On Monday, the Copyright Royalty Board, which licenses a variety of copyrights and organizes royalty fees, decided to raise royalty fees, a move that could cripple the fledgling Internet Radio
business.
Royalty fees have traditionally been calculated as a percentage of revenue--a good thing for smaller radio Webcasters. However, the new rule says Web outfits should begin
paying on a per-song, per-listener basis. "The more intensively an individual service is used and consequently, the more the rights being licensed are used, the more the service pays, and in direct
proportion to the usage," reads an excerpt from the 115-page ruling.
As is, most radio Webcasters survive on thin ad margins due to their small audiences; the new rules would put many
stations under. For example, AccuRadio, a Webcaster, makes about $500K in ad revenue. It currently pays $50K in royalty fees. Under the new rules, its royalty fees would be jacked up to an astonishing
$600K, according to 2006 usage figures. AccuRadio's owner says: "I don't think any of the operators would break even."
Read the whole story at Business Week »