On March 2, 2007 the Copyright Royalty Board (CRB), which oversees sound recording royalties paid by Internet radio services, increased Internet radio’s royalty burden between 300 and 1200 percent and thereby jeopardized the industry’s future.
At the request of the Recording Industry Association of America, the CRB ignored the fact that Internet radio royalties were already double what satellite radio pays, and multiplied the royalties even further. The 2005 royalty rate was 7/100 of a penny per song streamed; the 2010 rate will be 19/100 of a penny per song streamed. And for small webcasters that were able to calculate royalties as a percentage of revenue in 2005 – that option was quashed by the CRB, so small webcasters’ royalties will grow exponentially!
Before this ruling was handed down, the vast majority of webcasters were barely making ends meet as Internet radio advertising revenue is just beginning to develop. Without a doubt most Internet radio services will go bankrupt and cease webcasting if this royalty rate is not reversed by the Congress, and webcasters’ demise will mean a great loss of creative and diverse radio. Surviving webcasters will need sweetheart licenses that major record labels will be only too happy to offer, so long as the webcaster permits the major label to control the programming and playlist. Is that the Internet radio you care to hear?
As you know, the wonderful diversity of Internet radio is enjoyed by tens of millions of Americans and provides promotional and royalty opportunities to independent labels and artists that are not available to them on broadcast radio. What you may not know is that in just the last year Internet radio listening jumped dramatically, from 45 million listeners per month to 72 million listeners each month. Internet radio is already popular and it is already benefiting thousands of artists who are finding new fans online every day.
Action must be taken to stop this faulty ruling from destroying the future of Internet radio that so many millions of listeners depend on each day. Instead of relying on lawyers filing appeals in the CRB and the courts, the SaveNetRadio Coalition has been formed to represent every webcaster, every Net Radio listener, and every artist who enjoys and benefits from this medium. Please join our fight for the preservation of Internet radio.