SoundExchange, the body that collects music royalties for artists and which lobbied the Copyright Royalties Board for internet radio rate hikes due to take effect from July 15, reckons Last.fm is paying too little in royalties now that it is owned by CBS. In a recent edition of KCRW’s The Politics of Culture radio show and podcast, SoundExchange executive director John Simson said Last.fm was operating under a 2003 royalties rate, introduced after a request from Congress, that was designed to give web startups a chance by letting them pay royalties according to a percentage of revenue rather than number of streams served.
Simson: “A deal was struck back then which allowed them to pay 10 percent of revenue up to $250,000 and 12 percent above that. There are about 50 services that took advantage of that royalty deal and have been streaming on that basis since 2003. Interesting to note that one of those services, that paid us very low royalties last year, just was sold for $280 million to CBS. Here they are using our music to build a business at a subsidized rate and then they flip it to a big company for a lot of money and we don’t get a percentage of that, where’s the fairness to the performers whose music is being used to create value in these companies? We have a small webcaster who just sold for $280 million who had almost no revenue.”
That is interesting because Last.fm last week decided to take a principled stand against webcasters’ Day Of Silence designed to avert the new rates regime, arguing: “The only solution to this dilemma is commercial; make a commercial argument and see it through. People want to make money from their music. And we want to pay artists for the music we play. It