Save Net Radio

Okay, this is a post I've been meaning to write for ages, but I kept putting it off. Mostly because I don't feel qualified to address the issue in a holistic way.

But I need to try anyway, so here it goes. As most of you know, I'm a big fan of Woxy in particular, and the concept of Internet radio in general. It has introduced many people to all different bands and types of music that they may never have heard through their limited, terrestrial radio stations. Personally, since I've started listening to Woxy, I've pretty much stopped listening to normal radio because I only really like maybe one song an hour or so, and it's just not worth it. With Woxy's niche audience, the playlist can actually be tailored to what this group enjoys and is also not tied to payola and just repeating the top 20 countdown playlist.

This would seem like an excellent development for the recording industry. More people listening to more music = more music sales, right? With the Long Tail theory of economics, even bands with a very small listening audience should be able to get played on Internet radio and attract enough worldwide listeners to make a decent profit. Everyone wins!

Except the recording industry doesn't see it that way. I don't understand all of the nuances of this issue, but from my reading it seems that the industry is not concerned with these smaller webcasters who have a limited audience. They're just focused on huge ones, like Yahoo, Pandora, AOL, etc., and all of the royalties they could be getting from these huge web streams.

So in comes SoundExchange, who collects and distributes musicians' royalties. They proposed a different fee structure for terrestrial radio and Internet radio. Traditionally, terrestrial radio stations pay NOTHING to play songs on the air, because it's considered advertising for the artists and is, therefore, exempt.

Presumably due to the vast audience (aka revenue) that can be reached by the Internet, the RIAA chose not to view Internet radio stations as exempt but instead is attempting to charge the hell out of them. Directly from the Save Internet Radio website:

• Broadcast radio, an industry with $20 billion in annual revenue, is exempt and pays no performance royalties to record companies or recording artists.
• Satellite radio, which has approximately $2 billion in annual revenue pays between 3 and 7% of revenue in sound recording performance royalties.
• The six largest Internet-only radio services anticipate combined revenue of only $37.5 million in 2006, but will pay a whopping 47% (or $17.6 million) in sound recording performance royalties under the new CRB ruling. In 2008 combined revenues will total only $73.6 million, but royalties will be 58% or $42.4 million.
• Small Internet radio services are essentially bankrupted by the CRB ruling, with most anticipating royalty obligations equaling or exceeding total revenue.

What it comes down to is: small Internet radio stations cannot afford this rate increase. They would cease to exist, and the offerings on Internet radio would end up being the same as what's available on terrestrial radio, because only the largest corporate Internet radio could pay the royalty rates and continue operating.

I really, really don't want this to happen. There's currently legislation for consideration by both the House and the Senate to repeal these new royalty rates. Because the Copyright Royalty Board has approved these rates and denied any appeals, legislation is the only option left. Visit Save Internet Radio, call your representatives, and ask them to sponsor the legislation. I'm also writing a letter this weekend, so if you would like me to send you the letter to copy and put in your own contact info, I'd be happy to do that.

For more information, visit:
"Save Net Radio" blogs at Wired
Save Net Radio: About