US court ruling threatens return to dark ages of radio

Stan Beer
Friday, 13 July 2007 17:27

Your IT - Home IT

What many may describe as a ludicrous decision by a US federal court of appeal has threatened the immediate future of Internet radio, with many smaller net broadcasters saying they will not be able to afford new fees imposed by the US Government's Copyright Royalty Board. The new fee structure has resulted from intense lobbying from SoundExchange, a group representing artists and record companies.

US Internet radio stations had banded together to mount a court challenge to retrospective royalty rate increases, which would almost triple royalties paid on music played on Internet broadcast channels by 2010. What's more many smaller broadcasters will be hurt by the rate hike to the the tune of thousands of dollars because when they come into effect on July 15 they will be backdated to Jan 1 2006.

Internet broadcasters are particularly upset with Copyright Royalty Board ruling because they believe it discriminates against Internet radio compared to traditional wireless broadcasters, who don't pay copyright fees on music played.

Under the current ruling, Internet broadcasters will pay an annual fee of US$500 per channel plus a fee per song played per listener. The current per song fee of US$0.0008 per listener will rise to US$0.0019 by 2010.

Internet broadcasting advocates are up in arms over the ruling for a number of reasons. One is that they feel the fact that the Internet has the most accurate metrics of any medium for measuring consumer participation has led to the imposition of a discriminatory royalty policy against the newest and fastest growing broadcasting medium.

However, perhaps the most ironic aspect of the Copyright Royalty Board ruling is the difference between the treatment accorded traditional broadcasters and Internet broadcasters. Record companies lobby radio broadcasters to get their artists' music played - it's their chief product marketing tool. Yet Internet radio, which has a potentially wider reach than wireless broadcasters, has to pay for the privilege of marketing music for artists and their broadcasters.

Unless legislation is introduced in Congress to change the discriminatory copyright royalty structure, Internet radio in the US could well be priced out of existence almost overnight. Having exhausted legal avenues, Internet broadcasters intend to continue to take their fight to Congress to have the laws changed.