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Streaming Music Sites And SoundExchange Fail To Reach Royalty Deal

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Negotiations between the Digital Media Association (DiMA) and SoundExchange over royalty fees for streaming music fell apart at the last minute, leaving the two without a deal at the Feb. 15 deadline set by the Webcaster Settlement Act. DiMA members include RealNetworks (NSDQ: RNWK), Pandora and MTV. Billboard reports that the expected deal ran aground during a conference call just before the deadline. No details on what the squabble was about but, in a statement, DiMA Executive Director Jonathan Potter said the couldn’t overcome a major difference: “We are unable to resolve our principled differences regarding the applicability of sound recording performance royalties to various activities of multifaceted online companies, particularly when those activities and their revenue are not directly associated with the performance of sound recordings.” In other words, Real wants to pay royalties based on streaming music only, not on game or software revenue; Real has said it may have to cut back on streaming music as a result. Pandora has said it might have to shut down if forced to pay the full royalty increase.

What happens now? The 2007 decision by the Copyright Royalty Board that set the higher rates is set for appeal in March. As Billboard points out, “DiMA members would be on the hook to pay the full CRB rates, barring a a SoundExchange-only agreement or prevailing in the appeal.”

NAB reaches deal: Meanwhile, the National Association of Broadcasters did reach a deal by the deadline for “local radio stations that simulcast programming over the internet or that create new stand-alone internet stations,” providing discounts on already-set rates for 2009 and 2010 and establishing rates for 2011-2015. From NAB’s release: “Rates for simulcasts or web channels operated by local radio stations are reduced in 2009 and 2010 by approximately 16 percent, then gradually increase through 2015 – from $0.0015 per streamed sound recording in 2009 to $0.0025 per stream by 2015.”