Wall Street Journal columnist Jason Fry comments on the probable death of Internet radio as a result of the Internet radio business after the Copyright Royalty Board passed a new ruling to
raise royalty rates incrementally from $.08 per song per user in 2006 to $.19 by 2010.
Doesn't sound like much? Well, consider that Webcasters used to pay artists and record labels a flat
fee of 12 percent of revenue under a deal brokered in 2002. The new rules kill that exemption, making Webcasters pay performance fees in addition to composer fees. Clear Channel, for example, doesn't
pay performance royalties as per the established promotional benefit of songs played on the radio.
How in the world does it make sense to do this to Webcasters, Fry asks. "Left unchanged,
these rates will end Internet radio," wrote Tim Westergren, the co-founder of Pandora.com, on his blog. Pandora recommends music for consumers based on what type of songs they like. Some users
subscribe to up to 100 channels. If royalty fees are suddenly $500 per channel, its business model is toast. So what are beleaguered Web radio owners to do? They can appeal, and Internet radio fans
can sign petitions in the hope that Congress takes notice. If you're a fan, then help out people. Otherwise, Web radio may go the way of the dodo bird.
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