At least not yet. Internet broadcasters will not have to start paying sharply higher royalties next week, though the U.S. Court of Appeals in Washington, D.C., yesterday refused to halt the royalty increase. SoundExchange, the organization that collects and distributes Internet music royalties, said late yesterday that online radio outlets can continue to operate under their old licenses next week without fear of legal action. “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,” SoundExchange Executive Director John Simson told Radio and Internet Newsletter. “And we don’t want them to stop streaming. That’s just so long as they’re continuing to pay under the license they had. … Look, Monday’s not that magical a day. It’s going to be business as usual at SoundExchange–trying to process data, trying to get deals done. We’re not gonna be filing lawsuits.”

Thoughtful, yeah? But don’t mistake Simson’s remarks for benevolence. Because this isn’t a reprieve, it’s simply a stay of execution.

Although a royalty rate like this is typically 4% to 5% of revenues in other media (e.g., satellite radio), for other rights (e.g., the musical compositions), and in other countries–the rates set by the Copyright Royalty Board judges equate to roughly 50% of revenues for large webcasters like Yahoo LAUNCHcast (and probably many terrestrial station streamers), 150% to 300% of revenues for small webcasters like AccuRadio, radioio and Digitally Imported, and, for Webcasters with large numbers of channels like Rhapsody and Pandora, well more than 1,000% of revenues.”

SoundExchange–an organization spun off from the Recording Industry Association of America to collect royalties on the behalf of sound-recording copyright owners–argues that the royalty increase, slated to go into effect July 15, is fair payment for the right to stream digital music. But 50% to 300% of revenues does seem a bit steep, doesn’t it?

Steeper still, when you consider the fact that SoundExchange doesn’t always manage to disburse all the royalties it collects. That’s right. In the first quarter of 2006, the organization collected some $14.2 million in royalties, but distributed just $8.5 million. Where’s the remaining $5.7 million? SoundExchange says it’s being “held in reserve for artists and sound-recording copyright owners that have not been identified or located.” And it is. Until June 30, when those missing artists–all 8,353 of them–forfeit it to SoundExchange.

The irony is enough to make your head explode.