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SomaFM Calls on Congress to Urge the RIAA to Come to a Settlement on Royalty Rates with Webcasters Before July 15 Payment Deadline

San Francisco, CA (PRWEB) July 12, 2007 -- The Copyright Royalty Board recently issued massive royalty rate hikes for internet radio services which are set to take effect July 15. These increases are retroactive to January of 2006. The rate increase for SomaFM amounts to a 3000% increase, with royalties going from $20,000 to $600,000 for 2006.

"Our costs for music are set to go up 30 times what they used to be. Even if we're playing the same songs. That doesn't make any sense at all," says Rusty Hodge, Founder and General Manager of SomaFM.com.

"The RIAA's refusal to make a reasonable settlement with small commercial webcasters is an insult," says Hodge. "The RIAA keeps saying that most webcasters are billion dollar companies, but with the exception of AOL, Yahoo and Real, most of the top-20 listened-to music webcasters are privately-held, small-scale independent operations. The RIAA is willing to let independent webcasters be the collateral damage in their battle to extract more control over the large webcasters."

While the RIAA is negotiating on SoundExchange's behalf with several different groups, these negotiations are being kept secret in a traditional divide-and-conquer plan of attack.

SomaFM is calling on internet radio listeners to call their congressional representatives and ask them to tell the RIAA to make a reasonable public settlement with webcasters before July 15th. Terms of that settlement would include:

1. A reasonable rate. The previous rate of 10% of the first $250,000 of revenue and 12% of revenues in excess of $250,000 is designed to hinder growth. As revenues increase, royalties should decrease, just like any other quantity discount. We think the rate should start at 10% for revenues under $2 million, 9% for revenues between $2-5 million, and 8% for revenues over $5 million. These rates are in line with the rates currently paid by satellite radio.

2. A sensible term. A settlement that last for just 2 years is completely unacceptable. A suggested term would be through the end of 2010, with a right by either party to extend for another 3 years after that.

3. Increased revenue caps. The RIAA defines small commercial webcasters as entities with less than $1.25 million in annual revenues. Exceeding this amount in a calendar year would disquality a webcaster for paying based on a percentage of revenues, and force them to pay on a per song, per listener basis which would be multiple times their annual revenue. This cap needs to be raised if the webcasting industry is to be allowed to grow. Revenue caps this low will force small webcasters to constrain their growth or else face debilitating royalty liabilities. We think this cap should be raised to $10 million. The US Small Business Administration "Table of Small Business Size Standards" defines a small traditional radio broadcasting network as a company with less than $6.5 million in annual revenue (and no limit to the number of employees). An internet broadcasting service is considered a small business if they have less than 500 employees and no revenue limits.

4. Common-sense reporting requirements. Broadcasters would be required to report either the ISRC, or if not known, the Artist, Track Title and Album Name.

5. Congressional "codification" of the settlement. Congress will need to endorse this settlement and put it into law.

These are extremely reasonable requests, and the RIAA should instruct SoundExchange to finalize this settlement this week.

Time is of the essence. The RIAA is stalling negotiations since webcasters are facing a July 15th payment due date. This payment will cripple many if not all independent webcasters as it is multiple times their annual revenues.

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