Drowning The Saplings

Internet radio broadcasters face an impending hike in fees? Seriously?

Yeah, seriously. Apparently an “obscure arm of the Library of Congress” voted last week to more than double the cost to Internet broadcasters (the industry ranges from public and commercial entities first established on FM and AM radio to innovative operations like Pandora to the struggling satellite radio companies) for pumping audio streams out to the broadband-enabled masses.

What originally cost a mere US$0.0008 per streamed track will now cost a whopping $0.0019. We hope that looks like quite a hike, 'cause it is.

So why did the US Copyright Royalty Board give this the go ahead? That’s anyone’s guess. (Care to expound a theory of your own? Give it a whirl in the comments.)

Everyone in Internet radio is against the move. Everyone. Time Warner (owns AOL), Yahoo!, RadioParadise.com – even advertising agencies, who are just starting to see a pick up in business. The listener numbers are big enough that advertisers are now paying notice.

Which is kind of funny, because apparently the Executive Director of SoundExchange (a former subsidiary of the RIAA), John Simson, says the doubling of fees is a “fair” and “balanced” move (hmm, where did we hear those two words used in the same sentence before?), one that is necessary to meet the “growing influx of advertising money into the market.”

A company known as Bridge Ratings, which does… ratings, states that there are about 68 million people listening to online radio from Internet-only establishments or simulcast streams. In about three years, the company expects that number to be triple its current figure.

And growth is good news for any business. For years (like… a decade) Internet radio was pretty much a subset of a subset. It was going nowhere fast, and a lot of the “stations” you’d happen upon through various channels (Winamp, etc.) didn’t even pay the recording industry for the rights to play copyrighted audio. They simply tried to stay small and anonymous in order to evade the “authorities”, most of which didn’t even bother with a chase. Now the RIAA watches the growth of the Internet radio industry much more closely.

If the rate hike was instituted following the growth spurt, after all parties started to make out very well, few would have any serious objections. But this may not be a bad move made unknowingly by the Royalty Board. It could be a preemptive move by traditional radio (Clearchannel) to keep advertisers away from a market that appears to be a looming threat. While big media still has leverage, they may be forcing “new radio” back into the slow lane by lobbying for a fee increase that Internet broadcasters would find untenable but that they themselves could endure.

Any way you look at it, there’ll be quite a ‘Closed’ signs cropping up when the increase takes effect, or just a lot of angry independent talk radio coming out of the woodwork real soon.

Sure, this is still purely speculation. But is it baseless? Share your theories with us.