Jul 25

Internet Radio & Royalties

Category: Technology

The Internet has changed the way the many people experience entertainment. One of the many popular additions to our lives is the advent of free radio stations that are streamed online. This allows listeners to experience a much wider range of music than they would hear on their local radio waves, as well as giving them the ability to find very specialized stations that better cater to their tastes. However, things haven’t been entirely smooth for Internet radio, particularly in terms of royalty fees.

Radio stations that stream over the Internet have never been the most profitable business plan. Many are actually labors of love for the owners. These stations were able to exist because the from 1998 to 2005, the royalty rate was only $0.000768 per song. However, in May of 2007, the United States Copyright Royalty Board approved a rate increase for royalties paid to stream music online. This decision is currently under appeal, as it would force the closure of a large number of stations, or at the very least a major upheaval of their business plan. According to the revises rates, the owners of affected stations would be required to pay as much as $2.3 billion in royalties this year. This number is actually four times the amount that traditional radio stations pay in royalties.

One plan that some stations are opting for is to switch to broadcasting from foreign territories that are outside of the jurisdiction of US Copyright law. In order to protest the proposed royalty rate changes, many online radio stations participated in a Day of Silence on June 26, shutting down their broadcast for the day. A bill known as the Internet Radio Equality Act has been proposed and has already been introduced to both the House of Representatives and the Senate. There are currently over a hundred co-sponsors in Congress.

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