(Check out Rusty Hodge's blog for continually updated information on the staus of both bills, relevant news, opinions and more.)

October Update

23-Oct-07

This Wednesday morning (tomorrow), the Senate Commerce Committee will meet to hold a hearing on the future of radio in the United States. Representatives from broadcast radio, music industry, and Internet radio will testify before the committee about the current state of the radio industry and how royalty fees and other issues, like competition and innovation, affect the future of the industry. This is an unprecedented opportunity for Internet radio to explain its value to Congress, and we need your help to make sure they are listening.

Call the Senate switchboard at (202) 224-3121 and ask to be connected to your senator's office. If you don't know your Senator's name, just tell them your state, and they'l connect you.

Or look up their direct number on the senate site.

Here's what you should say:

Details on the hearing:

Full Committee Hearing on the Future of Radio

Wednesday, October 24, 2007, at 10:00 a.m. in Room 253 of the Russell Senate Office Building

Witness List

Mr. Mac McCaughan, Musician and Cofounder, Merge Records
Chapel Hill, North Carolina 27514

Mr. W. Russell Withers Jr., President, Withers Broadcasting Group
Mt. Vernon, Illinois 62864

Mr. Tim Westergren, Chief Strategy Officer & Founder, Pandora
Oakland, California 94612

Mr. S. Derek Turner, Research Director, Free Press
Washington, DC 20001

Ms. Carol Pierson, President and CEO, National Federation of Community Broadcasters
Oakland, California 94612

Ms. Dana Davis Rehm, Senior Vice President for Strategy & Partnerships, National Public Radio
Washington, DC 20001

More Details

September Update

All parties are "in discussions" and have agreed to continue those discussions. What that means is that nothing is happening and the issue is stalled. My belief is that SoundExchange doesn't really care about small webcasters; they only want to make sure that any deals reached by small webcasters can have no influence over deals made on a much larger scale with large internet companies.

August Update

SoundExchange extends offer to Small Webcasters, but it's a useless offer. As soon as Congress comes back from recess in September, we'll need to step back up the fight for passage of the Internet Radio Equality Act.

Congress is on recess until September 4th, so not much is happening on the IREA front until then.

23-Jul-07

While we though we had progress last week on the royalty issues, it now is obvious the RIAA was using this "truce" to derail the passage of the Internet Radio Equality Act. By announcing that SoundExchange was very close to a deal with webcasters, the RIAA was successful at derailing the campaign by making the public believe that internet radio was not going to die on July 15th. Instead of a mass execution, they hope to quietly kill off net stations one by one, and hope that no one will notice. So we still need you to call your representatives. If they're not supporting the IREA, we need them to support it. If they are supporting it, thank them and tell them it is still important that the IREA is voted on. If you've already called them, call them again! Don't let them think the battle is over.

17-Jul-07

Congressman Ed Markey jumps to webcasters defense!

Rep. Markey, who heads the committee overseeing the internet, is jumping to support webcasters. He's the one who forced the RIAA and webcaster representatives to sit down and told them to make a deal. This reminds is of what happened back in 2002, shortly before the Small Webcasters Amendment passed. This is a good sign. If you are in Rep. Markey's district, give him a call and let him know he's doing a great job.

13-Jul-07

Thanks to all your calls, a congressional roundtable (mini-hearing) occurred Thursday and one of the outcomes of that, SoundExchange stated that "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. And we don't want them to stop streaming." Simson qualified his statement by noting, "That's just so long as they're continuing to pay under the license they had." So effectively, we have some reprieve until the negotiations are concluded. 13-Jul-07

We are not in the clear yet, this is more like a cease fire than a victory. Keep hammering at your representatives to pass the IREA, that's the goal.

10-Jul-07

Time is running out. New royalty rates will go into effect on July 15th which are 6 times more than SomaFM's total revenues. If not changed, SomaFM will be forced out of business by the RIAA. SomaFM calls on Congress to insist that the RIAA comes to a settlement on royalty rates with webcasters before July 15th payment deadline.

