The Recording Industry: Even More Suicidal Than I Thought

Internet Radio is really the only place to discover new, emerging or obscure artists these days (except college radio and perhaps satellite radio, and a handful of public broadcasters). So it would only make sense that the RIAA would push for new fees that will put most Internet Radio stations out of business, right?

Sheesh. These guys just don't get it. The people still buying music -- the real music fans -- frequently discover that music by listening to radio stations (like KCRW) online, or checking out music enthusiasts' own sites.

Now, that may be in jeopardy, as the L.A. Times reports:

In a ruling made public Tuesday, the Copyright Royalty Board significantly increased the royalties paid to musicians and record labels for streaming digital songs online. The decision also ended a discounted fee for small Internet broadcasters.

Broadcast radio stations that also stream their programs online, such as KCRW in Santa Monica, said they might have to scale back on webcasting, and operators of Internet-only radio stations said the new fees would probably force them to go silent.

An estimated 72 million listeners each month tune in to Internet music programming from hobbyists, traditional radio broadcasters and Web companies such as Yahoo Inc., AccuRadio.com and Pandora.com, seeing them as an alternative to broadcast radio.

The board ruled that the current rate of 0.08 of a cent each time a song is played would more than double by 2010. For music sites run by tax-exempt nonprofit organizations, the board set a flat $500 annual fee per radio channel for a certain number of listening hours per month — which stations such as KCRW far exceed.

"Unless we can find an alternative to paying the published rates, there's no feasible way we can continue," said Bill Goldsmith, who operates an online rock-music station called Radio Paradise in Paradise, Calif. He estimated that he would owe $650,000 in royalties under the new fee structure in 2007 — 25% more than he expected to pull in this year from listener donations.

KCRW general manager Ruth Seymour called the ruling draconian. She said the station, one of the largest National Public Radio affiliates in Southern California, could owe more than $350,000 for 2006 and 2007...

SoundExchange, an organization created by the recording industry to collect and distribute Internet and satellite music royalties, dismissed talk of an Internet radio apocalypse.

The organization's executive director, John Simson, said the new fees simply leveled the playing field for Internet radio and forced websites to adequately compensate the artists and record labels providing the music.

"This is money that they've earned from valuable recordings they've created," Simson said.
Simson said the hundreds of Internet radio services include corporate giants such as Yahoo and Clear Channel Communications Inc. that can afford the higher fees. Those companies declined to comment Tuesday.

Leveled the playing field?! First off, radio broadcasters don't have to pay these kinds of fees -- and they actually could afford them. Internet broadcasters offer more of a service to labels, breaking acts and introducing people to new music. So why are they being penalized for offering the industry a service that mainstream radio long ago abdicated?

It's almost as if the industry is in cahoots with mega services like Yahoo and Clear Channel, given Simson's comments. Those behemoths are the only ones that might actually afford these new fees. If that's the case, Internet Radio could soon look alot like broadcast radio: Dominated by a few mega companies, offering the same bland fare. Good job, recording industry.