What is this all about?

On March 2, 2007 the US Copyright Office stunned the Internet radio industry by releasing a ruling on performance royalty fees that are based exclusively on the number of people tuned into an Internet radio station, rather than on a portion of the station’s revenue. They discarded all evidence presented by webcasters about the potentially crippling effect on the industry of such a rate structure, and rubber-stamped the rates requested by the RIAA (Recording Industry Association of America).

Under this royalty structure, an Internet radio station with an average listenership of 1000 people would owe $134,000 in royalties during 2007 - plus $98,000 in back payments for 2006. In 2008 they would owe $171,000, and $220,000 in 2009.

There is no way for a station with 1000 listeners to make that kind of money. That’s over $11 per listener per month in 2007. No Internet radio station currently operating comes even close to that kind of income. Also keep in mind that 1000 listeners is not a large number. Popular stations like Radio Paradise, SOMA, Digitally Imported, radioio, etc have many times that many listeners.

In other words, if they are allowed to stand these rates are a death sentence for independent Internet radio stations. The only stations that would survive would be those who can afford to operate at that kind of loss, such as AOL (who would owe over $20,000,000 in 2006, far in excess of their income from radio).

Yikes! What can I do?

Independent webcasters are currently working together to come up with a strategy to save their stations and the industry they love. That may involve asking people to contact their members of Congress or other authorities, but it’s a bit early in the game for a coherent strategy to have gelled.

The best thing that concerned listeners can do at this point is to get the word out about what’s happening. If you see a post on here or elsewhere that resonates with you, Digg it. Partcipate in the ongoing discussions about this issue on Digg, Slashdot, radio station websites, and elsewhere.

If you are a member of the press, you may be uniquely qualified to help save the stations we all love. If you feel the same sense of outrage that the radio station operators and their listeners do, then please feel free to contact any of the posters here to get more background on what’s happening.

UPDATE: See this blog post for some concrete suggestions on what you can do.


Where else can I go for more information?

Webcasting journalist Kurt Hanson has been covering the trials and tribulations of Internet radio for almost a decade. His site - RAIN Radio And Internet Newsletter - will be a valuable resource in the coming days and weeks.

Web station Radio Paradise has a passionate community of listeners who are exchanging ideas, outrage, and schemes about this issue in their Listener Forum. Please note the unusual ordering of posts in the RP forum (newest posts are listed first, the opposite of most sites). You can change the post order display to read the discussion chronologically.

As more trustworthy and/or interesting sources of information on this issue become available, we’ll list them here.

So this applies to Internet stations only? Not FM?

Each piece of music has two copyrights attached to it. One is a copyright on the composition, which is owned by the songwriter or music publisher. The second is called the “performance copyright” and is owned by the recording artist or (much more likely) by the artist’s record company.

All radio stations - FM, Internet, satellite, etc - pay royalties to songwriters and/or music publishers through organizations like ASCAP and BMI. The amounts are more or less equal no matter how the song is broadcast.

Terrestrial broadcast stations (AM & FM) in the US pay no royalties to the owners of the performance copyright. Broadcasters have successfully argued for decades that the promotional value of airplay (i.e. the sales generated by radio airplay) more than adequately compensate the copyright holder.

However, in 1995 the lobbying arm of the record industry successfully convinced the US Congress that digital broadcasts were equivalent to providing a “perfect digital copy” of each song played to the listener, and therefore were another matter entirely, and that digital airplay of their copyrighted material would actually reduce, rather than spur, the sales of recorded music, since a large percentage of digital listeners would naturally save that “perfect digital copy” for their own use.

Therefore digital broadcasters (Internet, satellite, etc) should be liable for the payment of performance royalties, at a rate to be determined by the US Copyright Office.

But I listen to Internet radio the same way I listen to FM? What’s the deal?

The laws that mandate the payment of these royalties by digital - but not analog - broadcasters were written in 1995 and 1998, when Internet radio had barely begun and satellite radio was just a vision. The laws are based solely on the fears that the music industry had about the impact of digital broadcasting, and have no basis in reality.

Perhaps it is time for a re-evaluation of those laws by the US Congress.