Silence Before Webcast ‘Death’

Thousands of Internet radio webcasters are expected to join a "Day of Silence" protest June 26th, going dark in response to royalty increases proposed by the Copyright Royalty Board and set to take effect July 15th.

On that date, 17 months’ worth of royalty payments – from webcasters ranging from AOL and Yahoo to small community-based public broadcasters and Internet hobbyists who stream music – will come due, unless a motion for a stay of the ruling filed by National Public Radio and other parties June 18th is imposed.

The "Day of Silence" is a repeat of a similar action in 2002, when Internet broadcasters fell silent in protest of a royalty rate increase ruling from the Copyright Arbitration Royalty Board. The rate was subsequently cut by the Librarian of Congress and passage of the Small Webcaster Settlement Act, which expired in 1995.

The CRB ruling set to go into effect July 15th, barring the stay or timely passage of intervening legislation in Congress, threatens to increase the music royalty rate for webcasters by as much as 1,000 percent. Webcasted music content of public radio and other noncommercial broadcasters would be subject to the same rates as those proposed for their commercial brethren.

Webcasters argue that royalties for other media, such as satellite radio, are typically 4 to 5 percent of revenues for musical compositions. In the case of Internet radio, the CRB rate could equate to roughly 50 percent of revenues for large webcasters like AOL, Yahoo and many terrestrial station streamers.

A "ceiling" proposed for smaller webcasters is based on a flat rate charged according to the number of streams and listeners a webcaster reports. Even then, the flat rate can be as high as 15 percent of gross revenue, regardless of non-commercial status.

Smaller operations, with non-programmed formats and hosts, also are fearful of onerous reporting requirements required by the CRB ruling.

Musicians themselves have fallen on both sides of the issue. For independent artists, Internet radio exposure outweighs royalty concerns; for established artists – including the Recording Artists Coalition – the royalty hike is long overdue.

In the meantime, the RAC and organizations including the National Association of Broadcasters, NPR, and the Radio And Internet Newsletter are urging their supporters to lobby Congressional representatives for or against the Internet Radio Equality Act.

The legislation, which has been introduced in the House and Senate, seeks to "modernize" copyright rules and place "sound recordings" used by public broadcasters under the same royalty structure as "musical works."