Internet radio lives on following landmark royalties agreement

Valerie | 09 Jul 2009, 07:08

Record labels and internet radio stations in the US declared an end to a two-year battle over the payment of royalties this week, with commercial webcasters such as Pandora agreeing to pay royalty rates for music they stream online.

According to a statement from SoundExchange, a not-for-profit organization that collects and distributes digital music royalties, the terms of the agreement are complex but copyright holders have essentially agreed to a new royalty rate, far lower than originally demanded but still higher than “free”.

Pandora CTO Tom Conrad said that the deal cuts minimum per-stream royalty rates for pure-play Internet radio providers by 40-50 percent, with different licenses available depending on the size of the company. Importantly, the agreement replaces a 2007 royalty decision which deemed that internet radio stations pay 0.19 cents per streamed song, which Pandora argued threatened the livelihood of all Internet radio providers.

John Simson, executive director of SoundExchange explained that the agreement benefits both creators and distributors:

“This is an agreement we’re proud of because it shows that both sides can address the business concerns of the webcasters while giving artists and copyright holders the potential to share in the revenue growth of webcasters.“

Dennis Wharton executive vice president of the National Association of Broadcasters welcomed the news:

“This is good for music. It sets a rate where artists will receive royalities for the music they produce.“