Help Save Internet Radio

Yesterday I got an email from Tim Westergren of Pandora, an Internet radio station. Tim was asking his listeners (of which I'm one) to voice their concerns about the perils facing Internet radio. The trouble stems from a recent decision by the Copyright Royalty Board (part of the U.S. Copyright Office) to almost triple the licensing fees for music broadcast on Internet radio sites. Tim suggests that Internet radio has been singled out unfairly for this increase, and that the exorbitant hike would force most Internet radio stations out of business. Tim is right.

Not to panic, though, I checked in with my favorite local radio station that both streams over the Internet and broadcasts traditionally, WFUV, and a few other organizations to get my arms around the issues. Here's a primer and an opinion.

What is Internet radio? Internet radio is usually a digital broadcast that is continuously streamed over the Internet. It can be a small independent voice like some of the thousands found on Radio Locator or Radio Tower. It can be a big station like National Public Radio, which has an Internet radio component. Or it can be a service like Yahoo! LAUNCHcast or AOL's Music. Some stations are free, some require a subscription. Some use standard media players like Windows Media Player to broadcast; others have proprietary players.

What's the fuss about? The Copyright Royalty Board, or "CRB," ruled that royalties for broadcasting music on Internet radio stations are about to go up, and that webcasters must pay the new rates. These payments are to be retroactive from 2006. (Currently Internet radio operators pay a fee based on a percentage of their revenue, not on how many songs they broadcast.)

How much is the increase? By anyone's math, it's a pretty hefty increase. Here's the bottom line as reported by Save the Streams, a web site hoping to mobilize listeners: Webcasters would pay "per performance." This means that any time ONE listener hears ONE song (or any portion of a song), that's a performance. If ONE listener hears 10 songs, that's 10 performances. The rate is $0.0008 (8 hundredths of a cent) per song.

A station plays about 16 songs every hour they say. This translates to just over a penny an hour. Let's say you have 10,000 listeners. That's over a million dollars a year in fees to operate a radio station. Do I hear any takers?

Worse still, the northwards of a million dollars figure only estimates what the stations would owe in 2006; in 2007 there's a nearly 40 percent increase, with more increases scheduled year after year until 2010 when it tops off at $0.019 a song (more than doubling the initial 2006 rates).

What about plain old terrestrial radio stations? The royalties apply only to the digital transmissions of music. Traditional radio stations are exempt from paying additional royalties. According to Wikipedia's entry on the subject, traditional radio stations pay performance rights to organizations, but are seen as promoting the artists so they don't have to pay rights to the performers.

What can be done? Some folks are suggesting that Internet radio only play music to which the owner has waived the copyright, but most feel this would put digital broadcasters in an untenable situation with a morass of red tape and litigation. It certainly isn't feasible for those broadcasting digitally and terrestrially simultaneously. Mostly, the Internet radio folks feel like their industry is just growing and could not possibly support these kinds of royalty payments. They're probably right.

Who are the most vocal objectors? NPR, Yahoo!, MTV, RealNetworks, AOL Music, and other smaller players, including Pandora and Live365. You can visit DiMA, an organization representing many of the webcasters.

What can you do?

• Save the Streams is urging listeners who love their Internet radio to sign a petition.
• Or, you can write your Congressman.
• Urge your favorite Internet radio station to make people aware of the issue the way mine has.
• Read Ars Technica's report on NPR and CRB for a powerful summary of the fight.
• And why not log off your Internet radio stream when you're not listening? Part of the reason we're in this pickle is because of the ridiculous way fees have been determined based on listening.

Copyright law has been accused of hurting the consumer in many ways, and there have been outcries to create new, fair systems that promote new forms of entertainment. No one but the wealthiest corporation could ever pay these sorts of fees.

Internet radio stations bring us fresh new music and expose us to new artists we'd be unlikely to hear elsewhere. For our traditional stations, they offer us the ability to listen to our favorites even when we're not in terrestrial range. In light of the potential XM/Sirius merger, you'd think that the world needs an affordable competitor. That would be Internet radio.

I'm signing the petition, but I'm curious to hear from you.