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Stagnant royalty rates may bring end to Internet radio

By: Carlos Militante, Spartan Daily (San Jose State U.)

Issue date: 4/26/07 Section: News
SAN JOSE, Calif. - The death of Internet radio may be upon us.

On April 16, the Copyright Royalty Board refused to reconsider its March 2 decision that Internet radio operators will have to increase the royalty rates to artists whose music they play on their sites by 300 percent and 1,200 percent.

The decision will go into effect on May 15.

"The very large majority of Internet radio stations will go bankrupt," said John Potter, executive director of the Digital Media Association, in an interview with

San Jose State University's broadcast radio station 90.5 FM KSJS also live streams on the station's Web site

According to KSJS Director of Studio Operations and General Manager Nick Martinez, one of the largest Internet radio stations, based in Chicago, will see their annual running fee go from $55,000 a year to about $550,000 a year.

"The reason why it's so bad is it used to be every song you play counts as a play," Martinez said. "The way they do it now for the Internet, every song that you play is times by the number of listeners you have at the moment.

"So if you have 500 listeners at that time that counts as 500 plays and you basically have to pay for each play and that's where it's going to die."

Martinez says that KSJS won't have to worry about this problem unless their listening audience gets bigger, so the station will continue to stream content on the station's Web site.

According to Potter in a interview, Internet radio provides exposure and royalties for thousands of independent artists and labels that aren't represented in broadcast radio.

Last year, 72 million people tuned in every month, Potter told

The Copyright Royalty Board didn't reconsider the decision stating that, "None of the moving parties have made a sufficient showing of new evidence or clear error or manifest injustice that would warrant a rehearing."
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