I need you to call SomaFM's congressional representative in San Francisco, House Speaker Nancy Pelosi at (415) 556-4862 and ask her to use her office's influence to demand that the RIAA come to a settlement with small webcasters. Identify yourself as a listener to SomaFM which is based in her district. It doesn't look like the IREA will get passed before the July 15th deadline with the RIAA's aggressive and false-pretense lobbying against it. Our only hope now is for a settlement, which ideally will be codified into law later.

The RIAA is blocking the IREA from passing with propaganda and downright false statements. And the worst thing is they're being sneaky about it... trying to pretend that this propaganda is coming from SoundExchange. Because everyone knows you can't trust anything the RIAA says. But the RIAA is the puppeteer pulling the strings on SoundExchange, and makes up the majority of the seats on SoundExchange. The independent artist representatives on SoundExchange's board support independent internet radio and aren't trying to kill it, but the RIAA cronies have the majority vote.

At this point, it doesn't look like the IREA will pass, the RIAA has been very good in their lobbying. (Well, I should say, they're very good at hiring expensive lobbyists - after all, they're using SoundExchange's money to do it, and all that money comes out of the royalties paid to SoundExchange before the artists see it. Oh, the irony! Internet radio stations are paying SoundExchange royalties which are being used to lobby against net radio, and not actually paid to the artists. Yey they have the balls to tell the artists that it's internet radio that's stealing from the artists.

And even though we play very few RIAA-related labels, the RIAA has successfully made it so that even if we play independent artists, we still have to pay them royalties.

Past News

1-Jun-07: DiMA and SaveNetRadio.org have filed a motion for a stay pending appeal. If granted this will push back the looming July 15th payment deadline.

27-May-07: The IREA has its 100th co-sponsor in the house now! If we can get more than half the house to co-sponsor the bill, it will pass. The senate might be harder, but we've made amazing progress so far. Thanks everyone!

URGENT CALL TO ACTION

Once again, internet radio is being unfairly targeted with extremely high music royalty fees: fees that are so high, if not changed will put most internet broadcasters, including SomaFM out of business.

Internet radio pays royalties that are set on a completely different basis than other digital music services. For example, Satellite Radio pays less than 7% of their revenues in royalties to SoundExchange (the company authorized by the DMCA to collect and distribute royalties on behalf of all holders of sound recording copyrights). Yet even in the past, internet radio paid 10-12% of our revenues to SoundExchange, and the new rates are not even based on a percentage of revenue but now based on our audience size and how much music we play. This raises the rates for the largest webcasters by about 250%, and for independent webcasters like SomaFM, our royalty rates increase by over 30 times what we had previously paid. That is not a misprint: our rates go up for 2006 by over 30 times what we would have paid under the previous rates.

A Senate Bill, S.1353, has now been introduced! 10-May-07

WASHINGTON D.C. -- Legislation introduced by Senators Ron Wyden (D-OR) and Sam Brownback (R-KA) today would save Internet radio from a recent royalty hike that threatens to bankrupt the industry. The Internet Radio Equality Act would vacate a Copyright Royalty Board (CRB) decision to increase fees webcasters pay to play music online by a devastating 300 to 1200 percent. Companion legislation (H.R. 2060) introduced in the House of Representatives on April 26th, by Congressman Jay Inslee (D-WA) and Don Manzullo (R- IL), has already garnered the support of more than 60 cosponsors. (read full release)

It's time to start calling your Senators now!

You've probably already called your Representative. Now it's time to call your Senators. In most cases, a call will only take one or two minutes. Just call and tell them you're a fan of internet radio, and the CRB's new royalty rates are going to put your favorite internet radio station out of business, so you're asking the Senator to sve internet radio by co-sponsoring the Internet Radio Equality Act as introduced by Senators Ron Wyden (D-OR) and Sam Brownback (R-KA). (lookup your Senators and view the talking points script)

News as of 3-May-07

Deadline reprieve: the Copyright Office has announced that royalty payments are now due by July 15, 2007 (instead of May 15th as previously announced). This slight reprieve gives us more time to get legislation passed for royalty equality - but we still have to act fast and call your representatives.

