Letter to the Judicial Committee (May 26, 2007)

To Chairman Berman and Congressman Coble,

Thank you for your attention to the mounting threat increased sound recording royalty rates pose to our industry. Unfortunately, the "small" commercial webcaster solution proposed by SOUNDEXCHANGE at your request would be a temporary fix affecting only a small portion of the Internet radio industry.

The hope of virtually every webcaster is to someday build a sustainable business, just as the hope of virtually every musician is to receive radio airplay, tour promotion, and to make a living playing music. Unfortunately, any likelihood of small commercial webcasters realizing our hopes would be crushed by SOUNDEXCHANGE's proposed offer.

An extension of the terms of prior Small Webcasters Settlement Act agreements would limit the revenue we could earn to $1.2 million and penalize success, forcing us to pay hundreds of thousands of dollars in retroactive royalties if we earned a single dollar more than the cap.

Frankly, this proposal is not a solution; it is a temporary delay of a problem that requires an immediate and lasting solution, as offered by the Internet Radio Equality Act. The next CRB review begins in 2009, and without a substantial legislated change in the underlying CRB legal standard, it may very well lead to a similar unworkable outcome.

It is, however, encouraging that SOUNDEXCHANGE has publicly acknowledged that the recording royalty rates set by the CRB on MARCH 2 are, in fact, too high for most webcasters to stay in business, grow and succeed. I hope you will explore this issue further through a committee hearing, and that you will soon appreciate that the CRB rates are too high for virtually ANY webcaster to survive.

Again, thank you for your time and attention. The date on which most of Internet radio might be forced to shut down, JULY 15, is fast approaching, and we appreciate your continued interest.