SAVE INTERNET RADIO!

If you haven't heard yet, the federal Copyright Royalty Board recently announced new royalty rules for Internet radio broadcasters. In a move that should surprise no one familiar with the Bush Administration or the United State Government, the CRB chose to adopt the "per play" rate proposal set forth by SoundExchange, the digital music fee collection body created by your friend and mine, the RIAA.

As described by Kurt Hanson in his Radio and Internet Newsletter (RAIN), this has the potential to destroy Internet radio. Even worse, it's retroactive to the beginning of 2006, meaning that not only do Internet radio stations have to pay the higher rates going forward, they need to find a way to dig up enough money to pay them for the past 15 months. Given how little most Internet stations make in the first place, this alone could put many of them out of business.

RAIN has learned the rates that the Board has decided on, effective retroactively through the beginning of 2006. They are as follows:

2006 $.0008 per performance
2007 $.0011 per performance
2008 $.0014 per performance
2009 $.0018 per performance
2010 $.0019 per performance

A "performance" is defined as the streaming of one song to one listener; thus a station that has an average audience of 500 listeners racks up 500 "performances" for each song it plays.

The minimum fee is $500 per channel per year. There is no clear definition of what a 'channel' is for services that make up individualized playlists for listeners.
For noncommercial webcasters, the fee will be $500 per channel, for up to 159,140 ATH (aggregate tuning hours) per month. They would pay the commercial rate for all transmissions above that number.

Applying these new rates to Pandora, one of the bigger players in the field, RAIN estimates that: "If Pandora has to pay the annual $500 minimum for each channel ... its sound-recording royalty bill for 2006 alone would be capped at about $2 billion (based on the service's 300 million registered users, each of whom gets to create up to 100 unique channels)."

Amazing, BROADCAST RADIO IS NOT REQUIRED TO PAY THESE SOUND RECORDING ROYALTIES, AND SATELLITE RADIO PAYS RATES ONLY ABOUT 20% AS HIGH. Thus, as Pandora's CEO, Joe Kennedy, points out, "[i]f these rates are left standing, satellite and broadcast may be all that are left."

I don't know about you, but that doesn't sound particularly appealing to me.

If you want to make your voice heard on this issue, go sign this petition, and head over to Save the Streams to learn more. (And check out their excellent, well-laid-out FAQ.)