Given the recent critical events in Internet radio, we're in the process of completely rejiggering the agenda for our annual RAIN Las Vegas Summit, which will be held all day on Monday, April 16th at the Renaissance Hotel in Las Vegas. More details are coming, but in the meantime, scheduling and location information is here. Please plan on joining us if you can!

Internet radio fans from all over the country (and the world) are expressing their shock, disappointment, frustration, and anger over the possibility of losing streaming music to crushing royalty obligations.

Webcasters have steered listeners toward a number of sites (such as here and here) to add their signatures and comments to an online petition, demanding Congressional intervention.

Just casually parsing through "Signatures" section on iPetition (here), we were floored by the number and variety of comments, and by how passionate some listeners are.

Petitioners were given optional questions to answer, including "Do you feel that the existence of Internet radio helps or hurts the music industry?" Here's a small sample from the last few days:

The editorial boards of two major market newspapers have examined the Internet radio royalty situation and decided that the Copyright Royalty Board's determination is unfair and harmful to webcasters and artists alike. Excerpts from editorials by the L.A. Times and the San Jose Mercury News are below. It will be interesting to see if other major metropolitan newspapers follow suit.

From an editorial in the L.A. Times: "An obscure federal panel has sent Internet radio stations into a panic. The Copyright Royalty Board's decision to increase the amount of royalties due to music labels and recording artists is nominally a victory for labels and artists. But the victory could be Pyrrhic if it forces a consolidation and commercialization that robs online radio of its musical diversity.

"The latest rate-setting drama is a virtual replay of one six years ago... Small commercial stations later won a deal that allowed them to pay a percentage of their revenue in place of a fee for every song heard by each listener. And noncommercial college stations bargained for a low, flat fee.

"Those rates expired at the end of 2005, and once again the various sides found themselves pleading their cases to a federal panel instead of making deals with each other. This time, the Copyright Royalty Board provided discounts only for noncommercial stations with, on average, fewer than 218 simultaneous listeners.

"There is some rationale for having a single rate for broadcasters... a song's value to copyright holders doesn't change according to who plays it. In reality, however, rates vary widely in the radio market. Satellite broadcasters pay royalties based on a percentage of their revenue; local radio stations pay no royalties at all to labels or artists for their over-the-air broadcasts.

"If the purpose of the royalty system is to allow artists (and labels) to benefit from their creativity — and it is — then they would be foolish simply to use the system to push royalty rates as high as they can go. A better strategy would be to derive the maximum possible benefit from online broadcasting, in terms of royalties and exposure. Given the tightening playlists of over-the-air stations, webcasters are among the few reliable outlets for lesser-known and new artists. The Pandora.com online radio service, for instance, says its listeners hear music by more than 30,000 artists each week...

"If the music industry simply charges small and noncommercial webcasters the maximum rate allowed, it could put them out of business. Then they wouldn't be paying any royalties at all — and it'd be the industry's turn to panic."

This is from an editorial in the L.A. Times, online here.




From a San Jose Mercury News editorial: "An obscure federal panel is about to kill the Internet radio star.

"Handing a huge gift to the music labels, the Copyright Royalty Board ruled this month that streaming-music Web sites must pay quickly escalating royalties to labels and artists, backdated to January 2006.

"The fees are so high they would wipe out many Internet radio stations and severely curtail even the largest operations like RealNetworks and AOL Radio.

"The board should reconsider its unfair decision -- or at least stay its ruling until Webcasters have a chance to appeal or negotiate a settlement with the music industry. If a fair agreement cannot be achieved that way, Congress must step in to protect the nascent Internet radio industry...

"Conventional radio stations, which receive significant advertising revenue and free use of the public airwaves, don't have to pay royalties to the labels and artists (although they do pay composers, just as the Internet stations do).

"The reasoning is that traditional radio stations provide free promotion to recording artists by playing their music. How is that different from promoting a song on an Internet station?

"A flat per-listen royalty rate is a huge burden on smaller Webcasters. For example, AccuRadio, a Chicago-based cluster of Internet radio channels, estimates that its annual payments would rise from about $50,000 to about $600,000. That's more than AccuRadio's revenue...

"XM and Sirius are trying to mitigate antitrust concerns by arguing that healthy competition from Internet radio stations will still give listeners lots of choices. Before regulators consider approving the satellite deal, they need to make sure Webcasters can thrive.

"If the recording labels are smart, they will avoid a legislative battle and negotiate a fairer royalty system on their own."

Read the San Jose Mercury News' entire editorial online here.

Here's more feedback on the Internet radio royalty crisis...

"Some go for the quick money and lose in the long run..."

I was going to start up my own radio station some time ago but decided to hold off
until a decision was reached in this matter. Thank God I waited. It's obvious that
big business with its lobbyists & power brokers have won again. Time will show that
if indeed these rates are implemented very few will be broadcasting & thus paying
royalities. Then they can review any study they choose & see that royalities are way
down or maybe almost nonexistant.

It dumbfounds me that when given a choice, some will go for the quick money and lose in the long run as opposed to negotiating a plan that benefits both parties equally. Greed has blinded those in power. It'll come back to haunt them. Too bad the little guy has to pay the price of that greed as well.

"Webcasting is an extension of the (music) industry..."

No where in all the discussions and meetings does the RIAA, or for that matter most
entertainment companies, ever look at the fact that webcasting is not a threat but
an extension of the industry. No where have they examined the fact that the
possiblities of making money are very limited. They seem to think that millions of
dollars are being lost in unpaid royalties...when in fact if there is a broadcaster
on the internet who is making one million dollars webcasting nobody knows who that
individual is.

We are in the webcasting field because we feel that yes it is the future and we want to grow with the technology until such a day arises that indeed one can make a living off of the process.

The Internet has brought back creativity and outlets for exposure...outlets at a price the little guy can afford.

"The Internet is a great tool for marketing..."

The reality is like so much of what happens with the RIAA is based on seriously
outdated models of the music industry. The information age has had its share of issues with copyright holders -- not unlike the days when they thought betamax was
going to destroy the video industry, but that turned out to not be true and the same
goes here.

The Internet is the greatest tool for marketing to a broad range of users around the globe, and record labels themselves should be fighting to keep Internet radio alive since it is the only outlet for true undiscovered and diverse ranges and styles of music and entertainment. Terrestrial radio certainly isn't going to support underground or other genres that don't fit the format of the 10 "hits" of the moment.

The sheer lunacy of these decisions by the Copyright Control Board shows how much
they don't understand the current state of the music industry. If Internet radio goes away so will one of the greatest platforms of discovering new music as well as having access to a vast selection of great programming.

Listen up labels: traditional radio may be playing 3-7% of your super artists, but Internet is supporting the other 95%.

"Royalties paid to the PROs will vanish too..."

One side-effect of this rate hike is that if webcasters stop because of the high SoundExchange revenues, then the royalties paid to the PROs (ASCAP, BMI, SESAC) will vanish too. It would seem to me that for independent artists, simply allowing Internet radio stations to play their original music free of royalties is an obvious path for them to take.

"Internet radio has been a revelation..."

I can't believe the RIAA can be so short sighted. Internet radio has been a
revelation to me. I've discovered artists on AccuRadio that I would otherwise have never heard of, much less heard their music, and I've bought many CD's from Amazon because of it.

I can't remember the last time I set foot in a record store. I believe everyone, consumers, music fans and artists will suffer if this insane proposal goes through.