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Finance

SoundExchange, webcasters settle at last

Let the music play. Finally, after two a half years, we have an agreement on webcasting royalties that doesn't doom sites like Pandora to the ashheap.
Written by Richard Koman, Contributor
Let the music play. Finally, after two a half years, we have an agreement on webcasting royalties that doesn't doom sites like Pandora to the ashheap. The LA Times reports that SoundExchange and webcasters have agreed to a structure that doesn't require a per-song royalty payment.

Instead, webcasters can just pay 25% of revenue. That sounds like a credit-card-size interest rate but since many webcasters have negligible revenue, it's a life-saver.

"If the rates weren't resolved, we were sunk. So this is a huge relief," said Tim Westergren, co-founder of Pandora, the Oakland, Calif., webcaster that has about 30 million registered users. The company forecasts $40 million in revenue this year and hopes to become profitable next year, he said.

The deal was actually not struck with Pandora but with three other webcasters - AccuRadio, Radio IO and Digitally Imported. A law passed by Congress allows other webcasters to opt in once a deal is reached. They will.

"It's a substantial reduction in the per-song streaming fee, and that was really the crux of the problem for us," said Westergren, who has been a leading voice in the fight against the royalty rates.

SoundExchange said they were happy with the deal, too.

"We were able to come up with an interesting, experimental approach," said John Simon of SoundExchange. "We're still in a developing business, so we said, 'Let's try something that gives us a really nice upside if they're successful.' "

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