At today's Congressional hearing about the new rates for online radio that would essentially destroy it (as readers of this blog already know), SoundExchange, which was scheduled to receive the new royalty payments on Monday morning (since the enforcement date falls on a Sunday), made a startling statement.
The SoundExchange executive [Jon Simson, executive director] promised said -- in front of Congress -- that SoundExchange will not enforce the new royalty rates on Monday. Webcasters will stay online, as new rates are hammered out.
I just spoke with Pandora founder Tim Westergren, who expressed relief that Pandora wouldn't have to shut down on Sunday in response to the new rates. He said, "It was getting pretty close. I always had underlying optimism that sanity was going to prevail, but I was beginning to wonder."
He said everyone who called their Congress person about this should feel that they had an effect on the process: "This is a direct result of lobbying pressure, so if anyone thinks their call didn't matter, it did. That's why this is happening." The flyer DiMA distributed to Congress today probably helped a bit too, but overall, it appears Congress intervened due to pressure from web radio listeners.
Funnily enough, Westergren told me this mere hours after a representative of SoundExchange said
that the new rates are "etched in stone." Evidently not.
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Update: Another source -- close to the situationalthough not inside today's closed-door hearing -- confirmed thefollowing: Pandora was there; "progress was made"; the minimum fees areindeed off the table; and SoundExchange and the webcasters that werepart of the Copyright Royalty Board hearings are going to have anotherchat about the rates.
However, the source said the big question right now is whetherwebcasters not part of the CRB hearing might still have to pay therates set by the board, minus the minimum fees.
Basically, this news qualifies as a reprieve, but internet radiowon't be truly saved until negotiations result in a workable royaltyrate.
Another Update: This story has been confirmed by Kurt Hanson of RAIN.
Final Update: Overnight, this blog post was mistakenly reverted back to a very early title, which used the phrase "Internet Radio Saved." What happened in Washington yesterday was more of a reprieve than a total relief, since royalty rate negotiations continue. That said, webcasters don't need to pay the new rates on Monday, and therefore will not shut down, the minimum per-station fee is off the table, and the way is paved for more workable rates to be set. For the full story, read this article.
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Westergren had more to say, lending insight into a process that was largely opaque to non-participants. Apparently, theper-channel minimum fees mandated by the Copyright Royalty Board were never taken very seriously by those involved. They'venow been taken off the table completely, saving Pandora, Live365, and othermulticasters from their most imminent threat. Instead, per-station minimums will be capped at $50,000 per year.
"No one thought those per station fees were remotelyrational. It only makes sense that they're being taken off the table."
Asfor the Copyright Royalty Board? They're entirely cut out of theprocess, having set the rates and then refused a rehearing. Going forward without the royalties being collected, SoundExchange and webcasters will negotiate a new royalty rate with Congress looking over their shoulder -- "and last but not least, thepublic looking over Congress's shoulder." Alternatively, Congress now has time to consider the Internet Radio Equality Act, which would set webcaster royalties at 7.5 percent of revenue and allow them to continue operating pretty much as they have been.
Either way, this is a big win for webcasters and their listeners. Again, this is a reprieve, and internetradio can't be considered saved until new rates are set that everyonecan live with.
