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Net Radio Broadcasters Face Higher Rates
July 12, 2007
Thomas Mennecke
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There’s some tough news for Internet radio broadcasters. Yesterday an appellate court in Washington DC denied an appeal that would delay a March 1 ruling which tripled royalty rates for Internet broadcasters. The ruling only affects the motion to stay the March 1 ruling, not the general appeal itself. Come July 15, the new rates go into effect and net broadcasters will start having to pay up.

The issue of royalty rates for web broadcasters has been a contentious issue, with both sides calling for calamity if, a) the rates don’t change, or b) the rates do change. SoundExchange is leading the charge on the side of the major record labels, while the Digital Media Association (DiMA) is fighting vigorously to maintain the current royalty rates.

The new rates call for a gradual increase from “a per play rate of $.0008 for 2006, a per play rate of $.0011 for 2007, a per play rate of $.0014 for 2008, a per play rate of $.0018 for 2009 and a per play rate of $.0019 for 2010.” The rates are effective retroactively, which has the DiMA concerned that many smaller net radio stations will go out of business.

“DiMA members and all webcasters are disappointed by the Court’s decision, and are now forced to make very difficult decisions about what music, if any, they are able to offer. The result will certainly be fewer outlets for independent music, less diversity on the Internet airwaves, and far fewer listening choices for consumers. We’re hopeful that Congress will take steps to ensure that Internet radio is not silenced, and that webcasters and SoundExchange will find a way to compromise and maintain the diversity and opportunity of Internet radio.”

Just last week, there was a day of radio silence in protest of the rate change. It remains to be seen if yesterday's ruling makes that silence permanent.

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