Copyright Royalties and Internet Radio

Copyright Royalty BoardInternet radio has become a great way to hear bluegrass in the last few years. I talk with more and more people who listen online. Now the RIAA has successfully convinced the Copyright Royalty Board (CRB) to adopt at "per play" rate for internet broadcasts. This will result in increased royalty fees for the use of master recordings by internet radio broadcasters.

The new rates are effective retroactively to the beginning of 2006 and continue to increase each year for the foreseeable future. The retroactive rate for 2006 has been set at $.0008 per performance. The rate for 2007 is $.0011, the rate increases to $.0014 in 2008, $.0018 in 2009, and in 2010 the rate will be $.0019.

This doesn’t look to bad until you realize that a "performance" is defined as "the streaming of one song to one listener." That little piece of news sheds new light on these rates. If a broadcaster had 1000 listeners, then the royalty due would equal $1.10 for each song played. There is a $500 minimum fee imposed per channel per year as well.

Non-commercial internet broadcasters are granted a reprieve with their fee being a simple $500 per channel for up to 159,140 aggregate tuning hours per month. Anything beyond that level will require they pay the commercial rate.

Based on our hypothetical 1000 listeners, that limit would equal each listener tuning in for a total of 159 hours per month. That’s over 5 hours a day, every day. But if you had 2000 listeners, that number would be cut in half.

The fees will be collected by SoundExchange, a digital music fee collection agency created by the RIAA.

These fees are separate from, and do not diminish, the fees due ASCAP, BMI, or SESAC for royalties due the songwriters for the compositions themselves. Before this announcement, a system was in place which varied the rate based on a percentage of gross revenues, which is similar to the way royalties are calculated for satellite radio providers XM and Sirius.

The potential fall out of this decision is a substantial increase in operating expense for bluegrass internet broadcasters who have large audiences.

I spoke with Jen Hitt, the Music Content Manager, for, and asked for her thoughts on this change in the way royalties would be calculated.

As an internet station with a global audience we are extremely concerned about the recent CRB decision and its impact on the future of given the decision’s projected crushing impact on providers of web-delivered music.

We feel that public internet radio enhances the musical community by connecting listeners with music that they love, music that is increasingly difficult to hear via traditional terrestrial radio models.

We hope that we will be able to move forward using technology that is readily accessible to our audience, while at the same time providing a model by which musicians can make a living and receive appropriate compensation for their art.