Rusty and Elise have been in Washington, DC to meet with congress and alert them to this issue. Everyone we've met with so far has told us that they're getting lots of calls and emails about the issue, so they realize it is important. But we still have a lot of work to do. Certain congressmen have stated that they don't think the bill has a chance and therefore won't support it. That's why it's important for everyone living in the US who cares about SomaFM and internet radio to call your representatives right now.

Background

A bill has been introduced that will save independent internet radio by setting these royalties at the same level paid by satellite radio services, a reasonable amount (7.5% of gross revenues) which will benefit the artists as well as not bankrupt net radio stations. Call your Representative right now and ask to cosponsor the HR 2060, "Internet Radio Equality Act", just introduced by Representative Jay Inslee. This bill will set royalty rates that internet radio pays to the same reasonable level that satellite radio pays. Please call the House switchboard at (202) 224-3121 and ask to speak to your representative. (find your representative). You can see the status and full details of HR2060 here. We have over 25 co-sponsors of the bill now.

Help SomaFM by contacting your local congressperson by:

  1. Writing a letter.
  2. Making a phone call.
  3. Sending an email.

If HR2060 the "Internet Radio Equality Act" isn't passed, SomaFM is facing a bill of $600,000 for 2006 royalties that must be paid by May 15th. These royalties have gone up from around $20,000 that SomaFM paid already in 2006. Our royalties for 2007 we estimate will be over $1 million!

Your support will not only save SomaFM, but other independent net radio stations. as well. Without changes to the current copyrght laws, only the largest corporations will be able to legally continue broadcasting over the internet.

We need your help in getting the US Congress to pass legislation that will remove or reduce these royalties - royalties that only internet broadcasters pay. Here's how you can do that:

Option 1. Send a stamped letter, mailed by U.S. Mail or FedEx to your congressperson - you can get their address by putting in your zip code below. A printed-- or better yet-- a hand-written letter with a personal story of how you will be affected by the loss of SomaFM and other internet radio stations will be treated with a lot of importance when received by your congressperson. Include information such as your name and location, the type of music you listen to, why internet radio is important to you and how this new royalty will affect you. Be as specific as possibly and let them know how important internet radio is to you. I've written a sample letter you can customize.

Option 2. Make a phone call! This has more weight than a letter and is the most effective way to communicate with the congressional staff. Call the congressional switchboard at (202) 224-3121 and ask to be connected to the office of your representative and your two senators (this entails making 3 separate but quick calls). Ask to speak to the staffer handling copyright issues. (A second choice would be the staffers who handle technology issues.) If they are unavailable, leave a message with your name, phone number and the quick message below:

I am calling in regards to the recent CRB ruling on royalties that internet radio stations will have to pay. These rates are so high that it will put independent internet radio stations out of business.

Please co-sponsor HR2060, the Internet Radio Equality Act.

This bill will create a level playing field by bringing the Internet radio performance rates into parity with traditional and satellite radio. Unlike internet radio, satellite radio pays 7.5% of their revenues in sound recording royalties. Traditional over-the-air radio is legally exempted from paying royalties to record labels or artists for songs performed over the air. This act will make royalties fair to braodcasters and rightsholders alike.

Option 3. Though it's not nearly as effective as a telephone call or postal letter, you can also send an e-mail message to your Senators and Representatives. Please seriously writing a postal letter or better yet calling, but if you can't do either of those, an email will have to do. Using your zip code or address, you can use this quick, easy e-mail form to get directly to the congressperson for your location, and this sample letter you can customize.

Enter your Zip Code to get the list of phone numbers for your representatives:

Thank you so much for your time and effort!

Why do internet radio stations have to pay in the first place?

It's all because of the Digital Performance Right in Sound Recordings Act of 1995 (aka the DPRA).

Over the air broadcasters have always been exempt from playing royalties on the "Sound Recording Copyright". When the original copyright laws were written, congress realized that they were giving an legal monopoly to the copyright holder. So in order to balance out that government-given monopoly, they also added provisions for fair use; such as copying for personal use, exemptions for libraries, and exemptions for radio broadcasters.

