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SoundExchange Inks Royalty Deal With Large Webcasters

Under the plan, large Webcasters would not pay more than $50,000 for the advance against royalties, no matter how many stations they operate.
SoundExchange has struck an agreement on royalty rates with several large Webcasters.

The nonprofit performance rights organization -- designated by the U.S. Copyright Office to collect and distribute digital performance royalties from sound recordings -- announced Thursday that the maximum a service would have to pay is $50,000 under a provision requiring a $500 per station advance for royalties. In other words, large Webcasters would not pay more than $50,000 for the advance against royalties, no matter how many stations they own.

The $500 advance was set by the Copyright Royalty Board and SoundExchange hopes see the limit enacted by regulators as an industry-wide standard.

Some large Webcasters may operate hundreds or thousands of music stations, so setting $50,000 as a maximum advance fee will save some of them from paying big upfront costs.

The agreement also calls on Webcasters to report all tracks they play, instead of reporting from a sampling. Finally, it states that Webcasters will cooperate with SoundExchange on the development of anti-stream-ripping technologies.

"There is no requirement that any of the services implement any particular technology, nor that they develop, or accept from a third party, a particular technology," the group explained in a prepared statement.

John Simson, executive director of SoundExchange, said the agreement shows the organization's ability to negotiate with Webcasters, "While upholding the integrity of the [Copyright Royalty Board] process" and protecting the interests of its members.

SoundExchange represents more than 3,000 record labels and more than 20,000 artists.

The group sent an offer to small Webcasters earlier this week. It would allow small Webcasters to continue operating through 2010 under essentially the same terms and rates they have met since 1998. The offer only applies to royalties for SoundExchange members. Sound recordings of non-members would still be subject to the new rates.

That offer applies to Webcasters earning $1.25 million or less in total revenues. They would pay royalty fees of 10% to 12% of revenue. The small Webcasters have until Sept. 14 to accept the offer. The offer has to be approved by Copyright Royalty Judges.

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