Last month, the Copyright Royalty Board (CRB, left) sent webcasters into panic mode, after deciding that webcasting royalties must be higher: astronomically higher. Ever since a group of technophobes composed the DMCA back in the late '90s, song royalties for webcasts have been treated differently than parallel royalties for over-the-air broadcasts.
Commercial webcasters pay a fee based on how many listeners hear a given song. Commercial broadcasters, in contrast, pay blanket royalty fees for over-the-air performance of songs based on the station's annual revenue. Why the double-standard? Because the internet is scary. And music licensing companies saw an opportunity.
Fortunately, the webcasting fees per song per listener were set at a somewhat reasonable rate until this year, so you didn't hear many complaints from commercial webcasters. Non-commercial webcasters, who by nature have a very different business model than for-profit companies, were allowed to pay a flat webcasting royalty fee (non-commercial broadcasters also pay lower over-the-air royalties).
The 2007 CRB scheme for webcasting royalties is different in a few ways:
1. The per-song per-listener fee for commercial webcasters is much higher, so much higher that for many companies, these royalties are actually higher than annual revenue.
2. Non-commercial webcasters are subject to commercial rates if they have a large audience.
3. These new fees are retroactive to January 2006.
These fee changes will essentially wipe out medium- and small-sized commercial webcasters, as well as larger non-commercial webcasters. Popular public station KCRW has already determined that they would owe more than $350,000 under these new rates.
With this new scheme, internet radio risks becoming a bunch of Emmis and Clear Channel giants, with only a few non-commercial little guys, forced to limit their audience or close shop. Just think of our brave new future where internet radio is even less diverse than what you can find on your FM dial. Blech.
Previously, I was confident that NPR's powerful lawyers would surely convince the CRB that applying commercial webcasting rates to non-commercial webcasters was absurd. Well, the bad news is they tried, and the CRB is standing firm on their new rate scheme.
The only hope left (aside from individual stations negotiating their own terms with record labels) is for an act of Congress to interfere. Thankfully, two congressmen introduced the "Internet Radio Equality Act" (H.R. 2060) to the House yesterday. The SaveNetRadio Coalition is recommending that citizens call up their congressperson, urging them to support this bill. They even provide an easy look-up page to find your rep's contact info, along with a few talking points so you can really get your point across to the intern who takes your call.