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Royalty Proposal Divides Webcasters, Musicians, And Labels

The plan includes overturning the Copyright Royalty Board to establish below-market royalty rates in an effort to "subsidize small webcasters."
The AFM called on the small webcasters and SoundExchange to seal a deal quickly and urged small webcasters to more fully and accurately report the songs they play.

"Small webcasters all confirm that they want performers to be paid, but many of them fail to file the reports that enable royalty dollars to flow smoothly to the entitled performers," Lee said. "In return for below-market rates, small webcasters should file the required reports so performers can be paid. Bottom line, musicians' creative work has value and it is important that they be fairly compensated for its use."

SaveNetRadio, which boasts a membership of "hundreds of thousands" of webcasters, listeners, and musicians, said all webcasters are small compared to terrestrial and satellite radio companies, and the proposals would "throw" the largest webcasters under the bus."

"Labeling webcasters small or large is a distinction without a difference," SaveNetRadio spokesman Jack Ward said in a prepared statement. "Two of the most prominent webcasters, Pandora.com and Live365 are models of industry success but would be bankrupted by the CRB and by the SoundExchange proposals. Pandora employs 100 people in an enterprise zone in Oakland, California, but its popularity would put it out of business. Similarly, Live365, an aggregate webcaster that provides a platform for more than 10,000 individual webcasters, has a staff of fewer than 40. Though clearly small as a business, Live365's enormous importance and scope among webcasters would force them to shut down."

Ward said that the revenue caps that SoundExchange proposed would "create an insurmountable barrier to growth for small webcasters," which would guarantee "the perverse and unintended consequence of forcing thousands of webcasters to stay small if they want to stay alive, thereby weakening the industry -- the very opposite of Congress' intention."

SaveNetRadio and the Digital Media Association support legislation that would set rates at 7.5%, which is what satellite radio pays.