New Webcast Royalty Deal Nears ... Better, But Still 'Unfair'
November 7, 2008 at 11:11 AM (PT)
It looks like a revised webcasting royalty deal is coming close to fruition, yet even the new rate could put some webcasters out of business. That's the perspective of Pandora founder TIM WESTERGREN, who told a WATT STREET JOURNAl blog that while "the hard stuff has been done" in the negotiations, the resolution will likely still be "tremendously unfair."
The current deal has Webcasters paying an escalating fee to copyright owners every time they play a song for a listener. This year, site operators are paying about 2.1 cents per user, per hour, a rate that as yet can't be covered through advertising revenue, let alone making the websites any profit.
PANDORA, one of the most popular Net radio websites, is expected to generate $20 million in revenue this year, yet WESTERGREN wouldn't confirm that the new rates would allow him to break even. The new deal, being hashed out between the DIGITAL MEDIA ASSOCIATION, which reps the websites, and label royalty collector SOUNDEXCHANGE, will be less onerous than the current rate it's still more than the royalty imposed on SIRIUS XM, which is supposed to pay between 6-8% of revenue between now and 2012.
Terrestrial radio doesn't pay performance royalties, another bone of contention in context to a proposed rate that might thin out the Net radio herd.
Read more here.