Internet Radio: Music, Law, Royalties

So I want to start an Internet “radio station.” Regular old broadcast stations have to pay music royalties to SOCAN (in Canada) or BMI or ASCAP (in the US).
There’s a good overview of the U.S. situation on the DNA Lounge website, but I wondered what the situation was in Canada. So I sent email to SOCAN.
SOCAN’s response was basically “we’re still figuring this out,” but they added:

To avoid future copyright infringement and any resulting legal proceedings, SOCAN advises that you send a letter to my attention stating that you (the company, if incorporated) agree to pay any fees and taxes applicable to your use, once they are set. Also, since the fees approved will be retroactive, you should consider making provisions for a reserve fund of 3.2% of your gross revenues or, if the site is noncommercial, 3.2% of operating expenses to pay fees and taxes once they become due.
I’m still trying to figure out exactly what this means. Stay tuned.

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