Major Webcasters to face billions in new fees?

We already know that Webcasters small and large are outraged at the prospect of having to pay higher royalty fees to the music industry, particularly when compared with what is required of their satellite and terrestrial radio counterparts.

In letters distributed to various Capitol Hill offices on Thursday morning, the four companies' CEOs argue that the music industry will also be forcing collection of more than $1 billion per year from three services alone--Yahoo, RealNetworks and Pandora--in the name of covering so-called administrative costs.

Here's how they say they derived that figure: When the CRB decided earlier this year to change the rules for Internet broadcasters, it also decided to levy a $500 minimum annual fee per Internet radio "channel." SoundExchange, the non-profit music industry entity that collects the royalty and other fees on behalf of record labels, says that minimum payment is supposed to cover administrative costs.

Such an amount would far outpace the $20 million in total royalty fees collected by SoundExchange from the Internet radio industry last year, the CEOs note in their letter. And besides, it's not even clear that those payments would go to artists, as royalty payments do, the companies argue.