Rise in copyright rates could signal doom for some webcasters
As broadband and wireless technologies spread, more listeners discover the world of Internet radio. Everything from 24-hour soul to '80s hardcore and more can be found on websites streaming formats not available over the air. But with prohibitively high new copyright rates, announced March 2 by the federal Copyright Royalty Board, many of these varied music stations may cease to exist within months. In addition, many traditional broadcasters that extend their reach using Internet streams are saying that they, too, may give up or limit webcasting.
Several local webcasters have confirmed that they will have to shut down. "We'll be out of business in a heartbeat," says Brandon Casci, managing partner in Somerville's LoudCity.com. The two-year-old online broadcasting company serves as the home site for several hundred stations that together garner approximately 800,000 listeners a month. The new rates, he says, "will cost about 300 percent of our revenue."
The rates are causing problems, say webcasters, because of their two-pronged nature. Traditional radio pays composer's fees. On top of that, digital broadcasters, such as satellite and webcasters, pay so-called performance fees, which go to the artists and record companies. Commercial digital broadcasters pay this fee each time a listener tunes in. Fees for small and noncommercial broadcasters had previously been set mainly as a percentage of station revenue, but under the new rules even these broadcasters will be charged by number of listens once they hit a certain limit (approximately 210 listeners per month).
"Small broadcasters who had been paying on a revenue basis . . . now have to pay on usage," says attorney David Oxenford. A partner in the Washington, D.C., law firm of Davis Wright Tremaine, Oxenford represents several small webcasters. "With the current royalty rates," he says, "the royalties alone in every case that I've heard of exceed the revenues."
Petitions against the rates may be filed through Monday. If these appeals fail to produce a compromise, says Tom Taylor, editor of trade magazine Inside Radio, "this is potentially a catastrophic event for many webcasters."
"We were paying $2,000 per month," says Casci. Now, "we're looking at $60,000 per month going forward, plus around $500,000 in retroactive fees for 2006."
Representatives of larger media companies have also expressed dismay at the rates' rapid rise. "I don't know if I'm going to be able to afford to stream," says Peter Smyth, CEO of Greater Media. "Does that mean we play less music? We're going to start to walk away from artists."
That loss of variety is what Dorchester's Tessil Collins fears. Since 1999, Collins has programmed gospel, jazz, soul, and R&B channels on his Sun-Music.net site for approximately 1,000 listeners per month. "The industry doesn't include people like me," says Collins. "The Internet was supposed to be where you could get different types of formats, a little variety. It was supposed to open up the market for folks."
The artists who are supposed to benefit, as well as the listeners, may suffer, according to Bob Lyons, director of new media for radio and television at WGBH-FM (89.7). WGBH.org offers several streams, including all-classical. "Particularly for small artists who do not get commercial airplay, this does not make sense," says Lyons. If 'GBH, a public station, has to pay the new commercial rates for its approximately 300,000 online listeners per month, says Lyons, it would "affect our ability . . . to provide that service."
"We're playing music that is not mainstream, that is not getting exposure any other way, so the whole rationale for these fees collapses," he says. "Ten percent of nothing is nothing."
