Ouch. 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).
- 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.
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.