The Death of Web Radio?
Posted by: Olga Kharif on April 16, 2007
On April 16, right in the midst of the NAB2007 broadcasters conference, the Copyright Royalty Board upheld its earlier decision to impose higher royalty rates on Web radio stations. The stations will have to cough up these royalty payments – 300% to 1,200% higher than the fees they are used to paying — retroactively. Unless Congress gets involved, that will mean the death of many Web radio stations, whose revenues will fall short of these royalty payments.
But larger companies not currently thought of as broadcasters will suffer as well: Today, the CRB clarified that its decision applies not only to Web-based radio stations, but also to any company broadcasting music over cellular networks. That means that its decision can be applied very broadly. In effect, the CRB has imposed high royalties, payable to a company formed by music labels, on everyone from Mercora, which allows users to download its radio-playing software onto smartphones for listening to Webcasts via cellular, to music services powered by wireless carriers themselves. Until now, these carriers have negotiated for royalty rates with individual content owners directly. These business arrangements have not been disclosed, but there is a chance that the telcos’ payments will now increase.
Now that the CRB decision affects not just the little guys – Webcasters – but also some of the telecom world’s giants, that makes me more sure than ever that Congress will have to get involved before the decision goes into effect May 15. Remember, Congress got involved in figuring out what fair and reasonable rates were the last time the royalty rates were renegotiated. Now, there are enough small and large Webcasters out there – wireless and Web-based — to claim legislators’ attention. Already, today, a number of broadcasters kicked off SaveNetRadio.org grassroots campaign. I wouldn’t be surprised if telcos join in this effort.