with RCS

Internet radio brokers new deal

Online broadcasters welcomed news this week that a new royalty deal had been struck between webcasters and record labels as a change in policy had previously threatened to strangle the life out the burgeoning industry.

The new deal replaces the controversial 2007 plan which had spooked a number of online stations and music providers like US companies Pandora and Rhapsody who argued that if the plans were implemented it could mean the end of their services.

The new deal means that songwriters and publishers have taken a cut in their royalty rate they originally demanded. Licences and costs will come down to the size of the company.

Sites earning less than £775,000 annually will pay up to 14 per cent of revenue in exchange for streaming rights. Larger companies, like Pandora pay either 25 per cent of revenue or a flat fee per song.

Pandora founder Tim Westergren triumphantly blogged, "the royalty crisis is over".

He added: "Pandora is finally on safe ground with a long-term agreement for survivable royalty rates. This ensures that Pandora will continue streaming music for many years to come."

In the UK, sites pay 8 per cent of their revenue on average, though Spotify is understood to have negotiated its own rate, while YouTube pared back their music content in the face of what they saw as excessive charges for music content.

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