Music industry offers deal to small Webcasters

Facing an outcry over imminent royalty fee increases for Internet radio operators, the music industry body that lobbied for the changes has attempted a peace offering.

SoundExchange, the nonprofit group that collects the fees on behalf of hundreds of major and independent record companies, said on Tuesday that it would give "small" Webcasters the option of paying "below market" royalty rates on the songs they play--that is, by keeping the required royalty rates essentially the same as they are under a 2002 law called the Small Webcaster Settlement Act.

"The net result of this proposal is that small Webcasters would be guaranteed no increase in royalty payments for 13 years, from 1998 to 2010," SoundExchange general counsel Michael Huppe said in a statement.

Webcasters that fall in the "small" category would be required to pay 10 percent of all gross revenue up to $250,000 and 12 percent for all gross revenue above that amount. Those rates would hold until 2010 and be retroactive to 2006, SoundExchange said.

It was not immediately clear what the revenue cutoff would be in determining which businesses qualify as small, and SoundExchange representatives did not immediately respond to requests for clarification.