Internet radio gets possible death blow after a strong start

[Bob Russell]

Internet radio may be a thing of the past after May 15,when steep new fees will begin to be imposed upon Internet radio stations. Kurt Hanson, CEO of AccuRadio.com, has indicated that the sharply increased royalty fees would raise their royalty payments from about $48,000 to $600,000 - 150% of their total revenues. In addition, the fees increase annually through 2010, and are even imposed retroactively for 2006. If the decision stands, Hanson said that it is "possibly fatal for Internet radio."

One would think that even artists and copyright holders would not want fees so high that there are no stations left to pay them. However, I suspect that it has more to do with the ongoing battle for greater control of content. The end game is to completely control when and how and where content is used, and to license it indefinitely at the highest possible prices. Without a big fight from the general public, special interests will rule the day.

And it's not just about standard Internet radio streams. There are other new services like Pandora.com which provide interesting customized listening experiences that are being applauded by more and more listeners. Without free Internet radio, we are left to the mercy of paid online radio services by subscription, and with less competition it's pretty clear what will happen to those prices.

So has everyone already given up? Not yet. "A campaign called SaveNetRadio.org has now been set up to put pressure on Congress to resolve the problem and create an environment where Internet radio, and the millions of artists it features, can continue to grow for generations to come.'" And there have been no shortages of industries saying they will die if a certain piece of legislation is enacted. Somehow, entrepreneurs can be amazingly innovative and creative when it comes to survival instincts. We can only hope that Internet radio finds a way to live on.

From BBC News.

[Bob Russell]

An interesting question about enforcement was raised atCopyFight. "Interestingly, this is a US-based decision. Web radio elsewhere in the world can continue to thrive. It's unclear to me whether those non-US stations would be required to block me if I tried to tune in from a US-located IP address."

[CCDMan]

Just another attempt by dying old line media to stay alive.

Some of this flailing about just gets so ridiculous. Another example is the XM-Sirius merger. On the one hand, the terrestrial stations claim that it would be a monopoly because Sat radio companies only compete with each other. Of course, if that was the case, terrestrial stations should not even care what happens to the merger. Since they clearly do care, however, it can't be the case and therefore the cannot be a monopoly.

Dialog above reminds me of that great scene in "Princess Bride" . <g>

[Moonraker]

This is crazy thinking if it's all about retaining control.

Existing Internet radio stations could play Indie music only.
Listeners tend to purchase something they've heard and liked.
If people don't hear any 'AA' music they won't buy any.

These media moguls seem intent on screwing themselves.

[RWood]

Most of the music I have purchased in the recent past came from artists I first heard on Internet radio.

The local AM/FM stations here seem to have playlists of less than 250 songs that repeat over and over and over and over. I liked most of them the first thousand times or so.

XM is a little better as they seem to change the songs with the changing seasons.

As it stands now, based on the information in the article, all we will be left with is Internet broadcasts of traditional AM/FM stations. Wake me up for lunch.

[VillageReader]

Well, and I suspect petitioning congress to stick up for the little guy will go over like a lead balloon. Without money attached (or their face in a camera) they don't seem to give a rat's behind. Bet on the biggies to win this one unless the indie route is taken (which, as Moonraker suggested, could lead to large scale foot injuries).

[Alexander Turcic]

Wasn't there already a similar discussion a few years back? I remember reading about the rise of royalty costs and the imminent end of Internet radio. Obviously it didn't happen - on the contrary, it seems like the number of radio stations online has multiplied by several orders of magnitude.

[Azayzel]

Lol, I think think that while this is a heinous act that impacts not just the I-radio group, but everyone in general, ultimately it will simply lead to pirate/underground Internet radio stations that move around so they won't get caught (kind like an underground rave). Secondly, I think that if I was in the I-radio biz, I'd simply host my station out of the U.S. (or any other country that tries to support the levy/extortion of these fees on my company). It would still be accessible to people everywhere, even if they try blocking my address at their borders, that's what proxies are for.

The whole, you pay-to-play gig for radio is just never going to stand. We've all grown up listening to free radio and then they turn around and try to tell us we need to pay for this; I'm not buying it. Ultimately, as mentioned in another post, this will damage record sales, as people won't buy something they haven't heard before and if they have to pay for radio (which not many will), then they won't be hearing much new music on the radio.

