offer to Small Webcasters

May 23, 2007 12:30 PM

Washington - May 22, 2007 - Sound Exchange has offered to extend the terms of prior legislation known as the Small Webcaster Settlement Act (SWSA), with some minor modifications, to small webcasters through 2010. The 2002 act that ended in 2005 had set temporary, below-market royalty rates for small Internet radio stations to provide them with additional time to build their businesses. According to a Sound Exchange press release, the "offer to extend the core SWSA terms represents a continued subsidy for these small webcasters in the form of lower payments to artists and content owners."

Sound Exchange notes that the offer comes as a direct response to a request from the House Judiciary Subcommittee on Courts, the Internet and Intellectual Property to �initiate good faith private negotiations with small commercial and noncommercial webcasters with the shared goal of ensuring their continued operations and viability.� The subcommittee''s request was sent to Sound Exchange last week in a letter co-signed by Representatives Howard L. Berman of California and Howard Coble of North Carolina.

Webcasters have opposed the revised rates because of the steep increase from the previous rates. In its press release, Sound Exchange states that the current rates as revised by the CRB are "fair and based on the value of music in the marketplace." While it's not unreasonable to expect compensation for work -- in this case, the musicians receiving a royalty for their songs being played online -- the exposure that these artists receive provides an intangible benefit of exposing the music to an audience, which can result in music sales.

This offer is only for small webcasters and defers the new rates set by the CRB on May 1, 2007, retroactive to Jan. 1, 2006, and effective through 2010.

Sound Exchange is proposing to base the subsidy on a percentage of revenue model and is proposing the same rates that prevailed under the SWSA: small webcasters would pay royalty fees of 10 percent of all gross revenue up to $250,000, and 12 percent for all gross revenue above that amount. The proposal includes a revenue cap and a usage cap to ensure that this subsidy is used only by webcasters of a certain size who are forming or strengthening their business.

In separate statements, the American Federation of Musicians (AFM) and the American Federation of Television and Radio Artists (AFTRA) expressed support for the Sound Exchange proposal.