PC World, July 16, 2007
By Tom Spring

In a last-minute attempt to avoid crippling royalty fees that would have gone into effect on Sunday, Net broadcasters won more time to negotiate lower fees to be paid to the music industry, according to legislative and industry sources.

In a closed door meeting that took place Thursday night, after a federal appeals court refused to halt the royalty increase, representatives from SoundExchange and the Web broadcasting industry agreed to negotiate further on compromise fees. According to Web radio broadcaster Pandora's Tim Westergren one of those compromises includes "more realistic" caps on how much Web broadcasters will have to pay in royalty fees.

The meetings were organized by Rep. Ed Markey, D-Mass., chairman of the House Commerce Committee's telecommunications and Internet subcommittee.

"We are very relieved we have more time to straighten this matter out," Westergren says. He said if Pandora was forced to comply with fees that would have gone into effect Sunday his company would of had to consider shutting down or possibly owing millions of dollars in fees.

"There was an understanding between all parties present that enforcement of the fees would not be made until more time had been spent negotiating a settlement," according to Christine Hanson, spokesperson for U.S. Rep. Jay Inslee (D-Wash.). Inslee introduced Senate bill—called the Internet Radio Equality Act of 2007.

Progress has already been made. Hanson says SoundExchange, the music-industry organization that collects the Internet royalties, has already agreed to a $2500 cap on royalties paid by small Web broadcasters. Pandora's Westergren said negations yielded a $50,000 cap on royalties paid by the largest Web broadcasters.

"We feel better than we did yesterday, but we're still not out of the woods," Westergren says.

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