Has Internet radio flatlined?
Posted Monday, June 25, 2007
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As far as Billy Oaks is concerned, Web radio is already dead. It might as well be.
A month and a half ago — late April he thinks, though it’s all a blur — a record label e-mailed Oaks’ hosting site for Hostage Radio, the independent Internet station he’s streamed online from his Chicago apartment for six years.
The e-mail was bleak. It informed Oak’s hosting company that unless Hostage Radio stopped playing the label’s music, he’d either be subjected to a large number of retroactive fines or forced to shut down the site.
Oaks severed his radio stream and essentially closed the station down (the podcasts remain).
“My first reaction was I can’t believe they found us,” he says, “because we really aren’t that big. I mean, we have our cult following, but there are so many bigger stations out there.”
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Hostage Radio’s following was modest, indeed — about 100 or 200 listeners at any given time, according to Oaks’ estimates. He played primarily local, mostly independent rock tunes and other “music that we like.” Certainly nothing that turned any profit; the site didn’t even post advertisements.
“We … got off line because we don’t know what’s going on,” he says simply, making it clear that shutting down Hostage Radio seemed more favorable than the potentially law-bending alternative.
Sites with audiences 50 times bigger than Oaks’ could face the same fate come July 15 — and Web radio could see an early demise.
Web radio D-Day July 15: Dues day. Pay-up or get-out day. A day certainly feared by most Webcasters, who on this day, could be forced to pay a huge retroactive fee if new royalty hikes remain in effect.
On the flipside, this could be a windfall of new royalty checks for artists and struggling record labels. That’s why royalty collectors, like Washington, D.C.-based SoundExchange, pushed for change in the first place.
Earlier this year, the Copyright Royalty Board — the government arm that, among other things, sets royalty fees for musicians — voted to hike performance rates for Web radio. The hike means an approximate 1.8-cent fee per listener per hour, an amount that would cost a station like Hostage Radio more than $2,600 to host songs for 200 people for two hours a day for one year. For most stations, that’s more than a 300 percent increase over what they currently pay.
And because the vote is retroactive, Internet stations like Chicago’s Fusion Radio and Fearless Radio need to pay back royalties from the beginning of 2006. The same applies for streaming FM radio Webcasts as well.
The increase doesn’t discriminate by size — it also covers Yahoo!, Live365 and Pandora, the last of which plays songs for 7 million registered listeners.
The CRB’s goal is to give musicians the cash that’s coming to them at a time when virtual album sales have trumped those of tangible CDs and electronic music trends have signaled the death of brick-and-mortar retail chains.
Critics argue that if these new increases force Web stations to shut down, nobody’s getting paid. And up-and-coming indie bands will lose out on extra exposure that they get on Internet radio.
“It’s certainly true that more money to the artists is a good thing,” Pandora founder Tim Westergren says. “But it’s only a good thing if those higher rates allow Internet radio to (exist).”
The death of iRadio When Westergren built Pandora, the “Music Genome Project,” in 2000, he did it to help musicians find their audience and fans to find new artists. That meant accepting and soliciting albums from thousands of musicians, categorizing the music by song structure and letting listeners build online “channels” based on bands they like. It worked.
Westergren’s song catalog, which can be accessed on cell phones as easily as the Web, now stretches to 500,000 titles from almost as many artists and several thousand record labels.
The copyright board’s higher rates include a minimum $500 fee per Internet “channel,” of which Pandora has thousands.
Thanks to a huge grassroots effort started in part by Westergren, the Internet Radio Equality Act has been put together by U.S. Reps. Jay Inslee, a Democrat from Seattle, and Donald Manzullo, a Republican from Egan, Ill.,
“We had a lot of calls, a lot of e-mails from people who listen to Pandora and Live365,” Manzullo’s spokesman, Rich Carter says.
The Equality Act, which calls for Web royalty rates comparable to those of broadcast and satellite radio, has yet to reach a committee hearing. But the act has 113 cosponsors. And on Tuesday, Webcasters nationwide are organizing to go silent for the day to help encourage its adoption.
“If it doesn’t happen by July 15,” Westergren says, “you’re probably going to start to see Webcasters turn off.”
So what’s fair? But what about musicians’ rights? Are they being paid fairly? The copyright board called Bruce Iglauer, founder of Chicago indie blues label Alligator Records, to Washington this year to testify about the competitive state of independent music. And he told them what he tells everybody: It’s bad.
“We would like to be paid something,” he says. “We’re struggling. It’s really hard right now.”
He and Westergren both want artists paid and neither wants to see Web radio shut down. “The problem,” Iglauer says, “is nobody knows what’s fair.”
