BREAKING NEWS:  “Internet Radio Breathes Sigh of Relief.  Congress and SoundExchange hear outcry of webcasters and listeners; Temporarily Agree not to force webcaster shutdown.”  See Net Radio Wins Partial Reprieve as Royalties Loom for more information.

Here is an excerpt from the The SaveNetRadio Coalition website:

Congress and SoundExchange have heard loud and clear the amazing outpouring of support for Internet radio from webcasters, listeners and the thousands of artists they support. A commitment has been made to negotiate reasonable royalties, recognizing the industry’s long-term value and its still-developing revenue potential.

During negotiations SoundExchange committed temporarily not to enforce the new royalty rates so webcasters can stay online as new rates are agreed upon.

This development is due in great part to the millions of people who have let their Congressional representatives know about their support of Internet radio. Over 125 representatives have cosponsored the bill to this point.

We urge listeners to continue calling their Senators and Representative to ask them to co-sponsor the Internet Radio Equality Act. Thank you.

Here is an e-mail I recently received from Tim Westergren, the founder of Pandora.  It gives a good overview of the issues facing small Internet radio webcasters.

hey Jeff -

There currently isn’t something on our website (probably a good idea), but in a nutshell, the problem is as follows:  We operate under a federal statute for internet radio - it’s called the Digital Millenium Copyright Act (DMCA).  Among other things, language in the law determines the rate we pay to stream songs - it’s called the ‘performance fee.’  In early March, this fee was dramatically increased by a panel from the Copyright office in Washington DC.  It was pushed so high (in Pandora’s case it almost tripled our fee from 0.076 cents/song to 0.19 cents/song), that internet radio cannot survive unless it is brought down.

Not only is this fee completely unaffordable, it is always wildly out of whack with what other forms of radio pay.  Satellite pays one tenth of this new rate, and AM/FM pays Nothing!  Yet we all provide the same basic service.

The problem dates back to 2002, when the RIAA lobbied successfully for a change in the DMCA language governing rate-setting.  It has left us in this terrible position.  It’s a nonsensical double-standard that was inserted before the internet radio companies had any kind of presence in DC, or national audience of listeners.

We are ready and willing to pay a performance fee (and have done so since our first song was streamed), but it has to be reasonable.  Higher rates are useless for artists because it would be a higher percentage of zero.

The new rates simply fly in the face of the economic realities of streaming radio.

Fixing the royalty rate standard for Internet radio is where we would like to focus the attention of Congress.

Internet radio has become the lone champion of musical diversity.  It’s the ONLY medium that plays a deep and broad range of artists and music.
It’s the ONLY medium that plays the numerous genres and subgenres of music that are deemed too small for a mass-market terrestrial radio station.  In pushing for this ruling, the RIAA and SoundExchange really violated the interests of the vast majority of the constituency they ostensibly represent
- the tens of thousands of independent artists for whom online radio is the only hope of exposure.

We play daily the music of over 40,000 artists - the vast majority of whom get no airplay anywhere else. The majority of Pandora’s employees are musicians and the company is fully supportive of artists.

This is probably more detail than you wanted, but I hope it helps.

Thanks for the support.

Cheers.  Tim (Founder)

More Information:

• The SaveNetRadio Coalition
• Internet Radio Equality Act (Introduced in House) - H. R. 2060

This entry was posted on Monday, July 30th, 2007 at 10:28 am and is filed under DMCA, Internet Radio, Internet Radio Equality Act, Pandora, RIAA, SaveNetRadio, SoundExchange. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.