Death Knell Chimes For Internet Radio

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In March, the U.S. Copyright Royalty Board approved a proposal by SoundExchange, working on behalf of the RIAA, which would implement a significant increase in royalty rates for streaming audio providers. Realizing that these rates would put them under, online radio stations banded together in one last desperate appeal to the CRB to reconsider the decision.

Unfortunately for Internet radio providers, and for music lovers around the world, the judges at the CRB denied the appeal headed up by NPR and joined by several online radio stations.

Now, the only music that’s coming from streaming online providers is that of the funeral march.

Olga Kharif at Business Week discusses the implications of the CRB’s ruling:

The stations will have to cough up these royalty payments – 300% to 1,200% higher than the fees they are used to paying — retroactively. Unless Congress gets involved, that will mean the death of many Web radio stations, whose revenues will fall short of these royalty payments.

Previously, streaming audio providers were only responsible for a paying percentage of their gross revenues in royalties to artists and record labels. Now, any station that serves up online music content will have to pay an initial $500 inclusion fee, along with royalties that are calculated on a ‘per song’ basis and are retroactive for all of 2006 as well.

Eric Bangeman
of Ars Technica talks more about the drastic change in royalty payment structure:

The ruling is a huge blow to online broadcasters, and the new royalty structure could knock a large number of them off the ‘Net entirely. Under the previous setup, radio stations would have to pay an annual fee plus 12 percent of their profits to the music industry’s royalty collection organization, SoundExchange. It was a good setup for the webcasters, most of whom are either nonprofits or very small organizations.

In a statement, SoundExchange Executive Director John Simson anticipates “working with the Internet Radio Industry” to ensure mutual success. As Bangeman continues in his article, however, he points out that the organization’s comments seem less than sincere given the consequences of their royalty hikes:

[A]fter today’s ruling—which will take effect on May 15 unless the US Court of Appeals for the District of Columbia Circuit agrees to hear an appeal—there probably won’t be much of an Internet radio industry left for SoundExchange to work with.

An online coalition, SaveNetRadio, has launched a last ditch campaign in an attempt to save Internet radio. 

Death Knell Chimes For Internet Radio
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  • Jack Smythe

    Simple math: A song is 4 minutes long. A streaming radio station plays 350 songs per day.
    At the 2007 rate of $0.0011 per one song to one listener, this translates to $140 per song/listener. No one
    can afford this.

    This is the way the RIAA, and record labels can bury their artists, since a lot of listeners like the choice or
    variety streaming radio provides. Many, many listeners are not into the extremely limited top 40 or hip-hop crap
    that clear channel provides, or the same tired old songs that you hear on country or oldies coupled with the
    over-saturation of commercials.

    If the RIAA greed succeeds in killing streaming internet radio in the US, we’ll just turn to the rest of the world
    to pick up our streams. And let the RIAA start charging the commercial radio stations these rates as well. Or better yet
    the RIAA and RECORD-LABELS have become OBSOLETE. They are old dinosaurs trying to extract as much money for their obsolete
    services as possible. MUSICIANS AND ARTISTS SHOULD UNITE and give their fans a venue to hear other things besides BILLBOARD
    TOP 40. Who the heck wants to hear the same Clear Channel poop on the internet. No I don’t want to listen to “STAR 92″ on
    my computer.

  • the pledge

    this is going around the neighborhood….
    WAKE UP:
    1500 college students have been sued and now internet radio is on it’s last leg

  • http://www.infowars.com Elitest Pig Dog

    Elitest Pig Dog – Look the people are actually enjoying themselves learning, enjoying music, acting free and turning against the slave pen we

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