The DRPA removed these exemptions for digital broadcasts, under the premise that digital allows unlimited perfect digital copies of the original work. But we're not distributing perfect digital copies of the original copyrighted performance, MP3 and WMA broadcasts are drastically compressed and (I'm sure you know) no where near a perfect digital copy. And we segue tracks together, talk over the beginnings and end, etc. Just like traditional over-the-air radio.

So the DRPA is based on a fundamentally flawed assumption which was then used to remove a copyright exemption for digital broadcasters.

How are these royalties different from the royalties paid in the past?

In the past, under the Small Webcasters Act, independent internet broadcasters had an option to pay a percentage (10-12%) of their revenues to SoundExchange for these royalties on the "sound recording". This is in addition to the 5-6% royalties they pay to ASCAP, BMI and SESAC for the royalties on the composition of the song. But this Act expired at the end of 2005.

Now, internet broadcasters are being forced to pay "per song, per listener", and the rates go up every year until 2010 when the current agreement ends.

Satellite broadcasters pay royalties based on a percentage of their revenue; local radio stations pay no royalties at all to labels or artists for their over-the-air broadcasts. But now internet radio is no longer being allowed to pay based on our revenues, and instead have pay per song, per listener. This means for 2006, the fees will be around $600,000 for 2006. Based on our current listenership, these fees will be over $1 million dollars for 2007! And the fees go up every year through 2010. From 2000-2005, we had to pay 10-12% of our revenues. Now we're bring forced to pay several times our total revenues. Why should internet radio have to pay so much more? It doesn't seem fair.

Achieving parity with over-the-air broadcasters

We want to amend the Digital Performance Right in Sound Recordings Act of 1995 (DPRA) so that "non-interactive digital transmissions" (e.g. internet radio broadcasts) are exempt from statutory licensing requirements in the same way that analog transmissions (e.g. AM/FM) are. This can be done by amending 114(j)(3) of the Copyright Act to change the definition of "broadcast transmission" to include internet radio broadcasts, aka eligible nonsubscription transmission, as defined in Sec. 114(j)(6).

Don't internet radio stations make lots of money?

I wish! Our planned budget for all of 2007 was $250,000. We'll have to raise 5 times that amount to pay these new royalties.

And we will have to raise even more money if we lose some of our good bandwidth deals. The actual cost for bandwidth to stream full time to one listener can be $5 a month through traditional access providers. We're paying less than that now because we've worked to find ISP parters to power our streaming servers with their unused bandwidth. But we can't always count on that.

Currently, we bring in only about $15,000 a month. We expect to bring in some more by putting some "tasteful" ads on our web pages, which get about 8 million page views a month. But we don't want to be forced to put ads in our streams!

Can you just play a couple ads a day and make money that way?

There isn't that much money being spent on internet radio advertising right now. Typical in-stream ad rates are $1.50-2.50 CPM, which translates into about $24 for a single ad played at our peak listening hours. But for 2007, we'll have to pay about $2700 a DAY in royalties. When all is said and done, we'll have to play at least 150 ads a day, or over 6 ads an hour just to cover these royalties!

Will SomaFM go out of business?

Probably. We'll do whatever we can to keep broadcasting. We can remove all the music we play by RIAA-affiliated label artists, and that means that we'll have to shut down or substantially change some of our channels. And we'll reformulate our other channels to still have the same flavor even though we won't be able to play some of the artists we have always played. (Ironically, some long time artists we've helped make popular are on labels that have been bought out by larger, RIAA-affiliated labels! So because we helped make them popular, we can't play them anymore.)

But that still leaves the $600,000 we will owe for 2006. We will need your help to pay off this debt.

What can I do?!?!?

If you think this is unfair to internet radio, and you are an American citizen, you can use one of the options at the top of the page. We already have the attention of Congress, so now you have to let them know you support internet radio and that royalty rates shouldn't be structured in a way that will put small webcasters out of business.

If you're not an American citizen, you can still help us spread the word and point out how unfair this is to internet broadcasters.

And everyone is invited to tell us what you think about the CRB decision, and internet radio royalties in general.

