The Death of Internet Radio: new royalty rates announced

[mandy]

How does this affect medium-size webcasters?
Radio Paradise's Bill Goldsmith notes, "This royalty structure would wipe out an entire class of business: Small independent webcasters such as myself & my wife, who operate Radio Paradise. Our obligation under this rate structure would be equal to over 125% of our total income. There is no practical way for us to increase our  income so dramatically as to render that affordable."

And Radio Paradise is perhaps the most-successful webcaster in its class!  For most operators, this rate looks as if it would be >150-200% of total revenues.

How does this affect small webcasters?
Webcasters who stream through services like Live365 may be in jeopardy, as such firms' business models probably never envisioned a royalty rate this high.

full article: http://www.kurthanson.com/archive/news/0...ndex.shtml

[mandy]

A related article:

Several radio broadcasters and online media companies are challenging a ruling this week that sets a higher royalty fee structure for music played over the Internet.

After nearly two years of hearing arguments from some of the country's biggest radio companies, the Copyright Royalty Board (CRB), a body created by Congress to settle royalty disputes in the music industry, has decided on a higher fee structure for Web-based music broadcasts.

The ruling, which went into effect on March 5, has increased the amount of royalties that online music broadcasters must pay record labels and performers, a possibly crippling blow to many Webcasters and Internet radio stations...

full article: http://www.ecommercetimes.com/story/8OHY...adio.xhtml

[mandy]

Update: bill introduced in US Congress seeking to overturn recent rate decisions:

Congress has introduced new legislation designed to overturn a controversial royalty fee increase that threatens to wipe out many Internet radio broadcasting firms. If the "Internet Radio Equality Act," introduced this week by Rep. Jay Inslee (D-Wash.) and Rep. Don Manzullo (R-Ill.), is passed, it would make a the recent ruling by the U.S. Copyright Royalty Board obsolete...

"You can't put an economic choke hold on this emerging force of democracy," Rep. Inslee said. "There has to be a business model that allows creative webcasters to thrive, and the existing rule removes all the oxygen from this space."...

full article:  http://www.ecommercetimes.com/story/H2sZ...vion.xhtml

[mandy]

A related article:

Thousands of U.S. webcasters plan to turn off the music and go silent this Tuesday, June 26, to draw attention to an impending royalty rate increase that, if implemented, would lead to the virtual shutdown of this country’s Internet radio industry...

Many webcasters are planning to shut off access to their streams entirely, while other webcasters plan to replace their music streams with long periods of silence (or static or ocean sounds or similar) interspersed with occasional brief public service announcements on the subject. Internet-only webcasters and broadcasters that simulcast online will alert their listeners that “silence” is what Internet radio may be reduced to after July 15th, the day on which 17 months’ worth of retroactive royalty payments — at new, exceedingly high rates — are due to the SoundExchange collection organization...

full article: http://www.lawbean.com/2007/06/23/intern...june-26th/

[mandy]

The aftereffects of last year's royalty hikes:

The future of Internet radio may be in jeopardy. Pandora -- one of the largest online radio services -- is on the verge of shutting down, its founders told the Washington Post. The problem? Royalty hikes put in place last year are costing the company most of its income. And it's not alone.

The federally mandated increase, set to take full in effect in 2010, doubles the per-song rate Internet radio stations have to pay for each play. On the flip side, broadcast radio pays nothing and even satellite radio pays a lower rate. Given that Internet radio appears to be the fastest growing medium of the three, many see the equation as a dangerous disconnect.

Pandora will end up paying 70 percent of its annual revenue to fees...

full article: http://ecommercetimes.com/story/Net-Radi...64202.html