Notes from the Internet Radio Front


If you tuned in to WUSC on the web on June 26, all you heard was a whole bunch of nothing. In a show of solidarity against the skyrocketing Internet radio royalty rates as imposed by the Copyright Royalty Board, webcasters across the country powered down their stations in a Day of Silence aimed at increasing awareness and gathering support for the SaveNetRadio coalition. And it worked — SaveNetRadio reported more than 14 million listeners visited the coalition’s website ( and more than 350,000 phone calls were placed to members of Congress pleading Internet radio’s case.

“Yesterday’s Day of Silence was a tremendous success,” SaveNetRadio spokesperson Jake Ward said in a press release, “but the clock continues to tick on the future of Internet radio … it is time for Congress take action.”

There is a bill in Congress designed to reverse the March 2 decision — H.R. 2060, a.k.a. the Internet Radio Equality Act. But according to BusinessWeek, Congress doesn’t seem too keen on taking action. In a hearing on the proposed royalty rate hike — which would nearly triple the per-song royalty rate and impose per-channel minimum charges of at least $500 — members of the House Small Business Committee said they’d prefer it if webcasters and the music industry settled their differences without the aid of the legislature.

“I really don’t think Congress would be the best type of vehicle to resolve this type of issue,” Small Business Committee Chairwoman Nydia Velazquez (D-N.Y.) said. “July 15 [the date in which the royalty hike would take effect] is just around the corner, and I hope the two parties can come together and resolve this issue.”

But that doesn’t seem likely. SoundExchange, the primary beneficiary of the proposed royalty hikes, proposed a compromise of a $2500 cap on required $500-minimum per-channel advances. The Digital Media Association rejected the offer, as the cap would not be effective for the entire term of the rate hike.

“Any offer that doesn’t cover the full term is simply a stay of execution for Internet radio,” said Jonathan Potter, executive director of the Digital Media Association. “The looming billion-dollar threat is destabilizing … and inhibits investment and growth.”

Furthermore, the members of the Small Business Committee seem stumped about how to come up with a reasonable decision that would appease both parties. “I have not heard what the win-win is,” said Representative Yvette Clarke (D-N.Y.).

What could end up happening — especially if ‘Net radio loses its fight — is what the San Francisco Weekly is calling “dark payola” — where webcasters could sign direct-licensing deals with labels for a lower rate than the one set by the Copyright Royalty Board.

“If Net radio stations don’t win their fight, playing whatever they want will become prohibitively expensive. Playing crap, however, won’t be,” writes Weekly scribe David Downs. “Direct licensing allows major labels to apply economic pressure to Webcasters who were formerly concerned with playing the best music.” SoundExchange insists that the direct licensing deals aren’t major-label exclusive, but webcasters say the amount of manpower necessary to handle licensing from thousands of indie labels makes it prohibitive. In essence, what we could end up with is yet another radio payola scandal a la Alan Freed. The more things change, the more things stay the same. 

One Response to “Notes from the Internet Radio Front”

  1. What’s going to end up happening to most small independent webcasters, like twangcity, is we will turn off our stations July 15.

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