The Webcaster Settlement Act Passes Through The Senate

Posted Oct 1, 2008

“I’m relieved, optimistic, and grateful to our listeners.”
-Pandora Founder Tim Westergren

The U.S. Senate passed the Webcaster Settlement Agreement on Tuesday.  This allows web radio stations to negotiate a more reasonable royalty rate for streaming songs on the web.  Those prices will be contradictory to that set by Congress last year. 

Now that the bill has passed The House and The Senate, it just has to be signed by President Bush.  And royalty rates will then have to be negotiated between webcasters and the copyright-holding labels.  The deal between the label companies and webcasters then have to be approved by Congress.  The RIAA sided with webcasters like Pandora to push the bill through The House and The Senate.  This is one of the few times I be proud of the RIAA!

“This is a welcome and encouraging development and a sign of the constructive working relationship between the music industry and Webcasters,” stated RIAA chairman and CEO Mitch Bainwol. “Together, we want to make this marketplace work for both music fans and music creators.”

While webcasters like Pandora are fighting for the Settlement Act, Apple Inc. (NASDAQ:AAPL) is currently dealing with an increase in royalty rates, pushed by the National Music Publishers’ Association.  The association wants rates to be increased from 9 cents to 15 cents per track sold on services like iTunes.  Apple responded by threatening to shut-down iTunes.

Apple is using the same strategy as Pandora!  Pandora threatened to shut down their services if the Webcaster Settlement Act passed too. 

“I have no doubt that an increase in the per track price would lower total music purchases at the store,” stated Eddy Cue, VP of iTunes.  Kid Rock boycotted his most recent album from being sold on iTunes because he believes that Apple pockets too much of the artist’s hard work.  I would not be surprised if you see a lot of other artists follow his lead.  Why not offer to sell the DRM-free tracks for $0.99 on your own website and cut out the middle man?