WebProNews

SoundExchange, the U.S. organization that collects online royalties for the music industry, says that it will allow smaller Internet radio stations pay a reduced fee.

Under their proposal webcasters making less than $1.2 million a year would pay 10 percent of all gross revenue, up to $250,000, and 12 percent of all gross revenue above that amount.

SoundExchange's announcement has been met with sharp criticism. "The proposal made by SoundExchange today would throw 'large webcasters' under the bus and end any 'small' webcaster's hopes of one day becoming big," SaveNetRadio spokesperson Jake Ward said.

"Under government-set revenue caps, webcasters will invest less, innovate less and promote less. Under this proposal, Internet radio would become a lousy long-term business, unable to compete effectively against big broadcast and big satellite radio -- artists, webcasters, and listeners be damned."

The rates would be in effect through 2010, said SoundExchange, which splintered off from the Recording Industry Association of America (RIAA) in 2000.

"There's a sense in the music community and in Congress that small webcasters need more time to develop their businesses," Executive Director John Simson said. "We look at it as artists and labels doing their part to help small operators get a stronger foothold."