Internet Radio Gets Royalty Rate Smack Down

CRB hikes internet radio royalty ratesOuch.  The Copyright Royalty Board (CRB) announced its decision decision to adopt the "per play per customer" royalty rate proposal made by SoundExchange (the RIAA-created digital music fee collection service).  As a result, webcasters will have to pay, retroactively:

2006   $.0008 per performance per listener
2007   $.0011 per performance per listener
2008   $.0014 per performance per listener
2009   $.0018 per performance per listener
2010   $.0019 per performance per listener

Add to that a $500 flat fee minimum per station.  In the past, webcasters paid 6-12% of revenue, based on audience reach.  The new rates are pretty harsh, as demonstrated in RAIN's analysis (Radio and Internet Newsletter).

Who Loses:

  • US-based internet radio.  Radio-only sites like Pandora and Live365 would have to shut down.  Bigger companies like AOL Music will have crazy-big bill to pay, rather suddenly.
  • Internet radio listeners.  There will be far less places to go to listen to music online.  (I love Pandora, myself.)
  • Record Labels.  Both large and small; that's a lot less exposure they'll be getting.
  • Artists.  Less channels of exposure equals a "long tail" that's been cut short.

Who Wins:  (I'm trying to see a positive spin, here...)

  • Creative Commons-licensed music repositories and Podsafe music sites.  Internet radio broadcasters will be looking for sources of free music to add to rotations.
  • Artists offering CC-licensed and "podsafe" music. Same reason as above.
  • Non-US Webcasters.  Companies like Last.fm will be able to capitalize on the sudden disappearance of major competitors.
  • Alternative Radio Options.  Satellite radio, terrestial radio, CD players...

Internet radio webcasters are expected to appeal...  Good luck, guys.

(Thanks, Taylor!)

UPDATE:  Peter at Create Digital Music conducted a great interview with Pandora founder, Tim Westergren, about the proposed royalty rate changes and their affect on Pandora, online music, and independent artists.

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