Rich Fiscus
26 Oct 2007 0:25
According to testimony before the Senate Commerce Committee yesterday, if the royalty rates approved by the Copyright Royalty Board (CRB) in March aren't overturned, internet radio stations are finished. The testimony from Pandora founder Tim Westergren was part of a hearing called to assess the state of negotiations between webcasters and SoundExchange, the recording industry royalty colllection agency which originally proposed the new rates. Although webcasters have claimed negotiations between the two sides have stalled, SoundExchange representatives have indicated that there are merely delays while they assess the financial situations webcasters find themselves in.
"The [higher] rates are actually currently in effect, and we are paying them," said Michele Husak, director of communications for Pandora. "But we're only doing so because we believe that rationality will prevail and that they will be lowered. Negotiations are slowly on-going." Husak also indicated that at some point Pandora, one of the more successful webcasters, will no longer be able to afford the royalty payments and would be forced to shut down.
Meanwhile, Westergren pushed for the passage of the Internet Radio Equality Act, which many webcasters see as their best chance for a fair Resolution to the issue. Even assuming SoundExchange officials realize that the new royalties aren't realistically possible to collect, it may require legislation to convince the agency to back down without losing face.
Russell Withers, president of the Withers Broadcasting Group and a board member for the National Association of Broadcasters (NAB), told the committee Wednesday that proposed CRB rates "would put Pandora out of business because of the size and the impact" of the proposal. "In my opinion, CRB got about 15 times more than they thought they would get," Withers said at the hearing. He accused SoundExchange of refusing to engage in timely negotiations on the matter, calling their actions "unconscionable."
Source: PC Magazine