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RAIN 02/18: Webcasters reportedly continuing to negotiate with SX

Posted on: 02/18/2009


It’s now Day 3 since the February 15 deadline for a negotiated royalty settlement between SoundExchange and various classes of webcasters — with little sign of a breakthrough.

The Webcaster Settlement Act of last fall gave SoundExchange and webcasters the authority to negotiate industry-wide royalty settlements, provided deals were submitted to the Copyright Office by last Sunday. Having passed that mark, but with negotiators still talking, it’s unclear what the nature of any negotiated settlement the parties reach will be.

It’s possible that any deal made now might be only between the negotiating webcasters and copyright owners that are SoundExchange members. On the other hand, it’s also possible that Congress might accede to giving slightly-after-the-deadline agreement the force of law as well (and thus cover all copyrighted material) if both sides request it.

Both DiMA — which represents large commercial webcasters — and SoundExchange acknowledge negotiations are continuing, with Billboard reporting (here) that small webcasters are still working on a deal as well. (It’s unclear, but presumed, that religious broadcasters and college radio broadcasters continue to negotiate with SoundExchange for their streaming music use as well.)

Details are also emerging as to why some of the negotiations fell through in the first place. In the weeks leading up to the deadline, SoundExchange and webcasters (e.g., Pandora’s Tim Westergren) were publicly optimistic about a deal, characterizing it as “imminent.”

While DiMA and SoundExchange reportedly came very close to an agreement on Monday, “a few sticking points“ prevented a breakthrough. According to DiMA executive director Jonathon Potter, SoundExchange insists that any percentage-of-revenue system be based on a company’s overall revenues, not just the earnings directly attributable to the use of licensed music. Naturally, this is a problem for webcasters with lots of other, unrelated business revenue (such as Yahoo! and AOL).

Webcasters have fallback hopes thanks to their legal appeal of the Copyright Royalty Board’s 2007 ruling. The oral arguments in the appeal process are set to begin in March. Should both negotiations and the appeal fail, webcasters will be back where they started: facing the full CRB-set royalty rates going back to 2006, with negotiations for the 2011-2015 term beginning this year.

Earlier this month, SoundExchange announced deals with NAB-represented simulcasters (RAIN coverage here) and public broadcasters (RAIN coverage here).

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