Monday, March 05, 2007

Rags's Soapbox: New Royalty Rates: Big Whammy for Webcasters

"The Copyright Royalty Tribunal (CRJ) in DC made its decision about Webcasting rates known yesterday and it's not pretty for Webcasters. As background, the statutory royalty rates for Webcasters have been determined in 5-yr stretches. This rate-setting is for the period from 2006 - 2010. While there are a few difefrent tiers, the rate for large webcasters for ad-supported streaming used to be $0.0007 (7 hundredths of a penny) per performance (defined as when a song is streamed to a listener). The new rates are:
2006: $0.0008
2007: $0.0011
2008: $0.0014
2009: $0.0018
2010: $0.0019
Assuming that a Webcaster plays 14 or 15 songs/hr, the old rate equated to about a penny per hour streamed to a listener, not including bandwidth or fees paid to the publishers and songwriters. So this rate is set to double next year and go way up from there by 2010. In terms of implications:
There's greater certainty for Webcasters as they've been waiting to know these rates for a while, which may have had a chilling effect with respect to their getting funded (I've counseled at least a couple of VCs looking at webcasting companies to wait until the rates have been set).
It may also impact any M&A activity that may have been swirling (like the "

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