Immediate Action Needed to Save Internet Radio
The situation is grave, but that makes the message all the simpler and more serious.
The issue is simple. Small net broadcasters usually don't make very much from advertising or contributions. In the past, they have had to pay a portion of their meager revenues to the record industry to cover royalties. Recently, the record industry decided to increase these royalty payments by tying them to the number of users and streams a net broadcaster has, rather than to a percent of the netcaster's revenue. What this means is that net stations - in most cases - will have to pay more in royalties than they bring in revenue. These payments will also be retroactive, i.e., net broadcasters will have to buck up for last year as well.
One example: SOMAFM.com paid $22,000 last year in royalties. If the new law goes through, they'll need to pay over $600,000 for 2006. And the fees are even higher in 2007, based on their current listenership, royalties will be over $1 million for 2007, 3-4 times the revenue they'll raise in 2007. In other words, they'll probably close down.
BTW, the competition, terrestrial radio broadcasters, is excused from paying royalties to the record industry.
Bottom line: if congress allows the web royalty rates to increase most net radio stations will be in bankruptcy.
PLEASE CALL YOUR SENATORS AND REPRESENTATIVES RIGHT AWAY and urge them to support the Internet Equality Act. Go to www.capwiz.com/saveinternetradio/alert_9738601.html to find the phone numbers of your Senators and Representative.