Big Brother Wants to Kill Net 'Radio' again.

Doc Searls Weblog

Internet radio is a canary in the coal mine of an insane Net-hostile Regulatorium that stretches from the cableco/telco duopoly to the copyright oligarchs who are strangling what Professor Lessig calls Free Culture. That Regulatorium should be the enemy of every free-market Republican and every free-speech Democrat. It's slowing down the U.S. and its businesses as competitors in the World Wide Marketplace we call the Net.

Will this decision to execute the Internet radio canary motivate us to do what we should have been doing more of for the past ten years? That's up to you and me.

Computer World

The new rates charge $.0008 per song per listener for 2006 (the royalty board's ruling is retroactive to 2006); $.0011 in 2007; $.0014 for 2008; $.0018 for 2009; and $.0019 for 2010. For multichannel operators like Pandora.com, a service that helps users find music on the Web, the fee is a flat $500 per radio channel for a particular number of listening hours per month.

Hanson said that under the previous royalty rate, his radio station paid $48,000. Under this decision, AccuRadio's royalty obligation for 2006 would be $600,000, he said.

"So we're bankrupt," he said.

Hanson said Web radio operators are considering their options, which could include an appeal of the board's ruling.

LAW.COM

Will the March 2 decision of the U.S. Copyright Royalty Board raising royalty rates for Webcasts 30 percent mean the death of Internet radio? U.S. Rep. Edward Markey, D-Mass., thinks so. As CNET News reports, he testified yesterday before the House Subcommittee on Telecommunications and the Internet that the CRB's decision "represents a body blow to many nascent Internet radio broadcasters." That is also the conclusion of the Radio and Internet Newsletter, which did the math and found that the royalties an Internet radio station would pay would easily exceed any revenues the station might bring in.

Trends in the Living Networks

In a shocking decision last Friday, the Copyright Royalty Board announced new Internet radio royalty rates, doing exactly what was suggested by the RIAA’s lobby body, effectively tripling the cost of streaming music, effective retroactively from the beginning of 2006, and increasing every year until 2010. Bill Goldsmith of Radio Paradise, a leading Internet radio station, does the math, working out that he will now have to pay out around 125% of his revenue, meaning he immediately has to consider closing down. Mark Cuban says “goodbye to webcasting.” Om Malik asks “Last.FM, Pandora KO’ed by new royalties?” Mike Masnick talks about “internet radio royalty rates designed to kill webcasts.” Indeed, there some bad craziness in the business logic here. In the first instance, putting music webcasting stations out of business isn’t going to increase revenue. Secondly, recording companies make the majority of their money from hits, and hits happen because people hear them. There is massive investment in promoting music to traditional radio and music TV stations, yet for no good reason the opposite attitude to online music streaming.

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