Media coverage of the new royalties

Save Net Radio: a resource dedicated to the CRB ruling issues

Cnet reported the following:

Edward Markey (D, Mass) a key Democrat in the U.S. House of Representatives on Wednesday slammed new federal rules that would require many Internet radio services to pay higher fees to record companies. 'This represents a body blow to many nascent Internet radio broadcasters and further exacerbates the marketplace imbalance between what different industries pay,' Markey said at the 'The Future of Radio' hearing. The hearing was convened by the House panel on telecommunications and the Internet, of which Markey is chairman. He continued: "It makes little sense to me for the smallest players to pay proportionately the largest royalty fee."

Background Articles

Online Broadcasters Challenge Price Hike

NEW YORK — A wide array of broadcasters and online companies on Monday challenged a ruling from a panel of copyright judges that they say could cripple the emerging business of offering music broadcasts over the Internet.

Clear Channel Communications Inc., National Public Radio, and groups representing both large and small companies providing music broadcasts online were among those asking the Copyright Royalty Board to reconsider key parts of its March 2 ruling.

That ruling, the challenging parties say, would greatly increase the amount of royalties that online music broadcasters would have to pay to record labels and performers as well as put unreasonable demands on them to track how many songs were listened to by exactly how many individuals online.... read more

A Fee Per Song Can Ruin Us, Internet Radio Companies Say

New-media companies and record labels are feuding again. But this time, it is the digital companies that warn they may be driven out of business.

Several Internet radio companies are arguing that a recent decision by the Copyright Royalty Board, a three-member panel under the Library of Congress, would make it almost impossible for them to stay afloat.

Under the ruling released on March 2, Web broadcasters must pay each time a listener hears a song, at a rate that began at 0.08 cent in 2006 (the ruling applies retroactively) and rises to 0.19 cent in 2010. Besides increasing the charge for each song, the ruling established a $500 minimum payment for each Web channel — making it difficult for companies like RealNetworks and Pandora to offer as many different kinds of music as they do now... read more

Webcasters and Rising Royalty Fees: Paying the Price for Innovation?

At Contemporary-classical.com, Adrian Koren plays music that most folks don't want to hear. But for those who relish exploring the classical works of the past century, Koren's Web radio station is a godsend.

For just the $300 a year he pays Live365.com for bandwidth and music licensing, the Massachusetts software developer can share his beloved music with people around the world.

For more than three years, Koren has led listeners -- a few dozen at a time -- to new discoveries, a process repeated tens of thousands of times on Web stations based in bedrooms, basements and attics. But a new ruling from the U.S. Copyright Royalty Board -- an arm of the Library of Congress charged with determining how much radio stations must pay artists and record labels for songs they play -- threatens to silence many, and perhaps most, webcasters.... read more

NPR Focuses On Net Radio Royalty Rates

Like everyone else in radio, the folks at National Public Radio are hot under the collar about the skyrocketing royalty rates for Internet streamers set earlier this month by the Library of Congress’ Copyright Royalty Board. The new rates, retroactive to 2006, run through 2010 and double the current rate by the end of the period.

Hoping to change the rates, NPR plans Friday to file a petition for reconsideration with the CRB panel. NPR plans to ask that online royalties be returned to their historic arrangement.

 “This [CRB decision] is a stunning, damaging decision for public radio and its commitment to music discovery and education, which has been part of our tradition for more than half a century,” said Andi Sporkin, spokesperson for NPR. “These new rates, at least 20 times more than what stations have paid in the past, treat us as if we were commercial radio – although by its nature, public radio cannot increase revenue from more listeners or more content, the factors that set this new rate... read more

Royalty hike could mute Internet radio

Susan Kaup is on the air -- but perhaps not for long.

Kaup, 34, of Allston, runs ExploitBoston.com, a music blog that includes an Internet radio station that plays music from Boston-area rock bands like Three Day Threshold and Bang Camaro. Kaup, who blogs under the name Sooz, has been at it since 2003. But she worries about her station's future under a plan to sharply increase the amount Internet radio companies must pay to broadcast recorded music...

