Internet radio broadcasters fearing that new music royalty rates would force them to shut down on July 16 can breath a sigh of relief -- at least for now. SoundExchange executive director John Simson stated that his organization will not take legal action against stations that are involved in good-faith negotiations, according to the Radio and Internet Newsletter.

"For the people who want to comply with the law and are in bona fide negotiations with us, we don’t want those people to be intimidated, " Mr. Simson said. "And we don’t want them to stop streaming."

Internet radio stations in the United States and SoundExchange -- the royalty collection arm of the RIAA -- have been embroiled in a battle for months over new royalty payment rates due to go into effect on Monday, July 16. The new rate schedule increases the amount Web-based radio stations pay for the music they stream, and the broadcasters claim the new fees will put them out of business.

SoundExchange proposed the new payment scheme to the Copyright Royalty Board (CRB), which approved and enacted the fees. Both organizations contend that the payments are fair, and have disregarded broadcaster concerns.

Webcasters have been paying a flat 10 to 12 percent of their gross income in performance royalties. The new royalty schedule, however, uses a per-play payment model that is retroactive to the beginning of 2006, and could cost stations about 125 percent of their income.

Legislation has made it into the House of Representatives and Senate to nullify the CRB ruling and impose a royalty payment system that matches what satellite broadcasters pay. Neither of those bills have been voted on yet.

A motion in the U.S. Court of Appeals by the Digital Media Association to temporarily stay the new CRB rates during negotiations was denied on Thursday, leaving most broadcasters under the assumption that they would have to stop broadcasting after Sunday or face fees they can’t afford to pay. Mr. Simson’s commitment to not seek legal action against stations that are still negotiation for better rates, however, means that Internet radio in the United States doesn’t have to fall silent on Monday.

Ultimately, agreeing not to seek legal action against Webcasters translates into a reprieve and not a free ride for the stations. A deal still has to be reached, or legislation must be passed that sets new guidelines, before the royalty payment dispute will be resolved. There is still a chance that the SoundExchange and CRB payment scheme will stand, forcing most Internet radio stations in the U.S. to shut down.

Radio and Internet Newsletter’s Kurt Hanson commented "If I were in charge of the SaveNetRadio.org ’countdown clock’ to ’The Day the Music Dies,’ during this period of negotiations I would probably set it at ’2 days and holding’."