New RIAA Royalty fees for Internet Radio

The longstanding debate between webcasters and the RIAA really hasn't been a hot topic since 2002-2003, when the RIAA pushed hard for some significant royalties that threatened to put smaller operations out of business. Smaller outfits were able to negotiate a revenue percentage deal that kept them operational, but those deals have now expired, and the RIAA has been hard at work trying to get their original fee structure imposed.

As mentioned over the weekend, a controversial decision by the United States Copyright Royalty Board on Friday reheated the feud. The board rejected a myriad of proposals and arguments by webcasters, essentially rubber stamping a proposal by the RIAA's SoundExchange royalty organization. The RIAA's proposal imposes per play charges on webcasters retroactively to 2006, while increasing yearly. It breaks down as follows:

2006: $0.0008 per stream per user
2007: $.0011
2008: $.0014
2009: $.0018
2010: $.0019

So what's the problem? According to the Radio and Internet Newsletter (RAIN), a typical Internet radio station plays about 16 songs an hour, meaning they now have a retroactive 2006 royalty obligation of roughly 1.28 cents per listener-hour. The group says total revenues per listener-hour for that typical webcaster would only be in the 1.0 to 1.2 cents per listener-hour range. That's before composer royalties.

Many Internet stations simply can no longer afford to exist, since royalty obligations will exceed total revenues -- leaving many stations wondering what happens next. RAIN cites the popular Pandora project as one example -- their owed royalties could easily exceed all of their recently acquired rounds of venture capital and all their sales revenues to date. Radio Paradise's Bill Goldsmith runs a small broadcast operation and voices his opinion over at his blog.

News source: Broadband Reports

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