Mark Lam, chief executive of Live365 Inc., a major Internet broadcast service, says the new rates will kill off most Internet broadcasters. "As the current law stands, we are out," he said.... read more

Recording labels should negotiate royalty system

An obscure federal panel is about to kill the Internet radio star.

Handing a huge gift to the music labels, the Copyright Royalty Board ruled this month that streaming-music Web sites must pay quickly escalating royalties to labels and artists, backdated to January 2006.

The fees are so high they would wipe out many Internet radio stations and severely curtail even the largest operations like RealNetworks and AOL Radio.

The board should reconsider its unfair decision - or at least stay its ruling until Webcasters have a chance to appeal or negotiate a settlement with the music industry. If a fair agreement cannot be achieved that way, Congress must step in to protect the nascent Internet radio industry... read more

Record labels win higher fees from Web broadcasters

NEW YORK — New media companies and record labels are feuding again. But this time, it is the digital companies that claim that they are being driven out of business.

Last week, the U.S. Copyright Royalty Board, a three-judge panel under the Library of Congress, announced a decision setting new royalty rates for Internet- based radio broadcasters. From 2006 through 2010 (the ruling applied retroactively), each time a listener hears a song, Web broadcasters must pay at a rate that begins at 0.08 cents in 2006 and rises to 0.19 cents in 2010. Less popular stations, whether they are operated by a hobbyist or part of a large company, would pay a minimum of $500.

Some online Internet broadcasters have said that the fees are high enough to drive them out of business. Besides raising the fee per song, the ruling established a $500 minimum payment for "channels" that would make it difficult for companies like RealNetworks and Pandora to offer as many different kinds of music as they do now..... read more

Giving streamers a royalty pain

AN OBSCURE FEDERAL panel has sent Internet radio stations into a panic. The Copyright Royalty Board's decision to increase the amount of royalties due to music labels and recording artists is nominally a victory for labels and artists. But the victory could be Pyrrhic if it forces a consolidation and commercialization that robs online radio of its musical diversity.

The latest rate-setting drama is a virtual replay of one six years ago, when the music industry and webcasters went to arbitration over the industry's initial royalty rates. Those rates, which the Librarian of Congress set in 2002, led to apocalyptic predictions about the end of free radio online, prompting Congress to suspend royalties temporarily on behalf of small and noncommercial webcasters. Small commercial stations later won a deal that allowed them to pay a percentage of their revenue in place of a fee for every song heard by each listener. And noncommercial college stations bargained for a low, flat fee.... read more

Will Web Radio Get Turned Off?

Traditional radio may be losing its audience, but Internet radio stations--or more accurately, Web sites that stream music over the Web--are growing in popularity. But their commercial prospects could worsen under new rules that will raise their costs dramatically.

Last week the U.S. Copyright Royalty Board, an obscure arm of the Library of Congress, voted to more than double the fees Web sites that stream music must pay record companies.The higher rates will affect all Internet radio businesses, from mom-and-pop commercial Webcasters to big portal destinations such as Time Warner's AOL and Yahoo!; it will also affect traditional and satellite radio companies that provide online feeds of their broadcasts.... read more

Web radio reels from rate ruling

Last year, AccuRadio.com, a Chicago Internet radio operation, paid 12 percent of its revenues, or about $48,000, in royalties to performers of the songs it played, said founder Kurt Hanson.

But a ruling by the Copyright Royalty Board of the Library of Congress made public Tuesday threatens to increase that royalty more than tenfold, putting AccuRadio and almost every other operator in the rapidly growing Web radio field out of business, Hanson said.

Those affected by the new rates, which change the royalty paid to a song's performers from a percentage of revenue to a per-song, per-listener fee, include not just Web-only outfits mimicking traditional radio stations, but also more specialized digital music services such as Pandora (pandora.com) and the Internet streams of traditional broadcast stations.... read more

Fee ruling may imperil Internet radio

WASHINGTON — Video killed the radio star, as the 1979 hit song goes, and now some fear an obscure group of federal copyright judges may be on the verge of killing Internet radio.

In a ruling made public Tuesday, the Copyright Royalty Board significantly increased the royalties paid to musicians and record labels for streaming digital songs online. The decision also ended a discounted fee for small Internet broadcasters.

