On Tuesday, after a two-year battle, record labels and online radio stations agreed on new royalty rates for streaming music online. Many of the music sites had argued that the old rates were so high they were being forced out of business.
This is definitely the agreement that weve been waiting for, said Tim Westergren, the founder of Pandora, one of the most popular Internet radio sites.
The conflict began in March 2007, when the federal Copyright Royalty Board ruled that all so-called webcasters needed to pay a fee, set to increase to 0.19 cent a song next year, each time they streamed a song. Webcasters said the fees would eat up most of their revenue, which mostly comes from online advertising.
The new agreement treats sites differently depending on their size and business model. It applies to the period from 2006 through 2015 for big sites and through 2014 for small sites. The sites in question often provide customized streams of music, but listeners do not get to directly choose which songs they hear, and they are not permitted to store the music on their computers.
Webcasters with significant advertising revenue, like Pandora, will pay the greater of 25 percent of revenue or a fee per song, starting at .08 cent for songs streamed in 2006 and increasing to .14 cent in 2015.
Webcasters also agreed to give more detailed information about the songs they play and how many people listen to them to SoundExchange, the nonprofit organization that collects and distributes digital royalties on behalf of artists and labels. They must also retain records of activity on their Web servers for four years.
