After two years of debate, Internet radio stations have finally reached a deal with copyright holders regarding royalty rates.
The price of the deal, however, will force Web radio station Pandora to limit the amount of free listening available each month, according to founder Tim Westergren.
“The royalty crisis is over," Westergren said in a blog post. “This ensures that Pandora will continue streaming music for many years to come."
The revised royalty rates, however, are “quite high" and will force Pandora to make some adjustments, he said. Users will now be limited to 40 hours of free listening per month. Those who go over 40 hours will be given the option to receive unlimited access for the remainder of the month for 99 cents. They can also upgrade to the subscription-based Pandora One.
“In essence, we're asking our heaviest users to put a dollar (well, almost a dollar) in the tip jar in any month in which they listen over 40 hours. We hope this is relatively painless and affordable--the same price as a single song download," Westergren wrote.
The debate dates back to March 2007, when the government-run Copyright Royalty Board (CRB) handed down royalty rates for Internet radio that stations like Pandora claimed would put them out of business.
Both sides went back and forth for more than two years, ultimately agreeing to a piece of legislation that let Internet radio and copyright holders hash out a deal on their own. If they reached an agreement, the CRB's rates would be thrown out.
The Webcasters Settlement Act of 2008 gave both sides until Feb. 15, 2009 to reach a deal, but to no avail. A second bill, the Webcasters Settlement Act of 2009, extended that deadline for 30 days after the president signed it on July 2.
Under the deal announced Tuesday, Internet radio stations are split up into three categories: large pureplay webcasters; small pureplay webcasters, who earn $1.25 million or less in total revenues and have a cap on the amount of music streamed; and pureplay webcasters that provide bundled, syndicated, or subscription services.
Large pureplay stations will be required to either pay a pay-per-performance rate or 25 percent of their revenue, whichever is higher. They must also provide SoundExchange, which governs the music industry's royalty rates, with accurate reporting on the music they stream to listeners. These rates are in place until 2015.
Small stations, meanwhile, will have to pay either a percentage of their revenue or a percentage of their expenses. They have the option of less stringent reporting requirements if they pay a proxy fee. These rates are in place until 2014.
Pureplay webcasters, meanwhile, will pay an annual fee of $25,000 that can be applied to their royalties owned.
The price of the deal, however, will force Web radio station Pandora to limit the amount of free listening available each month, according to founder Tim Westergren.
“The royalty crisis is over," Westergren said in a blog post. “This ensures that Pandora will continue streaming music for many years to come."
The revised royalty rates, however, are “quite high" and will force Pandora to make some adjustments, he said. Users will now be limited to 40 hours of free listening per month. Those who go over 40 hours will be given the option to receive unlimited access for the remainder of the month for 99 cents. They can also upgrade to the subscription-based Pandora One.
“In essence, we're asking our heaviest users to put a dollar (well, almost a dollar) in the tip jar in any month in which they listen over 40 hours. We hope this is relatively painless and affordable--the same price as a single song download," Westergren wrote.
The debate dates back to March 2007, when the government-run Copyright Royalty Board (CRB) handed down royalty rates for Internet radio that stations like Pandora claimed would put them out of business.
Both sides went back and forth for more than two years, ultimately agreeing to a piece of legislation that let Internet radio and copyright holders hash out a deal on their own. If they reached an agreement, the CRB's rates would be thrown out.
The Webcasters Settlement Act of 2008 gave both sides until Feb. 15, 2009 to reach a deal, but to no avail. A second bill, the Webcasters Settlement Act of 2009, extended that deadline for 30 days after the president signed it on July 2.
Under the deal announced Tuesday, Internet radio stations are split up into three categories: large pureplay webcasters; small pureplay webcasters, who earn $1.25 million or less in total revenues and have a cap on the amount of music streamed; and pureplay webcasters that provide bundled, syndicated, or subscription services.
Large pureplay stations will be required to either pay a pay-per-performance rate or 25 percent of their revenue, whichever is higher. They must also provide SoundExchange, which governs the music industry's royalty rates, with accurate reporting on the music they stream to listeners. These rates are in place until 2015.
Small stations, meanwhile, will have to pay either a percentage of their revenue or a percentage of their expenses. They have the option of less stringent reporting requirements if they pay a proxy fee. These rates are in place until 2014.
Pureplay webcasters, meanwhile, will pay an annual fee of $25,000 that can be applied to their royalties owned.
