Tomorrow, some of the most popular and prominent Internet radio stations will go silent to protest the imposition of new fees that many Webcasters claim will drive them out of business.
The protest stems back to a Mar. 2007 decision by the Copyright Royalty Board to impose per-song performance royalties on Web radio, starting at 0.08 cents per song (retroactive to Jan. 1, 2006) and increasing gradually to 0.19 cents per song by 2010. The former rules forced Webcasters to pay a minimum annual fee and 12% of their revenues. (Small Webcasters might be able to abide by these old rules until 2010.)
The protest is being organized by SaveNetRadio.org, which has calculated that the new fees could increase Webcasters' costs by between 300% and 1200%. In a letter to Congress, CEOs of major Webcasters claimed that SoundExchange, the organization responsible for collecting these fees,will collect $1 billion from the three biggest Webcasters--Pandora, RealNetworks, and Yahoo--alone, up from $20 million previously.
So who's SoundExchange? Today, it's an independent non-profit organization devoted to claiming performance royalites on behalf of copyright owners. But it was originally created by--surprise surprise--the RIAA. That's the same organization of copyright holders that's known for sending threatening letters to alleged file-traders demanding a settlement payment (although a recent judge's decision may put an end to that tactic).
Now, perhaps it's too easy to hate the RIAA. After all, I can sympathize with the recording industry, which has seen the digital writing on the wall for years, and is finally suffering the consequences in a big way--CD sales are down 16% this year from last year, and some are predicting that the 2007 holiday season will be the final curtain for CD sales.
I also understand that royalties are necessary to enable composers, performers, and, yes, distributors, to make a living. (This page has a good overview of how these royalties are collected and distributed.)
What I don't understand is why Internet radio should be subject to performance royalties, which are paid to the copyright owner of a particular recording (usually the record company), while over-the-air ("terrestrial") radio pays only royalties to the copyright owner of the song (the composer and publisher). One justification for exempting terrestrial radio is that it offers promotional value, leading to greater sales. Doesn't Internet radio do the same thing? Other arguments center around technical differences--Web radio results in a temporary digital copy of a song being made; Web radio listeners can skip songs they don't like. But these seem like nit-picks to me.
At any rate, bills have been introduced in the U.S. House and Senate to overturn or modify the CSB's ruling, and SaveNetRadio has a Web page that will help you communicate your support to your representatives.
And for those of you who've never been interested in Internet Radio, allow me to recommend Radio Paradise. Programmed by real live humans who like music and do things like segue songs together in intelligent and meaningful ways. You know, like terrestrial radio used to be?