The article below was posted on March 3, 2007. For the latest updates, please visit the SaveNetRadio Coalition.

If the RIAA and SoundExchange get their way, independent webcasting / Internet radio will soon cease to exist.

Why? Earlier today, the Copyright Royalty Board, the group overseeing statutory licensing for US-based internet radio stations, announced the new royalty rates for streaming radio performance rights. The board rejected the arguments made by webcasters and instead chose to adopt the proposal put forth by industry-backed SoundExchange, a royalty fee collection agency created by the RIAA.

The new rates are based on “performances” of songs. A “performance” is defined as one song being streamed to a single listener. In other words, a station with 1000 listeners is charged for 1000 performances of each song it broadcasts.

Further, the new rates, just announced today, are retroactive to 2006, and increase rapidly each year. The rates per performance are as follows:

$0.0008 in 2006
$0.0011 in 2007
$0.0014 in 2008
$0.0018 in 2009

At first glance, those seem like fairly small numbers: eight ten-thousandths of a dollar, eleven ten-thousandths of a dollar, and so on. When you actually do the math, however, you see the truth revealed. The average radio station plays 16 songs in an hour. Under this system, that would be equivalent to 16 performances.

0.0011 x 16 = 0.0176

Still a fairly small number - under two cents. But now assume this station has 1000 listeners. That means that, in one hour, the station would be billed for 16,000 performances.

0.0011 x 16000 = 17.60

That’s $17.60 an hour. Now we’re starting to see how expensive this truly is. Multiply that by 24 hours a day.

17.60 * 24 = 422.40

$422.40 a day. But there’s 365 days in a year.

422.40 * 365 = 154176

$154,176 for the year in performance royalties alone for a station with 1000 listeners. And that’s just for 2007: it gets even worse. In 2008, the cost rises to $193,536 for the year. In 2009, it goes up to $248,832. Even for a much smaller station, the royalties owed are huge.

Of course, these figures don’t include the other set of rights that Internet radio stations are required to purchase, which must be licensed separately from an agency like SESAC or ASCAP, or the cost of bandwidth and server capacity. When you add all these costs together, you can easily see why nobody, save perhaps a megacorporation like AOL or Yahoo, could afford to pay these rates.

But wait - what’s this? The new rates apply retroactively to the beginning of 2006. In other words, someone who has been happily (and legally) running their small internet radio station for the past few years is suddenly going to be hit with possibly hundreds of thousands of dollars in additional royalties owed. These bills could easily cause a small, independent broadcaster (and his family) to go bankrupt.

Meanwhile, over-the-air radio stations are still not required to pay one dime to the record industry for public performance rights from SoundExchange or an equivalent group. They only need to pay the far more reasonable fees of BMI, ASCAP, and/or SESAC. This reads like another tactic by the recording industry and corporate powers to exert control over anyone involved with music and an attempt to destroy independent broadcasting.

Whether you don’t want to see your favorite internet radio station go off the air, whether you just hate the RIAA, whatever the reason: please, help us get this senseless, greedy policy designed to do nothing but line the pockets of the record industry overturned. Write to, or better yet call, your representative, your senators, and the Copyright Royalty Board. Tell your friends and family, write on your blog, digg this - help get the word out and help to Save Internet Radio!

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