[drc54]

I've been contemplating to subscribe to sky.fm. They have a good selection of smooth and up-tempo jazz. As it is, the free access is good enough since, but I reckon it's not a sustainable business model. They need a good subcription base to be able to survive. The $5 per month is reasonable I guess for commercial free and "higher fidelity" data stream options. They did put up the banner about possible shutting down due to this increase in royalties payments.

But my indicision was more on whether the $5 is money well spent considering that I probably tune-in once or twice a week. I still enjoy music the old fashion way, which is visit HMV store, check out their selection of CD's, ripping them and use my PocketTunes or CorePlayer on the go. iTunes is still not available for us guys in Singapore .

So subcribe and hope the radio.net folks have enough money to stay alive, or continue the free ride and pray they'll find a way to slug this one out to stay in business. Tough choice.

[UncleDuke]

all you find on internet radio is stuff you like to hear. that explains why the big guys want it to go away

[Steven Lyle Jordan]

As a regular listener to I-radio, I'd recommend at least putting your name to a petition fighting against the fee hike. www.radioio.com has information about a petition called "Save the Streams," that I have already added my name to. And yes, this did come up previously, though the hike was cancelled (I don't remember why).

As a jazz buff, I value any music system that brings me jaz, and I-radio and sat radio are the two best sources of jazz I know.

[Leaping Gnome]

Originally Posted by Alexander Turcic

Wasn't there already a similar discussion a few years back? I remember reading about the rise of royalty costs and the imminent end of Internet radio. Obviously it didn't happen - on the contrary, it seems like the number of radio stations online has multiplied by several orders of magnitude.

The rate hike was announced months ago and was immediately challenged. The decision was reached on the challenge to uphold the original rate terms, which is why you are hearing about it again now. For example soma.fm, a big internet radio station that plays lots of indie artists, paid $22,000 in royalties last year. Under the new regulation they would have to pay $600,000 this year. What kind of business can survive a 2,700% increase in operating cost?

Originally Posted by Moonraker

This is crazy thinking if it's all about retaining control.

Existing Internet radio stations could play Indie music only.
Listeners tend to purchase something they've heard and liked.
If people don't hear any 'AA' music they won't buy any.

These media moguls seem intent on screwing themselves.

Nope, that is not correct. The way the ruling is internet radio stations would have to pay royalties to the SoundExchange, the royalty collection company, for ALL music they play, at the same rate. Then the indie artists have to petition/register with SoundExchange for their money. Same way it works today just the rates will be much higher. The only way around it is if the indie releases public domain music, which really limits their revenue potential and control in all media aspects, or if the internet radio station reaches another agreement with that specific indie artist. In other words internet radio stations can't just saw "screw the RIAA I'll only play indie music!". Too bad, you still have to pay the same.

This doesn't even go into the fact that today many indie artists are being denied royalties by SoundExchange even though the internet radio companies are paying royalties to the SoundExchange per the current regulation for playing these artists' music.

The other thing with the new rate regulations you don't hear much about is the new accounting is much more onerous. In the past the internet radio station would just pay a portion of their revenues as royalty/licensing fees. Now they have to pay specific rates per listener per time listened. So they essentially have to track exactly how many people are listening to exactly what every second and pay a rate based on that. This is why NPR has come out strong against the regulation because even though they don't play much music, like 1 minute clips, they'd have to track all this stuff and it wouldn't be worth it any more to do internet broadcasts.

It's basically regulations designed to kill internet radio. RIAA spokesmen have even said they want to clean up the wild west of internet radio and consolidate to a handful of big stable companies (read: ClearChannel), supposedly so they can get more leverage and control the content like they do on regular radio. If regular radio or TV had these kind of regulations placed on them when they started out, we'd still be heading to movie theaters to watch the month old news.

[grimo1re]

This is also the death of music discovery services such as Pandora. I love Pandora, it's already turned me to so much music I wouldn't have found on my own.... blegh I hate all this copyright-angst.

[Steven Lyle Jordan]

I think in the long run, this move will simply move most of these internet radio stations out of the US (and similar countries). While the RIAA may want to clean up "internet radio," they are clearly still thinking of it as if it is radio. They won't be able to "clean up" netcasts coming from outside of the US, and they won't be able to block them, either.

End result: No one in the US will be making money off of internet music... that money will all be going overseas. Let the RIAA tell us how that's going to help the industry.

This move will ultimately strengthen the international music industry, but it won't do the US any favors.

[Bob Russell]

Looks like there's a 2 month stay of execution....
http://copyfight.corante.com/archive..._execution.php