Today is a day of silence for Internet radio. Small broadcasters all the way up to Yahoo are shutting down in protest over the outrageous royalty rates approved by the Copyright Royalty Board. Who’s the CRB? Essentially, they are an arm of Congress, tasked with reviewing and setting royalty rates.
How bad are the rates? Instead of a flat fee, broadcasters will have to pay a per performance, per listener rate with a minimum of $500 per channel per year. Of course, they don’t define a channel in terms of the internet, so no one knows what that clause means. Internet broadcasters had proposed a fee structure that allowed for their continued existence and it was soundly rejected in favor of a proposal from SoundExchange, a fee collection body created by, guess who, the RIAA.
What’s the math on this?
Because a typical Internet radio station plays about 16 songs an hour, that’s a royalty obligation in 2006 of about 1.28 cents per listener-hour.
In 2006, a well-run Internet radio station might have been able to sell two radio spots an hour at a $3 net CPM (cost-per-thousand), which would add up to .6 cents per listener-hour. [source]
Effectively, the CRB has adopted a proposal that makes it cost at least twice as much to run an Internet radio station as what you could conceivably make in ad revenue. Oh, and satellite and terrestrial radio don’t pay this rate. Note that this has nothing to do with RIAA-member bands or acts; this is a fee you have to pay if all you did was broadcast music you created yourself. It’s a hit job by the RIAA, plain and simple.
So, what can you do? Call your representative, write a letter (not an email), urging them to support the Internet Radio Equality Act introduced in both the House and Senate. Internet Radio is not dead yet, but today is a preview of what it will be like come July 15th unless something changes.