In an action announced on the blog of popular Internet radio service Pandora, the service has decided to block Internet radio streams that are requested by users with IP addresses that are not in the United States or Canada.  This action highlights that fact that it is not only the Copyright Royalty Board decision on US royalties that is causing uncertainty for many Internet radio stations.  Royalty obligations for overseas listening also adds to the uncertainty and potential liabilities of these services.  Several US Internet radio stations have in the past received royalty notices from overseas collection agencies, asking for royalties for the use of sound recordings that are streamed to users in their countries.  This had caused other US streaming companies to block access to their services to foreign listeners. As the royalties that are paid to SoundExchange only cover US listening, until there is a reciprocal agreement between these collection agencies allowing one country’s agency to collect for worldwide usage and then distribute the money to the appropriate rights holders worldwide, potential liabilities to multiple worldwide collection agencies will persist. 

At last week’s Future of Music Policy Day in Washington, DC, SoundExchange President John Simson said that SoundExchange was hosting a meeting in Washington for representatives from a number of international collection agencies in efforts to work out an agreement that would provide a reciprocal collection and distribution agreement for Internet radio services.  In this instance, Internet radio operators should be on the same side as SoundExchange, rooting for its sucess in this negotiation to provide one-stop shopping for royalties for all of their listeners.

This also should remind Internet radio services that, when paying SoundExchange on a per performance basis, they are paying for performances to US residents only.  Any amounts that a service might have thought about paying to SoundExchange for performances to foreign listeners should be paid to the royalty organizations in the countries where those listeners reside.  One more concern for Internet radio companies to keep in mind in staying legal.