The end of Internet Radio?

For years internet radio have been establish and thriving but all that may come to a pass soon. A disaster that would perhaps lay down the final blow upon an entire business class.

Royalty price hike
According to this article written by, Daniel Mcswain for Radio and Internet Newsletter, “The Copyright Royalty Board (CRB) has announced its decision on Internet radio royalty rates, rejecting all of the arguments made by webcasters and instead adopting the "per play" rate”. The new pricing would simply kill off small and medium size webcaster.

"This royalty structure would wipe out an entire class of business: Small independent webcasters such as myself & my wife, who operate Radio Paradise. Our obligation under this rate structure would be equal to over 125% of our total income.” Said Radio Paradise's Bill Goldsmith.

Radio Paradise is arguably the most successful webcaster in its category and the new rate would cost them 150% to 200% of their income from the web radio.

The End is Nigh
Webcasters are contemplating of taking their operations overseas, out of the CRB's reach allowing them to maintain their business and not go under. There really isn’t a way out for the small and medium as the price hike won’t allow them to survive and charging advertises more isn’t an option as they tend to focus on large, high traffic webcasters like Yahoo! (Kharif, 2007)

Hammering the last nail in the coffin, the increase rates are effective retroactively in 2006 although the CRB ruling was passed in 2007. Suddenly, smaller webcaster are already in debt and might face bankruptcy. Even the bigger web radio such as AOL Radio Network might face problem now that they face a USD 20 million dent in their treasury.

So who benefits from it?
Nobody, absolutely nobody benefits from the death of smaller and medium size web radios, well perhaps the ego’s of RIAA. The promotion of niche music and new and upcoming bands will stop as smaller web radio become extinct and would actually lower the amount of royalty being paid.

Not only that but web radio also serve as a market place where the public can get more information on an artist which they like. Web radio often serve as proxies that help sell more records, according to Doc Seal, writer for Linux Journal, “You'll get album cover art, links to the artist's website, tour info, and much more, including six different ways to buy the song.”

“I'm sure I'll continue listening to music stations from the U.K., the Netherlands, France, Japan and elsewhere. But unless we unscrew this latest decision, there is little hope for continuing to listen to music stations from the U.S. They have been, essentially, outlawed.” – Bill Goldsmith

Their only hope, that an appeal to the CRB would work before the 15 July 2007, the day the ruling is enforced.





References

1. Bray, H, 2007. Royalty hike could mute Internet radio. Viewed on 7 June 2007 at http://www.boston.com/business/technology/articles/2007/03/14/royalty_hike_could_mute_internet_radio/

2. Kharif, O, 2007. The Last Days of Internet Radio?. Viewed on 7 June 2007 at http://www.businessweek.com/technology/content/mar2007/tc20070307_534338.htm

3. Mcswain, D, 2007. Webcast royalty rate decision announced. Viewed on 7 June 2007 at http://www.kurthanson.com/archive/news/030207/index.shtml

4. Searls, D, 2007. Internet Radio on Death Row. Viewed on 7 June 2007 at http://www.linuxjournal.com/node/1000196