Internet Radio facing impending doom

EggXpert Community Members 1

EggXpert Community Members 1
The Blog Group for all EggXpert Community Members

Tales of Mr. Toast

Various tech notes as well as other assorted rants and rambles.

Internet Radio facing impending doom

  • Comments 4
  • Likes

Hi there! Welcome to my NewEgg blog, I'm Mr. Toast.

Like many of y'all, I love listening to music over internet radio; there's a wide and eclectic variety of streaming choices out there. And more than that, it's a great equalizer. It used to take a boatload of money to start up a traditional radio station, assuming you could even get a license from the FCC. But on the net, virtually anyone with a reasonably fast PC and network connection can have a public voice, and it's a refreshing change from the cookie-cutter formats of the corporate FM world. You can find everything from big professionally-run sites like Live365 and Pandora, to "hobby" broadcasters who run stations out of their homes strictly for the fun of it and their love of the music they play.

However, mark July 15th on your calendar, because as things stand at the moment this date is likely to be remembered in the future as "the day the music died". The government and the record industry are about to shut most webcasters down.

In a nutshell, internet broadcasters (like all other radio stations) pay royalty fees to the copyright holders of music played for public performance. Previously, this fee was based on a percentage of the station's income from advertising or subscriptions, which was a fair and reasonable method of doing business. But last April, your good friends at the RIAA convinced a three-judge panel called the Copyright Royalty Board (CRB) to issue new rules that will require all internet stations to pay per-song, per-listener, which will result in an increase of between 300 and 1200% from what they're paying now. The fees, which are retroactive to January 2006, are still due even if the station doesn't make a dime, and not surprisingly, many stations unwilling or unable to to pay these outrageous amounts will be forced to pull the plug.

For anyone who might be unclear about how this might work, let me draw an illustrative parallel. It's not a perfect analogy, but it should give you a rough idea of the problem.

Let's say you're in a band. For the last year or two, you've been playing at a club called "The Royalty Lounge", and charge $5 a head to get in. You've agreed to give the club a 12 percent cut of your door proceeds; each week you average about 100 people, so you pay the club $60 and split the remaining $440 with the rest of the band. Fair enough, and simple too.

Now one day the club owners have a meeting and decide they're not getting enough money from you. Instead of a flat percentage, they want you to pay them a fee of 12 cents per song per person for every song you play. So the first thing you have to do is count the exact number of people in the club during each and every song in your set (which is a pain because it adds a layer of record-keeping you didn't have to deal with before), and tally up all the figures at the end of the night. But let's assume for this example that it averages out to the same number of 100 people. You play four sets of ten songs each, which means you owe the club 40 x 100 x 0.12 = $480, which is 800% more than you had to pay previously! That leaves you only $20 for yourself and the band.

Now let's take the analogy one step further, and add this wrinkle: due to increased competition from other clubs who don't charge a cover, "The Royalty Lounge" decides it's going to become non-commercial, which means that you can no longer collect the $5 entrance fee, so you now have no income whatsoever. But, at the end of the night you still must pay the club 12 cents per song per person. How long could you and your band survive under these conditions? It wouldn't be long before you were forced out of business.

Of course, you remember the RIAA, the lobbying group formed by the five largest record labels? They are embedded in Washington D.C., to make sure laws are written to keep them rich, no matter what. They made headlines by filing lawsuits against elderly people, stroke victims, single mothers and children for trading music online, even though some of them didn't even have computers. They're currently involved in a massive campaign of extortion targeting college students, sending thousands of letters threatening them with lawsuits unless they part with four and five figure sums of money to avoid being taken to court.

It's been said that any industry that has to depend on litigation to survive is close to dead already, and the record companies are getting desperate. They were totally blindsided by the mp3 phenomenon back in the Old Napster days, and are determined to avoid any loss of control over their "product" as technology continues to change the way music is made, distributed, and consumed. Sure, they want to keep selling you CD's at inflated prices, but despite outward appearances it's not just about the money from webcasting fees; killing off internet radio is an attempt to turn back the clock to the days when the major labels had total control over who could hear what. Forget any concern for the public's exposure to new artists, or for independent commercial-free stations that play what they want to play without pressure from labels or advertisers. The music industry wants whatever remains of internet radio after July 15th to become a boring corporate medium overrun with ads, mediocrity, and payola -- just like commercial broadcasting is today.

But there may be some hope: in the weeks since the initial ruling, a grassroots movement has sprung up among internet broadcasters and their listeners seeking to overturn the CRB's flawed decision. Two bills (H.R.2060 in the House, and S.1353 in the Senate), together known as the "Internet Radio Equality Act", would establish fair and reasonable fees (7.5% of their revenue in royalties, the same rate paid by satellite radio broadcasters) paid to those who create music, while assuring that net radio will not be killed off. Considering that most legislation languishes on Capitol Hill with very little interest from the general public, these measures have picked up phenomenal support in a very short period of time, as thousands of people (including myself) have written or phoned their elected representatives to tell them that they do not want internet radio to become extinct.

Want to help? If you're a voting resident of the USA, you can contact your Senator or Congressperson and ask them to please support this legislation. For more information on this issue, including who to contact as well as some talking points if you need them, click here.

I understand that musicians need to be paid fairly for their work -- after all, I'm an amateur songwriter myself. But putting internet radio out of business means everyone loses -- the artists, the labels, the broadcasters, and most of all the listeners.



  • That sucks.

  • I have read about this for a while and didnt know if it was still in the works. There are some top notch web radio stations  out there. I used to support radio free colorado till its demise. (thats annother story) It had the best sound 5.1surround , and all of the bells and whistles. I actually upgraded my speakers to the logitech z-5500 because of the stations sound.

    I used to follow EFF Electronic Frontier Foundation but have been occupied in other areas as of late. Here is a link to ( I belive the issue that the author speaks about) if not its at least a good read. :>

    Freedom and protection there must be a ballance.



  • already contacted my representative and both senators.

  • Very nice break down of what's happening with the Internet Radio legislation (I especially like the club example). Yep, you've stirred me into action now... will definitely have to bug Senator Feinstein about this... ^__~

    Great writing, too, btw-- you get 5 eggs, Mr. Toast!