Thousands of Internet radio stations flooded the web in the 90s, but now that number is bound to shrink due to royalty fees that exceed most webcaster’s annual earnings.
Since the Digital Millennium Copyright Act was passed in Oct. 1998, webcasters are required to pay performance royalties to record labels and artists, unlike traditional radio broadcasters who are required to pay the composers.
When record labels and webcasters could not agree on a royalty fee, the U.S. Copyright Office created the Copyright Arbitration Royalty Panel, made up of three judges who were to determine an appropriate fee.
After months of hearings the panel decided to set the rate at: .14 cents for internet-only webcasters, .07 cents for radio broadcasters (those who simulcast their signal over the Internet) and .02 cents for non-commercial webcasters, per song, per listener, according to Paul Maloney, Radio and Internet Newsletter editor.
However, the Librarian of Congress amended the rate in June and sliced it in half for Internet-only webcasters.
For example, an hour of programming, broadcast to an audience of 1,000, would equal to $10.50. That includes: the number of songs, about 15, multiplied by the royalty fee, and the number of listeners.
Because of the expense, hundreds of small-time webcasters, those who make less than $6 million in annual revenues, have already fled the Internet before the Oct. 20 deadline, which requires radio stations to pay the record labels and artists.
Local Stations Not Exempt
Here in Memphis, Radio stations like Hot 107.1, The Pig 107.5 and other stations owned by Flinn Broadcasting no longer stream their programs.
“We were using Yahoo and because of the new royalty fee rates, they felt it wouldn’t be profitable to continue streaming for us,” said Thad Caperton, Flinn Broadcasting Internet developer. “They said they would have charged us so much money we wouldn’t be able to pay. But they couldn’t give us a number.”
Prior to the DMCA, Flinn Broadcasting and many other Internet and terrestrial radio stations used a bartering system. Yahoo provided Flinn with the streaming technology in exchange for advertising.
Caperton said they are now searching for alternative routes for streaming services.
“We’ve got lots of email and phone calls begging to get the live feed back and we’re working on it,” Caperton said. “It’s top priority for me. It boils down to which company has the most amount of features for the least amount of money.”
Many supporters of the DMCA, like the Recording Industry Association of America, are not convinced that Internet radio is a profitable business model, said Paul Maloney, Radio and Internet Newsletter editor.
Because Internet radio is a relatively new media it hasn’t been given enough time to prove itself, said Maloney.
“There’s no one getting rich from it yet,” Maloney said. “If the RIAA shuts down small time webcasters then artists won’t receive any money at all from that avenue. So the idea of this benefiting the artist is ridiculous.”
Attempts of The Daily Helmsman to contact the RIAA were unsuccessful.
Support for Webcasters
U.S. Representatives Jay Inslee (D-WA), George Nethercutt (R-WA), and Rick Boucher (D-VA) authored a bill to exempt small-time webcasters from paying heavy royalty fees.
Inslee will address the Internet Radio Fairness Act Saturday at the NAB Radio Show annual Congressional Breakfast.
The bill would temporarily allow webcasters not to pay the debt owed, while a new Copyright Arbitration Royalty Panel reconsiders the rates.
Supporters of the net are encouraged to write to the necessary city and state officials, if they want to save Internet radio, said Will Robedee, creator of Save Our Streams website at www.ruf.rice.edu/~willr/cb/sos/, in an e-mail interview.
“Call, write, e-mail, fax and meet with members of congress to pass legislation that will provide an equitable solution for all parties involved,” said Robedee.
