Jonathan Potter, executive director of the Digital Media Association states that both small and large Internet radio webcasters alike will be driven out of business.

WOXY.COM’s Bryan Jay Miller says operating costs could more than double with the new performance royalty rates handed down by the CRB on March 2nd. WOXY pulled the plug on itself on September 15th of last year due to financial constraints before being resurrected by lala.com in October.

The annual cost of operating WOXY.com could more than double under new rates that Internet radio stations must pay to play music.

“This absolutely would have killed WOXY as a stand-alone operation without a doubt,” said Bryan Jay Miller, general manager of the Cincinnati-based online radio station. “We’re in a little better position than most Webcasters because we are owned by LaLa. We don’t rely on just advertising sales.”

WOXY.com was acquired in October by LaLa.com, a CD trading Web site created by Silicon Valley entrepreneur Bill Nguyen.

Despite the station’s commerce-based support, Miller is alarmed by the proposed “per-performance” rates issued in March by the federal Copyright Royalty Board.

The rates represent a 30 percent increase in royalties paid to the record labels and artists retroactively to January 2006, and 30 percent again in the following three years, according to the Digital Media Association.

“We do think artists should be compensated for their work,” said Miller, a Dayton native. “But you could go from collecting some royalties now to collecting no royalties, because you just killed off the whole industry.”

Increased royalties and a $500 minimum fee per Web channel could silence small Internet radio stations and drive big companies out of the business, said Jonathan Potter, executive director of DiMA. “Paying royalties of 30 or 50 or 75 percent of revenues is not a viable business for a Yahoo or for a Pandora, which is one of the larger Internet Webcasters,” Potter said.

John Simson, executive director of SoundExchange, the group that collects royalties from online radio and distributes them to labels and performers, said that online advertising revenue is growing dramatically. “I think that the judges’ determination was that these were rates that services could pay, or should pay, in a free market,” he said.

Miller, whose online alternative rock station had ceased broadcasting for financial reasons before being acquired by LaLa, disagreed. “Most Internet radio that I know of, especially little independent Internet radio operators, are barely struggling to stay alive,” Miller said.

[..]

Miller said that it’s in the best interest of the artists, record labels and Internet radio operators for the emerging industry to grow. “Because if it grows, everyone wins,” he said. “If you kill it, nobody wins.”

Read the full article here.

Remedial lesson in math for the CRB:

30% of NOTHING is still NOTHING.