Broadcast radio stations that also stream their programs online, such as KCRW in Santa Monica, said they might have to scale back on webcasting, and operators of Internet-only radio stations said the new fees would probably force them to go silent.... read more

The Last Days of Internet Radio?

Kurt Hanson runs a Chicago-based online radio station that streams more than 300 channels of classical, jazz, oldies, and other music genres aimed at adults. The station, AccuRadio, lures more than 1 million visitors a month—not bad for a startup that's only been around since 2002. If a Mar. 5 decision by the Copyright Royalty Board (CRB) takes effect, AccuRadio may not be around much longer.

The decision, due to take effect sometime during the next two months, could raise royalty fees paid by some online radio stations more than tenfold—enough to put many smaller stations out of business, Hanson says. Currently, most small Webcasters have paid royalties calculated as a percentage of revenue. Under the new rule, those outfits will begin paying on a per-song, per-listener basis. "The more intensively an individual service is used and consequently the more the rights being licensed are used, the more the service pays, and in direct proportion to the usage," according to the 115-page ruling.... read more

Royalty-Rate Hike Alarms Web Broadcasters

Internet radio broadcasters face the alarming prospect of paying much higher royalties to song performers, a burden that could silence some online stations.

The Copyright Royalty Board, an obscure federal agency charged by Congress in late 2004 with setting sound-recording royalty rates for online radio stations, has carried out its mandate -- with the result that some broadcasters could be on the hook for millions of dollars more than they had planned.

The rates set by the board, effective retroactively to 2006, start at .08 cents per song, per listener. While that might not sound like much, it rises every year and adds up fast. And that's in addition to the sizeable royalties Internet radio companies pay to the songwriters and composers of the underlying works. "With these rates, there's no Pandora," asserts Tim Westergren, co-founder of Pandora.com, an online radio service with about six million registered users.

The schedule is likely to take up a big part of the agenda at a congressional hearing on the future of radio scheduled for today. RealNetworks Inc., a Web company, is among those testifying. While the hearings aren't expected to affect the new rates, the industry can appeal the decision at the District of Columbia Circuit Court of Appeals.... read more (subscription required)

New royalty rate has webcasters worried

NEW YORK - Internet music broadcasters worry that a new ruling could put many of them out of business by drastically increasing the royalty payments they have to make to record labels and artists.

The new rates, which are retroactive to last year, were decided on Friday by the Copyright Royalty Board, a panel of three copyright judges, and made public Tuesday on the board's Web site.

The ruling could have the greatest impact on startup companies that make their living from broadcasting music online and selling advertising to pay for it. For large radio companies like Clear Channel Communications Inc. and CBS Corp., online broadcasting still makes up a relatively small portion of their overall business.... read more

Record Industry Proposes Huge Streaming Royalty Fees

If a new online radio webcasting royalty rate, proposed last week by the Copyright Royalty Board (CRB) of the US Library of Congress, is ratified and put into effect, BetaNews estimates that online webcasting leader AOL Radio may receive a bill for copyright holders' royalties retroactive to 2006 amounting to $23.7 million, payable to a collective representing the US recording industry. And assuming the service doesn't become more popular, it could find itself paying as much as $56.3 million in copyright royalties in 2010.

This while the world's three major copyright holders' groups - ASCAP, BMI, and SESAC - collectively charge terrestrial broadcast radio stations $972 per year per station, for the rights to broadcast exactly the same music to an equivalent or larger audience.

Last week, after having met with representatives of the recording, broadcast, and webcasting industries, the CRB sided with an industry group comprised of recording industry representatives in recommending that online radio webcasters pay royalty fees to a rights holders' collective based on the individual performances of songs for individual listeners. read more

Royalty Hike Panics Webcasters

Internet radio companies big and small are revving up for a fight with the Copyright Royalty Board that could lead to the halls of Congress and -- some fear -- the end of streaming music stations in the United States.

The panicked preparation follows last Friday's buzz-killing bombshell: As 50 million or so online radio listeners geared up for their weekends, the board released new royalty rates representing a potential tenfold increase webcasters would have to pay out. read more

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