New law could save internet radio
A law has been proposed in the US Congress that would overturn a recent ruling on internet radio royalty payments. The bill could save internet radio, according to activists.
Earlier this month the Copyright Royalty Board (CRB), which reports to the Library of Congress, increased the charges which internet radio stations will have to pay in order to broadcast music. Stations claim that the charges in many cases represent more than their total revenues, and that they make it impossible to build a business out of online radio.
The CRB is answerable to Congress, and two members of the House of Representatives have proposed a law which would withdraw the CRB's recent ruling and propose a compromise system of payments.
Internet radio activists say that the system is unfair because it penalises online radio stations unduly. Broadcast radio pays no royalty fees, they say, while satellite radio pays far less than internet radio's new charges.
The new law will charge the same fee to radio stations whether they are provided via satellite, cable or the internet. It will offer stations the chance to choose to pay 7.5% of their revenues or 33 cents per hour per listener.
The bill was introduced by Democrat Jay Inslee and Republican Don Manzullo.
"Since the CRB's decision to dramatically and unfairly increase webcaster royalty rates, millions of internet radio listeners, webcasters and artists have called on Congress to take action," said Jake Ward of lobby group SaveNetRadio. "Today Congress took notice, and we thank Mr. Inslee for leading the charge to save music diversity on the Internet."
Speaking this month to OUT-LAW Radio Joe Kennedy, chief executive of Pandora, one of the internet's largest radio-style services, said that the threat to online radio was severe.
"The judges adopted the proposal to triple the rates for large webcasters, and for small webcasters it's actually closer to a 12 times increase in the rates that they pay," said Kennedy. "It's an extraordinary increase in the rates that will effectively kill internet radio as we know it today."
"Over 90% of internet radio will simply be gone. The net result will be a huge loss of diversity, a huge loss for music artists and a loss of virtually all of the internet radio that exists," said Kennedy.
"You can't put an economic chokehold on this emerging force of democracy," Inslee said, according to CNet News. "There has to be a business model that allows creative webcasters to thrive and the existing rule removes all the oxygen from this space."
Internet radio broadcasters may find a savior in a recent proposition in the US Congress. The recently proposed Internet Radio Equality Act, introduced by representatives Jay Inslee (D-WA) and Donald Manzullo (R-IL), would strive to revert the drastic changes applied to Internet radio royalties by the Copyright Royalty Board (CRB) that will go into effect on May 15, 2007, and retroactive since January 1, 2006. The proposition aligns Internet broadcasting fees to be more inline with those of satellite radio, for a flat fee of 7.5% of the broadcaster's revenue, rather than the CRB rules of .08 (2006) to .19 (2010) cents per song for private broadcasters, or $500 per month for public broadcasters if below a specific number of listening hours.

According to Inslee, the fees that would go into effect on May 15 would be a chokehold on democracy, and claimed in a statement that webmasters need a functioning business model.

A common fear among Internet broadcasters is that they will have to file for bankruptcy once the fees of the CRB will go into effect. ''"Over 90% of internet radio will simply be gone. The net result will be a huge loss of diversity, a huge loss for music artists and a loss of virtually all of the internet radio that exists,"'' claimed Joe Kennedy, CEO of Pandora.

SoundExchange, supportive of the CRB rules and a major collector of artist royalties from radio stations, has claimed the new fees are necessary to pay the artists that deserve it.