Discord between music webcasters, recording industry

Webcasters say the recording industry is demanding unrelated charges

Large music webcasters are claiming the recording industry is "backtracking" on its offer to compromise with them over new, higher royalty rates that went into effect in March and were to be paid on July 15.

The Digital Media Association (DiMA), which represents large webcasters including Pandora.com and Yahoo Music, said the recording industry is demanding unrelated "technology mandates that are unreasonable, unworkable and way off-topic," before implementing the compromise.

In a statement, Jonathan Potter, the DiMA's executive director, said the latest turn of events is "disappointing." A DiMA spokesman said Potter would not comment further.

In an interview last week regarding the proposed compromise with the large webcasters, SoundExchange spokesman Richard Ades said his organization also asked that large Internet radio broadcasters implement better anti-stream ripping technology, which copies sound recordings in webcasts, and better reporting of how much music is streamed. Ades said the DiMA was well aware of the request, which was made at a recent roundtable discussion with members of Congress.

"This is just political posturing on their part," he said on Tuesday.

Two weeks ago, SoundExchange Inc., the nonprofit organization set up by the Recording Industry Association of America to collect the so-called digital performance royalties for recording artists and record companies, agreed to cap the US$500 per channel fee for large webcasters at US$50,000 per year, a figure that would last through 2010 or for the life of the new, higher rates.

In a separate deal, SoundExchange also offered to extend 1998-era below-market rates to small commercial webcasters, and to keep rates at 2003 levels for thousands of noncommercial webcasters. These small commercial and noncommercial groups are not involved in the latest feud.

While all the parties are involved in negotiations, SoundExchange has agreed not to collect the new royalty fees.

In a volley of letters between SoundExchange and the DiMA last week, each side accuses the other of blocking the path to a compromise.

"I have reviewed your press release of this morning and I am compelled to respond to the Digital Media Association's (DiMA) pattern of misinformation, mischaracterization and political maneuvering at a time when we should all be focused on negotiating, as several members of Congress have urged," said John Simson, Sound Exchange's executive director, in a letter sent to the DiMA and e-mailed to Computerworld. "Your comments over the weekend and this morning are, at best, disingenuous. SoundExchange is not "backtracking" on its offer from the roundtable. Rather, you are intentionally mischaracterizing our proposal."

The new rates were set by the Copyright Royalty Board (CRB) of the Library of Congress in early March and went into effect May 1, retroactive to the start of last year. The rate increase would at least triple the amount of royalties Internet radio broadcasters must pay to copyright holders per song, and it has been challenged by webcasters, Internet radio listeners and more than 6,000 artists over the past several months.

A number of U.S. legislators have been trying to broker a deal among the sides.

Several weeks ago a federal appeals court denied a petition from music webcaster associations for an emergency stay of the royalty rates.

Despite the harsh words, bot the DiMA and Sound Exchange say they are willing to continue negotiations.

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Linda Rosencrance

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