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Update On Webcasting Royalty Rates

By Steve Gordon
August 02, 2004

In September 2002, the author published an article in Entertainment Law & Finance titled “Examining Arguments in Controversy Over Webcasting Royalty Rates.” Since then, there have been major new developments. New rates have been set, although the controversy regarding prices to be paid by small webcasters is still being challenged. This article, with Part II appearing next month, provides background on the new rates, explains how they work and offers an overview of this new medium.

Webcasting generally refers to the non-interactive streaming of audio on the Internet. It is sometimes called “Internet Radio.” The content can originate from live or pre-recorded talk, live musical performance or sporting events, CD's or other pre-recorded media.

There are basically two types of webcasts: Internet-only services and streaming of standard broadcast radio stations on the Web. Internet-only webcasting often features one or more different channels of highly-themed genres of programming. Higher bandwidth results in better sound quality of and allows for a greater number of simultaneous listeners. Bandwidth, which is the number of “bits” of information transmitted per second, is usually the single largest expense in a webcaster's budget. For webcasters who transmit music, music clearance costs are often the second greatest expense.

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