Internet Radio Silently Protests Royalties

Many fans of Internet radio will be tuning in to nothing Tuesday, as many Webcasters participate in "A National Day of Silence."

It is a protest against what Webcasters call excessive royalties on the music they stream. New royalty rates are set to take effect in little more than three weeks.

Organizers of SaveNetRadio, a coalition of Webcasters protesting the hikes, say Internet radio outlets — big and small — will be participating.

Pandora, Rhapsody, AccuRadio, one of Yahoo's free radio streams and many smaller outlets will all go black for all or part of the day.

In between the silence, many outlets will play announcements explaining the protest and asking listeners to write their senators or representatives.

That is what Live 365 will be doing. It is an Internet radio site that aggregates 10,000 independently programmed channels.

Johnnie Floater is Live 365's general manager of media. He says listeners have supported the fight against the rate increases. He also says Live 365 is willing to forego its advertising revenue because the royalty increases do not take into consideration the value that Web radio offers the music industry.

"We have to look at what Internet radio does for the music industry. Beside coming up with royalties, it comes out with an immense amount of promotion for a wide amount of artists that are not heard anywhere else," Floater says. "You're going to silence one of the most powerful tools for music and that's what you're going to hear tomorrow — silence."

Several public radio stations will also shut down their music streams to protest the rate increases that are set to take effect July 15.

The new rates were imposed by the Copyright Royalty Board, a three-judge panel established by the Library of Congress to oversee royalties in the digital domain.

The new rates are based on a per song, per listener formula. The old rates were based on a percentage of Webcasters' revenue.

The burgeoning Internet radio industry has collectively argued that those rates will put many Webcasters out of business.

At a recent conference on digital media, Jonathan Potter, executive director of the Digital Media Association, says silence is what listeners can expect if the new rates go into effect.

"Silence may become pervasive on the Internet if the royalty rates stay in effect or go into effect on July 15," Potter says. "I think the goal is to do get people to do something to get the Webcasters to stay on the air."

Those supporting the royalty increases say the money goes to musicians who are creating the content for the Webcasters.

John Simson is the executive director of SoundExchange, the organization created by the recording industry to collect royalties from Internet radio outlets.

"The absence of music will happen when performers are not adequately compensated fairly for creating," Simson says. "I think in their own back-handed way they are proving our point, which is performers need to compensated so we will have wonderful works being created."

Congress has already gotten involved in the royalty fight. Two bills making their way through the House and Senate roll back the rates.

Webcasters and National Public Radio, on behalf of its member stations, have also asked the Circuit Court in Washington, D.C., for an emergency stay of the Copyright Royalty Board's decision.

Both sides say they are open to a negotiated settlement to the royalty issue outside of the courts and Congress.

Correction June 26, 2007

Jonathan Potter, executive director of Digital Media Association, was misidentified in early broadcasts of this story.

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