Monday, July 16, 2007

Internet Radio Faces Uncertain Future

KXL Tech Expert Segment for 16 July 2007

Fans of internet radio may find their favorite online music stations silent if new fees set to go in effect today are enforced...

Internet radio, like terrestrial stations heard up and down the FM dial, are obligated to compensate artists for each song played as part of their programming. New rates are threatening to shut down many online music channels that simply can’t afford to pay.

The per-song/per-listener fees double by 2010 at the top of the chart, but also of (perhaps larger) concern to smaller broadcasters is a $500 minimum charge per-channel and the discontinuation of a previous “percentage of revenue” plan that spared those who made little or no advertising revenue off their streams.

Congress, no doubt in response to constituents fearing their favorite internet radio stations will fold, has pending legislation that would reduce these fees in both the US House and Senate – though neither bill has made much progress.

Now it’s important to point out that these fees are retroactive to the beginning of 2006 – so some stations could face a hefty bill if the recording industry group SoundExchange -- they collect the fees on behalf of the artists – start enforcing the new rates, which do in fact go into effect today. In a welcome “sigh of relief” (albeit temporary), the recording industry has said they will hold off enforcement while negotiations are ongoing sparing some music channels – for now at least…

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