I
n March of this year, the Copyright Royalty
Board—a group comprised of three U.S.
copyright royalty judges—established new
royalty rates for the broadcast of music over
the Internet. Its proposal, which was final-
ized after reviewing several thousand pages
of testimony, would require commercial
webcasters to pay a retroactive rate of.
cents per song, per listener, which would
increase annually to .19 cents a song by- While it’s conceivable that large web-
casts such as Yahoo’s LAUNCHcast and
AOL Music could survive the price hike, it
puts the fate of independent broadcasters
in jeopardy. Popular indie site Pandora.com,
for example, would effectively be shut out
of business if forced to pay the new rates,
which are triple what it currently pays.
Since the CRB’s ruling, webcasters large
and small have united in the SaveNetRadio
campaign to reverse the board’s decision.
Their primary negotiations have been with
SoundExchange, a nonprofit cor-
poration that collects royalties and
then distributes them to artists,
record companies, and copyright
holders. In a press release issued by
SoundExchange, John Simpson, the
company’s director, stated, “While
we want Internet radio to succeed, it
is only fair that artists be compensat-
ed for the value of their work, which
forms the basis of their business.”
But under the CRB ruling, U.S.-
based webcasters would be the only
music broadcasters required to pay
a per-song rate. Other music outlets,
such as satellite radio, pay fees that
are calculated as a percentage of
their revenue, while terrestrial sta-
tions pay no performance royalties at
all (although online streams of their
broadcasts would be affected).
At press time, discussions
between both parties have pro-gressed, but no compromise satisfying all
sides has been reached. SoundExchange has
granted a stay on the new rates, which were
to go into effect on July 16. According to Tim
Westergren, founder of Pandora.com, “We
are currently in a phase of ‘supervised nego-
tiations,’ following the direct intervention of
a number of congressional allies.” Pandora,
along with other webcasters, has urged its
listeners to pressure their congressional rep-
resentatives to address the issue, resulting
in the proposed Internet Radio Equality Act.
More than 130 members of congress have
sponsored the bill, which would return the
industry to a percentage-of-revenue-based
model. “The ideal compromise is a rate
that allows webcasting to grow, while fairly
compensating artists. This rate should also
reflect some level of parity with other forms of
radio,” says Westergren.
At the end of the day, there’s no guaran-
tee that negotiations will yield an agreement
that won’t put some webcasters out of busi-
ness to meet the monetary demands of music
labels. Fans of Internet radio should contact
their congressional representatives and ask
them to take notice of the situation. Making
your voice heard will go a long way toward
ensuring that Internet radio survives.quick start The beginning of The magazine, where arTicles are small
Net Radio
on the
Brink
08 MAXIMUMPC october 2007
New royalty rates threaten
to shut down many Internet
radio websites
Features unique to online radio, such as customizable stations and music recom-
mendations, will not be sustainable under new royalty rates.The SaveNetRadio coalition is working with con-
gressmen like Jay Inslee of Washington to pass
the Internet Radio Equality Act.