Friday, March 02, 2007

Radio No!

In a potentially crushing blow to innovative new music services (many of which I cover on this blog), "the US Copyright Royalty Board has announced new Internet radio royalty rates rejecting the arguments made by webcasters and adopting the per-play rate requested by digital royalty collection agency SoundExchange. Retroactively through the beginning of 2006 the rates are:"

  • 2006 - $.0008 per play
  • 2007 - $.0011 per play
  • 2008 - $.0014 per play
  • 2009 - $.0018 per play
  • 2010 - $.0019 per play

What does this do to all of the innovative radio services that are already losing money? I'm not sure, but I'm guessing the folks at Pandora, Finetune and others aren't too happy right now.


Kurt Hanson's Radio and Internet Newsletter also does some quick math to illustrate just what royalty payments that high does to Large broadcasters (AOL and Pandora), Medium Size (Radio Paradise) and Small (Live365's community).

Their rough calculation is that, based on the 2006 rates, AOL would be paying upwards of $20 million in royalties for last year. And if listenership metrics stayed flat through 2010, that means the bill would be close to $50 million/year by the end of the decade.

So, you want to create the next killer online radio service and grow it virally to be the "next big thing"? You better raise about $30 million dollars just so you can pay your bill when they come collecting. Oh, that's right.... no one will do that, instead we will see further innovation around how to skirt around royalty liabilites via various legal loopholes and safe harbor.

Congrats to the Copyright Royalty Board, it appears that by 2010 they will have effectively priced many of the legitimate online broadcasters out of business... paving the way for many other technologies and approaches where they most likely won't see a dime.

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