Friday, July 13, 2007

The Day the Music Dies: This Sunday!
If one were to characterize the trends seen in America during the George W. Bush era, they would be characterized as the years where the large corporations have been rewarded at the expense of small businesses. This certainly has been true in the oil, pharmaceuticals, and international trade industries. And now, it appears that the same will be true in the music industry

The Copyright Royalty Board (CRB) has decided to radically alter the royalty revenues demanded by all broadcasting mediums, and the change may be enough to virtually eliminate internet radio, save for the very largest stations. The decision will destroy the small radio stations, cripple the smaller recording industry, and oddly enough, will even hurt the larger recording industry long term, as there will be less sources of revenue.

On Sunday, July 15, the new rates proposed by the CRB will go into affect, and stations all over the United States will go under. What’s more, there is only one obstacle left to prevent this from occurring: legislation proposed in congress called the Internet Radio Equality Act. The importance of this bill is immense, as it really allows stations like the one I’m developing to provide you with alternatives to mainstream radio.

Presently, as many as 72 million US citizens listen to internet radio every month. Over 37% of the music that is played by internet radio stations comes from independent musicians, as opposed to only 10% on mainstream stations. Meanwhile, nearly all of these internet radio stations operate at a loss, as my last radio station did, only existing because of the owners’ dedication to the music.

The new royalties specifically target the small internet stations. First, there has always been a revenue-based royalty option, where the small stations could pay a percentage of their income. This option has been removed, and now internet stations of any size will be charged the same amount per song, which is approximately 3 times what large stations are paying per song today. This is despite the fact that few large stations operate in the black at present.

But it gets worse. Every internet station will be required to pay a $500 per channel base royalty. This is on top of all other royalties required. To put this in perspective, my last station lost about $385 last year in total, so this $500 fee would nearly triple my losses in 2007. And in case that wasn’t enough to eliminate most stations, all these fees are retroactive to January 2006, so stations will owe additional royalties on the services provided over the past year and a half.

In other words, stations will owe $500 for 2006 and $500 for 2007, plus the additional royalties for both years, come this Sunday, and will then have drastically higher royalties to pay in the future. Few, if any, will be able to come up with the nearly $1500 immediately due to the CRB, and most stations will shut down.

The total annual revenue from the internet radio medium is approximately $37.5 million, as compared with broadcast radio, which makes $20 billion per annum, and satellite radio, which makes $2 billion a year. Despite this, internet radio will be responsible for 47% of all revenues under the new royalty scheme.

Make no mistake about it, folks, this plan is designed to eliminate the small internet radio station, and put the power back in the hands of the large recording corporations. It will bolster broadcast radio and satellite radio while homogenizing the music industry, and crushing the hopes of so many small artists that internet radio supports.

What’s more, it destroys the free speech that this country is based upon. It is a firm declaration that only the mainstream stations, with the mainstream programming, can remain on the air, eliminating all other broadcasting competition. And that is not what this country, or this industry, has ever been about.

Internet radio is just beginning to blossom, and new revenue streams for small stations are only now becoming available. The diversity this burgeoning industry is creating is awe inspiring, and honors the greatest traditions of this country. But this new legislation threatens to kill the internet radio industry before it can reach its true potential. Help prevent this tragedy by going to Save The Radio, and supporting the internet radio industry.

Posted by Scottage at 2:00 AM / | |