In addition to the exorbitant royalty fees they would be paying under the new rates mandated by the Copyright Royalty Board (CRB), leading webcasters like Yahoo!, Pandora and Real Networks’ Rhapsody would have to pay billions more dollars to SoundExchange, the music industry’s digital royalty collection arm.
At issue is the vague “per channel” condition of the licensing fee that was part of the CRB’s decision. Services like Pandora and Real Networks offer listeners multiple channels. Real’s Rhapsody service alone offered more than 400,000 unique channels in 2006.
In a letter sent to Capitol Hill, CEOs of the webcasting industry leaders wrote that, based on the CRB’s decision, Yahoo!, Pandora and Real Networks would wind up paying SoundExchange $1 billion just in licensing fees. And that doesn’t include countless other webcasters!
The problems with this? Well, for one, these rates and fees are outlandish. And, for two…just what purpose do these ridiculous fees serve?
Such an amount would far outpace the $20 million in total royalty fees collected by SoundExchange from the Internet radio industry last year, the CEOs note in their letter. And besides, it’s not even clear that those payments would go to artists, as royalty payments do, the companies argue.
“While we don’t imagine SoundExchange would keep this $1 billion all to itself, this lack of clarity is absurd,” RealNetworks spokesman Matt Graves told CNET News.com.
SoundExchange did not respond to requests for comment.