Better Webcast Fees for Small Webcasters Ready, but Can the Smallest Webcasters Escape Detection?

According to the LA Times small on-line radio webcasters and the music industry have reached a deal to lower the royalty rates due record labels. These rates apply to webcasters with less than $1 million in annual revenue. Small webcasters were originally not invited to the table when the webcasting industry and record labels first negotiated under the watchful eye of the copyright office. Thus, they’ve complained that the rates set were most friendly to big webcasters and choking for small webcasters.

Apparently, the new deal is “a two-year agreement that calls for Webcasters to pay back and future royalties equal to 8% to 12% of their revenue or 5% to 7% of their expenses, whichever was higher.” This differs from the flat rate of .07 cents per listener per song originally applicable to all webcasters.

Since this deal is not yet public, I wonder what consideration, if any, is made for non-commercial webcasters. What about the webcaster who effectively has no revenue, and very low expenses — like a college or community radio station that also runs a web feed? What about someone running a station for fun, as a hobby, off her DSL line? Or what about a noncomm, community-based on-line station like LA’s Kill Radio?

My hope is that such broadcasters get by little or no payments. In the case of a community or college station, which expenses are taken into account — those for the whole station (including running a transmitter) or just the webcast. Obviously, it would only be fair to count just the expenses of the webcast. And for the Internet-only low-budget webcaster, it would seem that the expense-based royalty would be much more affordable.

While I certainly think a no royalty fee option is best, and frankly most reasonable, since traditional broadcast stations pay no royalties to record companies, having the fee be a small percentage of already low and extant costs is not too bad. It may still put some webcasters off the air, but for others it’s just an incremental increase in costs, which are also very predictable and not based on the same tenets as the fees for huge commercial webcasters.

What’s yet to be seen is if and how the RIAA will go after “rogue” webcasters who refuse to pay the fee — especially really small webcasters. Can and will they afford to go after anyone capable of putting up a 10 stream Shoutcast server on her home DSL line? Indeed, kind of like pirate low-power radio, it might make sense — both financially and philosophically — to run a pirate “low-power” webcast rather than try and legitimize yourself in the eyes of the RIAA.