On Friday, SoundExchange made the offer official in a press release that proposed a cap on minimum fees charged against royalties for sound recordings played by webcasters like America Online, Pandora and Live365. The $2,500 ceiling would apply to regulations (due to take effect July 15) that requires services to pay a $500 minimum fee “per station or channel” regardless of the overall number of stations or channels they stream.

There was plenty of confusion over how the minimum fee set by the Copyright Royalty Board would apply, said John Simson, the group's executive director. "We certainly don’t want anybody to get unduly hurt by the minimum fee, but there is a value to music and a cost to administering the digital royalty program, and we wanted to ensure that everyone was treated fairly – artists, webcasters and record labels," he said.

SoundExchange reached out to the Digital Media Association this week to discuss the offer but DiMA has not formally responded. Simson's organization is also negotiating with small and noncommericial webcasters such as public radio and college stations to provide below-market rates for what they will pay to artists and record labels.

"We are in this together," Simson said. "We want to see artists and labels fairly paid for the music they provide and we want to see Internet radio grow and flourish."

*UPDATE* DiMA responds to SoundExchange

DiMA Executive Director Jonathan Potter said his group would agree to a $2,500 per-service cap for the entire term of the royalty board ruling (through 2010), but not the partial-offer presented to us 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 said in a statement. "The looming 2009 billion-dollar threat is destabilizing and inhibits investment and growth." Potter added that he was "disappointed to have to issue this statement" because he would rather negotiate important issues "directly with our counterparts rather than through press releases.”