Royalty Rates killing Internet Radio

The CRB has given the internet radio community some bad news recently. The new royalty rates that the CRB plans to implement are significantly higher than those previously instated. The details of the CRB's announcement can be seen here. I will just go over the big changes. The CRB suggests that Retroactive fees of $.0008 per performance be paid for 2006, and $.0011 per performance in 2007, $.0014 in 2008, $.0018 in 2009, and all the way up to $.0019 in 2010.

Additionally to these per performance fees, the CRB has also stated that a $500 per channel per year fee be implemented. Although this is loosely defined, as to what makes up a channel.

These rates were decided upon by the recommendation of SoundExchange, which is a digital music fee collection body created by of course, the one, the only, RIAA.

These rates effectively destroy small and medium sized webcasters, and greatly injure the largest webcasters. For example, for a medium sized webcaster like radio paridise, the royalties would be in the range of "150-200% of total revenues". This is obviously a damaging blow to the small and medium webcasting industry, but at these rates it might not even be profitable or worthwhile for the biggest webcasters to continue to broadcast.

These royalty rates have huge consequences for the mobile media market. This is the area everyone was banking on radio making its glorious return to a respected form of media. When high-speed wireless networks become ubiquitous in this country, internet radio had great potential to be a respected source of entertainment, because it was not effected by the limitations and narrow minded tendencies of terrestrial radio.

Yet it appears the RIAA's SoundExchange wants to eliminate any possibility of a strong return of radio by pummeling internet radio with debilitating rates. These rates surpass those of terrestrial radio and satellites radio, causing a huge disconnect and seemingly unfair royalty structure for the internet radio industry.

However there is some good news. As of Tuesday, the CRB has granted the motion for appeals regarding these rates, and will reconsider their decision. Judging by the amount of outrage that has surrounded this announcement, I imagine that some changes will come to fruition. We will just have to wait and see.