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THE DEATH OF WEBCASTING?
Posted 21 Jun 2002 04:08:43 UTC

The US Librarian of Congress released his final decision on royalty rates for Internet music broadcasting. Already, at least one such "webcaster" has shut down rather than pay these fees.

The rates were was set AT 0.07 per song per listener for all Internet broadcasters. The recommendation of the CARP panel, which the Librarian rejected one month ago, requested double this amount for Internet-only broadcasters (as compared with entities that simultaneously broadcast online and over AM or FM).

While this rate may sound like a small amount, a typical station that plays 20 songs an hour for 20 hours a day would end up owing $102 per listener per year. Therefore, a station with a dozen listeners would pay $1226 per year, while one with 100 listeners, still a tiny audience by AM/FM radio standards, would owe more than $10,000 yearly. Even at the reduced rate of 0.02 per song per listener available to certain non-commercial stations, the cost would be $29.20 per listener per year, or almost $3000 for 100 listeners. These fees are also applied retroactively to 1998.

Even beyond these large fees, the record-keeping required by this fee structure may prove impossible for many hobbyist webcasters to implement. Every webcaster will be required to record every song played, as well as how many people listen to each song.

Especially disturbing is the observation that certain mass media outlets are portraying the Librarian's decision as a victory for webcasters. Although it is true that royalties for Internet-only webcasters were halved, even the new rates are likely to be out of reach for most hobbyists. The RIAA released a statement that claims that the new rate is too small of a price to charge "multi-billion dollar companies," but says nothing about the effect of these royalties upon the large numbers of hobbyist and non-commercial webcasters.

It's likely that this decision, and the recording industry's greed, will mean the end of many hobbyist Internet radio stations. Although many webcasters play music that cannot be heard on commercial radio, likely inspiring listeners to purchase CDs that they may not otherwise hear, the music industry continues to insist upon charging unreasonable fees to these broadcasters. And no one has proposed any kind of plan to ensure that artists will ever see a dime of these fees.

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