The last Tuesday in June was a “Day Of Silence” for the Internet radio biz with many stations cutting back on their music streams if not shutting down altogether for 24 hours.

It was the fledgling industry’s latest protest against new royalty rates that many claim will force small Web radio operators to look for another line of work.

In March the Copyright Royalty Board issued new rates – .08 of a cent per song, per listener, retroactive to 2006 and rising to .19 of a cent by 2010 – a hike many Netcasters claim represents a 300 percent increase in fees.

Of course, each side is spinning its version of the royalty issue, with SoundExchange, the non-profit group tasked with collecting fees from Netcasters, saying Web radio doesn’t want to pay for the music it plays.

But Netcasters aren’t the only ones decrying the new rates. Both the Senate and the House have almost identical bills that, if passed and signed into law, would establish rates similar to what satellite radio already pays – about 7.5 percent of revenue. Called the “Internet Radio Equality Act,” the bills have already accrued more than 100 co-sponsors.

Since Congress got into the act, SoundExchange has kind of backed off its original stance, by granting a reduction to small Webcasters with the royalty clearing house defining “small” as those stations that earn less than $1.25 million. Webcasters weren’t too thrilled with SoundExchange’s proposed olive branch, pointing out that the difference in royalty fees for a station that makes just a dollar more than that $1.25 million would effectively put that station in the poor house.

SoundExchange has also offered to cap the payment for additional channels.

One of the more controversial aspects of the rate hike is the $500 per channel charge Web stations have been ordered to pay in advance regardless of how much music is played over those channels. On June 29th SoundExchange offered to cap the charge at $2,500 per service.

Now we’re in what may be the home stretch of the Internet radio royalty controversy, with Netcasters scheduled to make their first payments under the new system on July 15th. That is, if Congress doesn’t take any action, or if SoundExchange doesn’t have a change of heart.

But the momentum raised by Internet radio’s Day Of Silence carried into the Day After The Day Of Silence as Net radio listeners continued to contact their representatives. Apparently a lot of people really, really love their Web radio.

“You folks continue to amaze me,” blogged Pandora.com founder Tim Westergren. “You brought down the server system for the country’s most robust provider of online petitions (they said they’ve NEVER seen anything like it before). Virtually every congressional office was jammed with phone calls all day. Make no mistake – each call makes a HUGE difference.”