Webcasters Decry Internet Radio Royalty Increase

In a move that Internet radio broadcasters (webcasters) argue could be the beginning of the end for Internet radio, the US Copyright Royalty Board (Royalty Board) has rejected an appeal to reconsider increases in royalties paid by webcasters. On March 2, the Recording Industry Association of America (RIAA) had asked for and received an increase in webcasting royalties, to be calculated on a per-song, per-hour basis. Larger webcasters, such as SomaFM and Live365, claim that higher royalty fees will likely put them out of business and argued that the method of calculation was onerous. The Royalty Board granted temporary relief to these webcasters by allowing them to calculate royalties based on average listening hours for the remainder of 2007. Small broadcasters are subject to a different five-year-old tariff based on a percentage of revenue generated. A broad group of public and private broadcasters, including radio stations, Internet startups, National Public Radio and major Web properties, such as Yahoo Inc and Time Warner Inc's AOL, opposed the increase on the grounds that webcasting is still a fledgling industry, with few properties turning a profit. Some webcasters have promised to appeal the new royalties, due to come into effect May 15, to the US Court of Appeals. However, lawyers for the webcasters concede this could take at least a year and the prospect of successfully persuading a court to block the Royalty Board's decision in the meantime is slim. For news articles on this issue, see: http://internetradio.notlong.com [International Herald Tribune]; and http://www.pcmag.com/article2/0,1895,2122005,00.asp [PC Magazine] Summary by: Jason Young