Internet Radio's Final Countdown

A few weeks ago, Matt wrote about the imminent death of internet radio. For those who aren’t familiar, internet radio allows you to tune into thousands of internet radio stations around the world. You can listen through your browser, or you can listen through the “Radio” heading in iTunes. Internet radio is an excellent way to discover new music for purchasing later, find out what’s happening around the world, and to catch up with events in your hometown at your alma mater via their radio’s webcast.

Unfortunately, due to very aggressive lobbying from RIAA (Recording Industry Association of America), internet radio is in immediate danger. Rates for webcasters have been drastically increased by a recent ruling and are due to go into effect on July 15 (Worse yet, the rate increase is retroactive to Jan 1, 2006). Before the ruling, internet radio royalties were already double what satellite radio pays. The 2005 royalty rate was 7/100 of a penny per song streamed; the 2010 rate will be 19/100 of a penny per song streamed. The option to calculate royalties as a percentage of revenue has been lost, so small webcasters’ royalties will grow exponentially. Webcasters royalty rates will effectively increase between 300 and 1200 percent over the next 5 years.

While music artists certainly benefit from royalties, according to the Chicago Tribune, “this kind of royalty rate hike will mean bankruptcy for almost every webcaster. A significant number of small Internet radio stations already operate at a loss; they carry on because of their commitment to the music they play.”

This ruling by the Copyright Royalty Board goes into effect on July 15 – four days from the writing of this article. It appears that thousands of internet broadcasters will then go off the air, probably forever.

I started thinking about this today, becuase we listen to internet radio in our office here at Small Dog. It’s the perfect way for us to enjoy diverse music. Also, the webcasters we listen to actually pay royalties to the musicians.

The only advantage of internet radio going away is that I won’t have to hear Europe, Winger, Milli Vanilli, etc at work, ever again. But I also won’t be as apt to discover new bands and musicians. There are several albums I’ve purchased from the iTunes store after hearing the band on web radio – Kaki King, X-Clan, and Easy Star All-Stars come to mind.

As Matt wrote a few weeks ago, visit www.savenetradio.org for an easy way to contact your representatives and tell them to join Reps. Jay Inslee and Don Manzullo as sponsors of H.R. 2060, the Internet Radio Equality Act.