Internet Radio Rolls On: Call off the firing squad--it looks as though Internet radio will live to see another day. A real relief for us here at AyreWolfFM. Sharply higher royalty rates for Web radio stations went into effect over the weekend, but negotiations are continuing between station owners and the recording industry to reach agreements that could greatly soften the impact of the new rates. Thanks to these efforts and mounting pressure from congressional lawmakers, the Internet radio industry no longer appears likely to face the premature death that supporters had warned was imminent under the new rates. Under rules approved by the U.S. Copyright Royalty Board (CRB) in March and which took effect Sunday, Internet radio operators are required to pay record labels and recording artist's sharply higher "performance" royalties for the right to play their songs. Such royalties are separate from publishing royalties, which radio stations must pay to songwriters and song publishers. Performance royalty rates jumped about 45% for large Webcasters like Yahoo, Time Warner's AOL and CBS's Last.FM, and many times more than that for smaller Internet radio stations. The ruling also eliminated a $2,500 cap on a separate annual $500-per-radio-channel fee that Webcasters also have to pay. The CRB is an arm of the U.S. Library of Congress. Internet radio stations had warned that the increases would force many of them out of business. But with station supporters in Congress proposing legislation that would have greatly reduced the new royalty rates, agreements blunting the new rates' impact appear likely. The recording industry, represented by the trade group SoundExchange, is close to a settlement with large Webcasters that would cap annual per-channel fees at $50,000 through 2010, according to SoundExchange President John Simpson. In addition, SoundExchange has agreed to extend the terms of previous exemptions that had allowed small and noncommercial Internet radio broadcasters to pay far lower royalties, Simpson said. The Digital Media Association, which represents large Internet station operators, expects to meet later this week with SoundExchange to discuss a possible settlement lowering the royalty rate for big Webcasters. But Simpson said his side hasn't yet received a proposal from the Association. In the meantime, it's business as usual for many Web radio operators, large and small. Yahoo! Music, the largest U.S. online radio service, had faced per-channel fees totaling hundreds of millions of dollars a year, due to the high number of the customized music channels it serves up. Yahoo! Music spokeswoman Carrie Davis said that "obviously we're relieved" a settlement appears likely on annual fees and added that the company doesn't have any plans to change its service. AOL Music "is keeping our options open,'' but expects that "the user experience will not be impacted by this,'' spokesman Kurt Patat said. Many small Webcasters are continuing to pay performance royalties at the previous rate in anticipation that a settlement will be reached, according to Bill Goldsmith, who operates the Internet radio station RadioParadise.com in Paradise, Calif. "Everybody I know of is continuing to go forward under the assumption that we'll come to an agreement,'' Goldsmith said.
