Yummy Wakame

A court upheld decision by the Copyright Royalty Board in the US to hugely increase royalties for streaming music online could kill off all but the largest internet radio broadcasts on May 15th.

Instead of paying a royalty of 12% of their revenue as they currently do, the new ruling means that internet broadcasters will end up paying a steep set fee per song, per user to RIAA, imposed retroactively from 1 January 2006 and the fee climbs steeply each year until 2010. A $500 fee for every channel owned by a station will also be due.

“If these rates stand, and of course I hope they won’t, but if they do, I believe we’ll see a virtual shutdown all of US webcasting,” said Kurt Hanson, CEO of AccuRadio on his Savenetradio.org blog. “And that will be bad for listeners, webcasters, musicians, and the record industry alike.”

Small stations like Pandora or Live365 say the new royalty fees are a death knell for the industry. For the past five years, royalty payments for small webcasters has always been 12 percent of total revenue. Under the new rates the same stations would find themselves facing a 300 to 1,200 percent markup, an amount the boutique stations claim actually exceeds their income by a vast amount.

The new fees will kick in on the 15 May and will ultimately mean that stations will have to cough up royalties, due on that date, for every person who listened to a song on a streaming service from 2006. Many internet radio stations will go bankrupt immediately once the rates become effective.

The SaveNetRadio coalition has announced a national grassroots campaign aimed to prevent the new rates from taking effect.
“The CRB’s ill-informed decision to increase royalty fees to this unjustifiable level will quite simply bankrupt most Webcasters and destroy Internet radio,” said SaveNetRadio spokesman Jake Ward.

POLLSTAR:

Will the new rates destroy Internet broadcasting? While the small companies appear to be facing a financial tsunami when the new fees begin next year, the larger companies probably will absorb the hike as a cost of doing business and adjust their advertising and subscription rates accordingly.

But the new rates are hardly an inducement for new ventures into Internet radio, and there are rumblings that this is what the recording industry really wants – fewer online channels, leaving webcasting to major companies like Microsoft’s MSN, Yahoo Music and AOL. And, if the Webcasting gloom-and-doomers are correct, the recording biz just might get what it wants.

~ Ms. Wakame

This entry was posted on Wednesday, May 2nd, 2007 at 9:38am and is filed under General, Music, Music / Bands, News, Radio, Web - Radio / TV. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed. 1 User Browsing This Page.
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