It's been a roller coaster ride for webcasters in the past weeks, as Internet radio faces a royalty rate increases of more than 20 percent a year for the next three years. On Thursday, Internet radio lost its appeal to the federal D.C. Circuit Court of Appeals, which refused to halt the rate increase.

Despite the court ruling, however, a deal was inked late Thursday that temporarily waives the minimum charge of $6,000 per channel that the Copyright Royalty Board (CRB) required. But webcasters aren't in the clear just yet, for if negotiations fail, the old story line of doom and gloom for webcasters will continue.

Hold the Noose

"During negotiations, SoundExchange committed temporarily not to enforce the new royalty rates so webcasters can stay online as new rates are agreed upon," the SaveNetRadio Coalition reported on its Web site. SoundExchange, the company that collects royalties on behalf of music labels, did not return calls seeking comment.

SaveNetRadio gave part of the credit to the millions of people who contacted Congress in support of Internet radio. The support came in the wake of a unique protest in June, when webcasters silenced their broadcasts for one day to demonstrate what the Web would sound like without them.

Yahoo, Live365, Rhapsody, MTV Online, AccuRadio, Radioio, Born Again Radio, Pearadio.com, Ear.fm, and scores of others participated in the national "Day of Silence" on June 26. Notably, AOL Radio did not participate.

Blow by Blow

SoundExchange proposed a $2,500 cap on the fees charged against royalties for recordings played on Internet Radio. Recently enacted regulations due to go into effect on July 15 require webcasting services to pay a $500 minimum fee "per station or channel," regardless of the overall number of stations or channels they stream. The new offer was SoundExchange's attempt to address webcasters' concerns about their liability for per-channel minimums.

Jonathan Potter, executive director of the Digital Media Association (DiMA), said his members would agree to a $2,500 per-service cap for the entire term of the copyright royalty ruling through 2010, but not the partial offer presented to DiMA in writing, which would terminate in 2008. Any offer that doesn't cover the full term is simply a stay of execution for Internet radio, he argued.

Now, both sides of the table are talking again. Gartner analyst Mike McGuire, for one, said he is glad to see the negotiations continue: "We are seeing an acknowledgment on SoundExchange's part that it's better to negotiate now than risk killing off a potentially brand new revenue stream."

Meanwhile, late Thursday, Nydia Velasquez, Chair of the House Small Business Committee, and Ranking Republican Steve Chabot introduced H.R. 3015, a bill to delay the effective date of the CRB's Internet radio royalty rate decision by 60 days, until September 13, 2007.

"We are hopeful that this support and that of other members of Congress will help resolve the current rate dispute, as well as the long-term problem of royalty standard parity," Potter said.