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Web Radio Royalty Rates Appeal Gets No Dice On Changes


By: Spacelab Research Staff
Web radio broadcasters were dealt another setback today when the Copyright Royalty Board decided to uphold its previous decision to raise the royalty rates broadcasters pay for music.

This was the appeal after the March 2nd decision that sent shockwaves through the Web radio world. It was previously decided to hike the royalty rates each year from 2006 (retroactively) through 2010. Today that decision was appealed to the Copyright Royalty Board to attempt to get the rates lowered.

The bottom line is that the royalty rate is set to double during that timeframe, which will leave some established stations like Soma.FM and Radio Paradise to either change their direction or possibly go out of business.

The Digital Media Association Executive Director Jonathan Potter called the decision a nail in the coffin for Web radio, saying “The CRB’s denial of a rehearing today is all but a nail in the coffin for Internet radio, and May 15 now looms as the day the music will die. Internet radio provides exposure and royalties for thousands of independent artists and labels that are not represented by broadcast radio – and last year, 72 million people tuned in every month. We call on Congress to step in to save Internet radio for the artists, the labels, the webcasters and – most importantly – the tens of millions of listeners.”

The next move is to go to Congress, to see what action can be taken to moderate the new charges. Playing hardball, the CRB decided that the rates would go into effect during that period, so that if Congress doesn't move to change the situation, the new royalty rates will have been in effect the whole time.

I don't think anybody is saying that royalties shouldn't make their way to artists, but questions are being raised around how heavy handed the increase is. What good is a rate hike if you squeeze out the stations that are paying you royalties?

The Small Webcaster Community Initiative (SWCI) has just announced a movement to advocate a change in the industry. They want to create more power on the other side of the Soundexchange / RIAA nexxus to make the royalty structure one that allows for diversity, not the concentration of the power and means to broadcast on the Internet into a few hands. Remember FM radio? Over the top costs created a barrier to entry for anyone without major financial backing (READ: big corporations in the music industry). Web radio seems to be attempting to enter that phase of pricing people out of competition.

"In addition they should not try to silence an entire industry. People need choices, and currently terrestrial radio does not offer that choice. Internet radio does," said Soshahi Wilson of Surround Mobile, a SWCI member.

As always, stay tuned for more as this story continues to develop.


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