On Monday, the Copyright Royalty Board, or CRB, turned down all rate appeals that it had agreed to review from Internet radio stations, and stood by its original ruling.The new increased rates will affect tens of thousands of listeners. Many Internet stations will be forced out of business, and quickly. They must pay royalties based on the new rates for 2006 by May 15 or face extremely high fines. The Internet stations are now planning to appeal to the Courts and to try and persuade Congress to override the CRB’s decision with new legislation.
And who will be affected by the rate change? The webcasting community is vast, with smaller webcasters like Accuradio, radioio, and Somafm, along with large Internet networks like Pandora, Live 365 and AOL.
On the basis of the CRB decision, Internet radio will pay record high royalties to musicians. To artists, that might sound great, but further investigation underscores the unfairness. None of these rates are based on Internet radio revenue. Many of the smaller webcasters run marginal operations. The creators were motivated by their passion for music, not profit. They are the radio stations that provide the diversity on the Internet. If you want to hear blues, ambient, ragtime, African rhythms, Spanish flamenco or any number of the hundreds of genres of music, Internet radio provides just that level of diversity. Another important reason the rates are unfair is that these stations will pay far more than terrestrial broadcast radio. That’s because terrestrial broadcast radio pays absolutely no sound recording royalties. Why should Internet radio stations carry the burden of the industry and be forced to pay such high rates? It serves no purpose to force these adventurous Internet outposts off the air.
All we can hope for now is a sympathetic Congress.
But it’s a busy time for radio on the Hill right now. The Senators have their hands full, trying to sort out the satellite radio merger at the moment.
The House has convened a special Anti-Trust panel to hear arguments for and against the merger of XM and Sirius. Some may have thought the union of these titanic satellites was a slam-dunk, but it appears, the marriage could still be called off. Speaking against the proposed merger, the head of the National Association of Broadcasters, argued that the merger would create “a government-sanctioned monopoly.” He’s right.
It’s time our government did the right thing. The right thing to do is give internet programmers the tools they need to survive and grow, and make sure that the satellite merger is squashed. Competition is the only possible way to maintain value for the public. Any other argument is merely marketing spin.