News & Reviews

BASS: Internet radio could play on with Senators Wyden, Brownback bill

Days after the Copyright Royalty Board (CRB) pushed back the due date for newly inflated royalty payments to kick in for Internet radio broadcasters, two U.S. Senators --  Ron Wyden (D-OR) and Sam Brownback (R-KS) -- proposed legislation to keep Internet radio alive by vacating the CRB decision that could increase Internet radio sound recording royalties by 300 percent to 1,200 percent.

"I am alarmed by the recent Copyright Royalty Board decision and the effect it will have on Internet radio -- especially small Webcasters with limited revenue streams. I am hopeful that with this bipartisan legislation Internet radio will continue to flourish," said Brownback, a member of the Senate Judiciary Committee, in a press release.

The CRB’s new rates, originally slated to go into effect today (May 15), were pushed back to July 15. The CRB initiative would effectively shut down hundreds of Websites that broadcast electronic music like House, Trance and Drum & Bass, most of which are popular but unprofitable. Digitally Imported recently announced that it would shut down its public (free) streams as soon as the new rates go into effect, unless the royalty rates are fixed.

According to an Arbitron and Edison Media Research, 52 million people listened to Internet radio at least once a month in 2006. Bridge Ratings and Research predicts that number will double within three years and reach nearly 200 million by 2020.

July 15, when collection begins on the new royalty fees, literally will be the day the music died. Most Internet radio Webcasters will be driven out of business because of a massive retroactive royalty rate that is above total revenues for most in the business. For large Webcasters, the royalty increase could be between 40 percent and 70 percent of revenues. For small Webcasters the royalty increase could reach up to 1,200 percent of revenues.

Currently, terrestrial radio stations only pay royalties to songwriters. Internet radio and satellite radio pay royalties to both songwriters and record companies/recording artists. However satellite radio only pays royalties of 7.5 percent of their revenue.

The Internet Radio Equality Act of 2007 corrects the enormous disparity created by the CRB by putting Internet radio on par with satellite radio. Additionally, the legislation would create special royalty rules for the Webcasting arms of non-commercial broadcasters like National Public Radio and college radio to ensure they are not left out of reaching new listeners on the Internet.

"Our bill is about standing up for folks ranging from a small Webcaster in a basement in Corvallis to an innovative startup in Beaverton to a new band trying to be heard in Portland to a huge music fan in Coos Bay," Wyden said. "Keeping Internet radio alive is part of a broader issue that is important to me -- keeping the e-commerce engine running by preventing discrimination against it."

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