I love Internet radio. I’m lucky enough to live near a great radio station, WNCW in Western NC, which plays a wide variety of music outside the mainstream, but many people aren’t so lucky. And, even as eclectic as WNCW is, they don’t play all the kinds of music I like. That’s why I spend more time listening to music over the Internet than I do over the airways. Recently, however, it looked like that was going to come to an end. Now, Internet radio is getting a chance to live.
Internet radio had been endangered when an increase in music royalty fees for Internet radio stations went through in 2007. The Library of Congress’ Copyright Royalty Board, changed the royalty rates for music carried over the Internet from a percentage of revenue to a per-song, per-listener fee. This ruling got everyone from pure play Internet radio stations, to stations like Pandora.com, which enable you to set up your own song lists, to broadcast stations that also stream their programs.
This move was opposed by, what a surprise, the RIAA’s (Recording Industry Association of America) Sound Exchange, the group that collects royalties for performers and record companies. Now, the stations broadcasting over the Internet had always paid royalties. It’s just that their rate was 6 to 12% of their revenue. Broadcast radio, on the other hand, only pays a composer royalty.
The new rates, which was retroactive to 2006, would charge $.0008 per song per listener for 2006 ; $.0011 in 2007; $.0014 for 2008; $.0018 for 2009; and $.0019 for 2010. For multichannel operators like Pandora.com or my own favorite SomaFM (http://somafm.com) the fee was a flat $500 per radio channel for a given number of listening hours per month.
What does all the mean? I’ll do the math for you. A typical Internet station would see its royalties costs increase by 25-times the old rate. No business can afford to see its cost explode like that, even if the economy wasn’t in the dumpster.
Internet radio businesses and users, under the auspices of the The SaveNetRadio Coalition fought the musical industry, but to little avail. At the same time, according to the Coalition, Sound Exchange and Internet radio’s closest competitors, satellite and cable radio, that set their royalty rates at less than half of what Webcasters pay.”
It looked like the Internet was going to so silent. Now, it looks like—cross your fingers—that a bill will pass Congress that will potentially keep the music playing.In a report from the National Journal, it’s reported that the Webcaster Settlement Bill had passed the House by an unanimous vote. It now goes to the Senate for approval.
The bill is no panacea, but it will give the Internet radio broadcasters the right to negotiate with the music companies directly to set a royalty rate that they can live with. I really, really hope that the bill passes and the studios and Internet broadcasters can come to a fair and equitable arrangement. I would hate to give up my Internet music.