SoundExchange Softens Stance, Seeks Webcaster Discussions

In the wake of a hotly-contested royalty ruling by the US Copyright Royalty Board (CRB), SoundExchange is now extending a conciliatory tone to internet broadcasters.

Last week, the CRB rejected webcaster demands for a rehearing, stirring fears that stepped-up royalty levels would eliminate a smaller class of internet broadcaster.  SoundExchange, which represents the interests of major record labels and artists, has resolutely backed the hiked rates, despite the potential fallout.  “The music created by artists is the main reason why people listen to internet radio, and those artists should be fairly compensated for the value they bring to each webcaster’s business,” SoundExchange executive director Jon Simson said following the decision.  “Yet, the webcasters refuse to acknowledge this common sense fact.”  But that hard-nosed style has now been softened somewhat, an unexpected twist in the ongoing drama.  “We recognize that there may be certain needs and expectations, as expressed by webcasters in recent days, that might possibly be addressed through direct discussions,” Simson said yesterday.

The mixed messages may seem moody, though SoundExchange is now operating from a position of power.  The Royalty Board declared its decision final and retroactively effective, though legislative and legal battlefronts are hardly exhausted.  That could create a drawn-out dogfight, one that smaller broadcasters will have a difficult time surviving.  In its decision, the CRB rejected pleas to delay the increased rates until all legal remedies were finalized.  “In just about one month from today … the Copyright Royalty Board expects internet radio stations to pay millions of dollars in retroactive royalties – and this will drive most stations out of business,” said Jonathan Potter, executive director of the Digital Media Association, or DiMA.  That is a result that SoundExchange may want to avoid, especially since it creates a void for overseas entrants.  “We sought a dialog with these services in order to determine if there is an appropriate business solution that addresses their concerns while still ensuring fair compensation for artists,” said Michael Huppe, general counsel of SoundExchange in recent comments.  “It is in the industry’s interest to foster the continued growth of internet radio, and we stand ready to work towards that goal.”