The new royalty structure between radio stations and the Sound Exchange, announced Feb. 16, calls for a 16 percent drop in fees for 2009 and 2010, with stations paying $1.50 for every song heard by 1,000 listeners, rising to $2.50 per 1,000 listeners by 2015.

The deal does not cover Internet-only stations like Pandora.

But it does cover all stations represented by the National Association of Broadcasters. Non-member stations have the option to join in the agreement. That includes radio industry heavyweights Clear Channel Communications and CBS Corp.

The new fee structure puts terrestrial radio stations on a more solid footing, royalty-wise. Many broadcasters were considering dropping their Internet streams under the previous royalty fees.

As over-the-air broadcasters, radio stations pay royalties only to publishing companies and songwriters. Over the years the recording industry has tried to convince Congress that stations should also pay for actually playing the music. So far legislators have disagreed, saying that although stations do not pay royalties to the labels for actual spins, record companies do get a considerable amount of free promotion from radio airplay.

However, one organization representing artists and labels – the MusicFIRST Coalition – is currently lobbying for another crack at changing the ol’ radio station / record label quid pro quo.

At this point terrestrial broadcasters and the Sound Exchange are making nice, with each saying it’s a new day for streaming. Of course, that will probably change the next time royalty negotiations roll around.

“Today’s announcement provides local radio stations with the ability to enhance their local service with an online component, boosting listeners’ access to music, local news and information,” said NAB Executive VP Dennis Wharton. “By ensuring the continued viability of Internet streaming for America’s radio stations, today’s agreement further strengthens the relationship between free, local radio and our 235 million weekly listeners.”

“Because of the explosive growth of music on the Internet, this is good news for everyone involved in music – from artists to labels to broadcasters and to fans,” Sound Exchange Executive Director John Simson said. “It provides radio stations more opportunity to grow their on-line businesses in a stable business environment.

“Furthermore, it gives artists and copyright holders the opportunity to have more of their music played, while being fairly compensated, in more places as radio services expand their offerings on the Internet.”