Digital Music Association (DiMA) and Sound Exchange (SX) announced on August 23 that they had reached an agreement to "cap the Internet radio '$500 per channel minimum royalty' at $50,000 per service, signaling the start of productive negotiations and bringing resolutions to three important music industry issues," according to DiMA's press release.
Within the next six months, webcasters will be required to provide "full census reporting" (all songs played on all channels, 24 hours per day, 365 days per year), which, SX claims, is essential for fair compensation for artists and labels.
In addition, representatives from SX and DiMA must meet "at least" every six weeks to discuss issues and potential solutions relating to stream-ripping (DRM), which SX had insisted upon in the last round of negotiations. Meanwhile, the agreement stipulates that DiMA member webcasters must "identify, review, internally test, and evaluate technologies to prevent stream-ripping."
That right there is the big breakthrough—not the "agreement," but the announcement that SX and DiMA are going to sit down and discuss the issues before them rather than battle via press release. They don't have an impressive record at that whole negotiation thing as of yet.
So, what does this really mean? Some reporters have trumpeted that "Webcasters got exactly what they asked for". Well, not quite. There are many issues still to be worked out.
It's a good start for large webcasters to get a cap at $50,000—at least compared to the original SX proposal, in which the sky was the limit. However that leaves small, marginally profitable webcasters where they were in the last round, which is priced out of business. And that's just one unanswered question.
So why is everyone making nice about what is obviously a first step—agreeing to sit down together and talk about these issues? Well, because Labor Day is one week away, and that happens to be the deadline after which Senators Ron Wyden (D-Oregon) and Sam Brownback (R-Kansas) and five Senate co-sponsors have threatened to pass the Internet Radio Equality Act (IREA). The senators said: "While we strongly support a negotiated solution, we will not allow the minimum fee issue to be used to force an agreement that mandates DRM technology and fails to respect the established principles of fair use and consumer rights....Internet radio is crucial to many segments of business and culture—to small and large webcasters building sustainable businesses; to independent artists trying to make it in a crowded industry; and to millions of music fans searching for new diverse music that corporate radio generally does not offer. Innovation and creativity are the winners if Internet radio flourishes, and are the losers if Internet radio stagnates."
If you think that sounds like they mean business, we suspect that DiMA and SX think so, too.
Good for them. We think that jaw-jaw is better than to war-war every time—and while we can't believe we're saying this, we suspect that DiMA and SX can jointly hammer out a more sensible solution than the legislature.
Faced with that choice, we'd get smart fast. Let's hope they do.
