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Streaming Radio Royalties Set To Affect Terrestrial Radio

Last year at this time, the Copyright Protection Board had announced a set of performance royalty rates that, at the suggestion of SoundExchange and other lobbyists for the RIAA, were to go into effect retroactively. These rates were geared toward internet radio broadcasters, who argued that the percentages were unfair.

In part due to grassroots efforts of constituents calling and emailing their Congressional representatives, a bill was introduced that would bring performance fees in line with those traditionally paid by other mediums. H.R. 2060, dubbed the "internet Radio Equality Act", was introduced by U.S. Representative Jay Inslee (D-WA), and now has more than 150 co-sponsors.

"The fees assessed by the Copyright Royalty Judges are unfair and unrealistic," said one poster at the time HR 2060 was introduced. "An internet radio station with just 100 listeners playing 24 hours a day would have to pay $1,920 per day to the RIAA under the current new rules! This same station would be paying almost $700,000 per year."

SoundExchange responded with the suggestion to create a cap of $2,500 for all internet radio stations. Internet radio groups, such as SaveNetRadio, rejected the offer, and negotiations have stalled.

Fast forward 12 months. SoundExchange hasn't been standing still. It has successfully negotiated a royalty performance fee with cable and satellite radio providers, at a rate significantly lower than the rate it proposed for internet radio.

"In the last 12 months, deals have been cut between SoundExchange and internet radio’s closest competitors—satellite and cable radio—that set their royalty rates at less than half of what webcasters pay," the SaveNetRadio.org website notes, which pegs internet radio at about 40% performance royalties versus 6-8% for satellite radio. "Being asked to pay an irrationally and unjustifiably higher royalty rate than its competition puts Net radio at a significant competitive disadvantage."

SoundExchange has also been using the CPB's ruling on internet radio and its deals with satellite and cable radio providers to go after its true target: the traditional terrestrial radio station. In the last few months, two additional bills have been introduced that address the issue of performance fees for traditional radio, a target the recording industry has been after since the 1930s when Paul Whiteman, a big band leader, lost a court appeal against radio stations for playing records that his record label had marked "not authorized for radio play."

The first bill, introduced by a bi-partisan Texas delegation of Republican representative Mike Conway and Democratic representative Gene Green, was called the "Local Radio Freedom Act" and was intended to oppose any new performance fees for radio stations.

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