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Dead Webcasters pay no royalties

Internet radio stations are about to be silenced by huge fees

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A battle is raging in Washington, DC. No, I’m not talking about the war on terror; I’m talking about the war on Internet radio.

The gatekeepers of the music business like record labels, music publishers, broadcasting conglomerates and all their cronies are mad as hell, and they aren’t going to take it anymore.

You dared to decide for yourself which bands you like. You dared to make a podcast of said songs and shared it with the world. You started your own Webstream so you could play DJ (the way DJ was meant to be played — by the seat of your taste buds not the latest playlist sent from on high). You played it loud, and you played it all night long. Well, now they are gonna make you pay for it out the nose.

Is it really so different from the days when people tape recorded their favorite songs off the radio and made mix tapes for their friends?

Yes, because millions of people want to listen to it.

As a musician, I know that exposure is critical, especially for independent artists, and airplay is the commercial that sells the record. Shutting down the small Internet-based stations could mean the end of niche marketing and the end of programming that isn’t controlled by something that seems very much like a monopoly. In short, the indies will have fewer opportunities to be heard. 

The debate centers around two opposing forces, SoundExchange (\">www.sound, which defends a huge royalty rate hike announced earlier this year by the Copyright Royalty Board, and DiMA (Digital Media Association — which opposes them.

If SoundExchange has its way, in addition to a flat fee of $500 per channel per year (which never goes to artists but instead covers administrative costs of SoundExchange), Webcasters will pay for each song streamed to each user. The per-song rate starts at $.0008 and increases every year between now and 2010. That means if the station plays 16 songs per hour, they would have to pay about 1.28 cents per listener per hour. That’s roughly $11,212.00 per year for just one daily listener. Imagine if you had a dozen?

“We stopped streaming in 2000 because we couldn’t afford the OLD fees,” states John Mangan, station manager for Tacoma-based I-91FM-KVTI.

Web streamers are shaking in their Doc Martens because the enormous bill they are being threatened with would put them out of business and into debt in many cases. What is additionally daunting is that these rates will be retroactive as of January 2006, so unless Uncle Sam intervenes or a compromise is found, the debt already exists and the interest is accruing. July 15 was the due date by which Webstreamers were supposed to voluntarily pay up, but SoundExchange said no law suits will be brought against anyone just yet because the debate continues.

SoundExchange offered an annual fee cap of $50,000 if the broadcaster reports every song that is played and implements expensive technology to limit the ability of listeners to copy the broadcasts, a practice known as streamripping.

If the Internet Radio Equality Act is enacted, it would set Webcaster royalties at 7.5 percent of revenue and allow them to continue operating pretty much as they have been. For more information, visit Equality_Act

“We stream our air signal from our Web site at, and from our MySpace page,” says Jon McDaniel, station manager of KNHC C89 FM in Seattle.  “The new RIAA (Recording Industry Association of America) rates have not gone into effect yet, so we are continuing until the new deadline is set. Once they are instituted, we will have to cut the number of streams we offer. The new rates will be too much for us to continue at our current rate.”

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