Will this be the Death of Internet Radio?

Posted on April 11, 2007 by C Johnson
Culture, Industry, Tech

Remember the days when record labels were screaming bloody murder about being pushed out of business by burgeoning new-media companies? Well, the tables have turned and now internet radio as a whole is being threatened by the record companies.

Last month, the Copyright Royalty Board issued a ruling, stating that web broadcasters must pay 0.19 cents each time a listener hears a song (more than double the current rate of 0.08 cents) and additionally to a $500 minimum payment for each web channel.

According to the performance rights organization SoundExchange, it’s perfectly fair. “Artists have earned the right to be fairly compensated for the performance of their work by webcasters who benefit— financially or otherwise— from their talent,” they said in an issued statement on the matter. “Without these royalty payments, the artists would, in many cases, be unable to continue contributing to the music world.”

Fair, is it?

Let’s say, for example, that an internet radio site like the hugely popular Pandora has 1,000 listeners on a particular song, it then has to pay the increased royalty 1,000 times for that one song. You do the math: hundreds of songs played in the day? A hundred thousand or so played in a year? Multiplied by the hundreds of thousands or even millions of people that listen to that one station?

Many web radio sites offer hundreds, if not thousands of channels, and the Copyright Board’s ruling would make the existence of such sites an impossibility. For some smaller internet radio companies, these new royalty measures would actually exceed their annual revenue. And anyway, at a time when CD sales are in a state of decline, why would record labels want to push out of business an operation that is a significant source of revenue for them?

Internet radio stations are, for the most part, independent. They play an impressively diverse selection of music that far outshines the play lists found on broadcast and satellite radio. Sites like Pandora have been tremendously successful because of the fact that they expose listeners to artists they would have, otherwise, probably never have been exposed to. Internet users have embraced the incredible diversity offered to them, something that traditional broadcast and even satellite radio simply can’t match. The record industry appears to like the ‘concept’ of web radio, however SoundExchange says that the attitude that the only thing small web casters owe artists is the exposure they get from having their work streamed over the internet needs to change.

Hmmm. The fact is that traditional radio broadcasters have long been exempted from paying royalties to record labels whose songs they play on the air.

Not exactly what I’d call fair.

The last time the internet radio industry was threatened in such a fashion was about five years ago, and congress stepped in with a compromise. This ruling has caused enough uproar and fury amongst the throngs of dedicated internet radio listeners that, hopefully, the same thing will happen this time around.

To see what you can to help save internet radio

Articles on the subject are all over the internet, and you can read more at the New York Times, Business Week to name a few.

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