Thanks to a new ruling from The Copyright Board at the Library of Congress, which was made public on March 6, a new tenfold increase in royalties must now be paid for streaming songs on the internet. And the payments are the same, whether the web site is commercial or non-commercial and is retroactive to 2006 as well.
A filing was made March 19 to make the Library of Congress review the ruling, but if unchanged, it will likely be the end of internet radio for both small and large web sites. In one article via the L.A. City Beat, the new costs are beyond astronomical:
"Up until March 6, webcasters figured their royalty payments as an affordable percentage of total revenues. In the case of KCRW, that was a negligible number for [general manager Ruth] Seymour, since the entire NPR network had negotiated a flat fee and it was paid by the Corporation for Public Broadcasting. Maybe not anymore. Under the new system, which requires that Internet broadcasters pay per performance – meaning each time one person listens to one song – her new bill for 2006 went from essentially zero to about $350,000. And it’s going up. For each of the next four years, the rate goes up at least 30 percent every year."
An additional report was made on the change and the challenge to it via WKRN recently as well.
A company backing the plan, SoundExchange, claims that revenues for internet radio exploded to a level of $500 million dollars last year. Paul Maloney of RAIN - Radio and Internet Newsletter - says that claim is just false and is seeking support to battle the change:
"Now, what you hear the SoundExchange people saying is, ‘Oh, studies show that the Internet radio industry made $500 million last year in advertising.’ And I’m here to guarantee you that that’s absolutely not true. It’s not even close to being true,” says Maloney. He also points out there’s no hidden money anywhere, as stations they have to submit their financials to SoundExchange."
I wonder if the merger-masters for the combining of XM and Sirius Satellite radio are endorsing this plan?
Certainly the RIAA, which has been forcing colleges to hand over student email and internet accounts so they can threaten lawsuits to collect a few hundred or perhaps thousand of dollars for trading digital sound files, likes the new law.
The claim is that royalty fees alone from internet radio would hit nearly $3 billion in 2008, more than four times the royalties that would be paid by non-web radio.
And despite claims that all the "royalties" will go to artists are smokescreens to the real issue - performers get pennies to the dollars that record company owners receive.
The fight for the existing and potential audiences is fierce, and this ruling will only insure that fewer and fewer web-casters are allowed to participate.