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Broadband & Mobile Featured Article
July 16, 2007
Web Radio Gets Reprieve
By Raju Shanbhag TMCnet Contributing Editor
For quite some time now, the standoff between SoundExchange and Internet radio providers was threatening to close many small radio service providers on the Internet. Many smaller Internet radio stations had declared that they would be forced to shut shop, if the new laws about the royalty payment were implemented. But according to a report in National Post, it seems that the smaller Internet radio service providers have obtained a temporary breather.
The tussle began when the U.S. Congress and SoundExchange demanded a steep hike in the royalties paid to the music owners when their music was paid on the Internet radio stations. Although the entire online radio industry protested this unanimously, it was the small operators like webcasters AccuRadio and independent broadcasters such as WFMU, who feared that the new rates will make it impossible for them to stream free content. They protested and made requests. But until last Thursday, the U.S. Congress and SoundExchange did seem to give in. But now, there are signs that they are considering of softening their stand a little.
Were the proposed hikes in loyalty rates too steep? According to AccuRadio CEO Kurt Hanson, if they had to pay those fees, they would be bankrupted the day they had to write the first check! He feels this is a strange move by SoundExchange as the internet radio has been the best thing that happened to the music industry in the last decade. It has given airspace to many new and aspiring artists who would otherwise have not got the opportunity to showcase their talent.
So what is in this new royalty scheme that has the internet radio broadcasters worried so much? To start with, until now, internet radio broadcasters paid royalty to the music content owners based on their own revenues. That will not be the case anymore! The rates now will be a minimum fee of US $500 per year, per channel with escalating fees for each song played. As this decision is retroactive, in 2006, the applicable fee would be US$ 0.0008 per performance. If that seems pretty inexpensive, you haven’t heard the whole story. Here, the term “performance” is defined as streaming one song to one listener. This simply means that a webcaster with ten thousand listeners would pay 10,000 times the going rate for every streamed song! Each year, the fee structure will increase which will ultimately double the existing rate by 2009.
Do you still think it’s inexpensive?
Even SoundExchange doesn’t think so anymore. On Friday, the company confirmed that it has new terms that could mean lower fees for some webcasters. Under the new proposal, to be implemented by the CRB [Copyright Royalty Board], the broadcaters will have to pay $500 monthly per-channel and a minimum fee at $50,000 per year. Also, webcasters are required to provide more detailed data they play on their stations and improve their efforts in stopping unauthorized copying from streamrippers -- software that can turn ephemeral net radio streams into permanent recordings.
Apart from the minimum caps proposal, webcasters were also given assurances the new negotiations will provide them a breathing room.
Raju Shanbhag is a contributing editor for TMCnet. To see more of his articles, please visit his columnist page.
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