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Bill Offers Possible Reprieve for Indie Internet Radio

"Appeals to this ruling have been denied," he adds, "which means that most small internet broadcasters and streaming will stop by the end of May because cats are gonna be bankrupt. The big players like AOL radio, Yahoo and Microsoft will be around, but not the rest. . . . While many small broadcasters like us (who saw the internet as a saving grace) will now find themselves in serious legal and financial jeopardy, the big time radio stations are cutting side deals with the major labels so they don't have to pay the high royalty rates-in exchange for normal airplay."

John Simson, executive director of SoundExchange-the organization that collects and distributes royalties to labels and artists-has defended the rate increase and doesn't buy the argument that small internet broadcasters deserve a break and should be allowed to pay a reduced rate because of the exposure they bring to artists that might not get played on the corporate-run stations. "Are artists better off having hundreds of listeners on lots of little stations," he asked rhetorically in an interview with the Washington Post, "or thousands of listeners on larger stations?"

Our previous article on the topic noted that an analysis by BetaNews showed that online stations would pay proportionally more than their traditional radio counterparts, and that SoundExchange would ultimately become a $2.3 billion-per-year business.

"BetaNews can now project that AOL Radio could owe $146.4 million in royalties in 2010 alone," said the site's analysis. "LaunchCast would owe $113 million, Clear Channel would owe $61.7 million, and Live365.com would owe $42 million. Just the top four streamers would be billed $363 million during the same year that all 14,000 US radio stations combined would be billed $550 million."

After the article ran, Simson sent a letter to StreamingMedia.com that read, in part: "SoundExchange was "spun off" of RIAA in 2003 after negotiations between artist groups like the AFM, AFTRA, Recording Artists' Coalition, the Recording Academy, MMF, Future of Music Coalition, and the RIAA to create an independent non-profit organization. We are an independent 501(c)(6) organization with a Board of Directors comprised of 9 artist representatives and 9 label representatives (6 major label and 3 independent label)"

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