Increased Streaming Radio Rates Face Stepped-Up Backlash

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The Copyright Royalty Board (CRB) has been at the center of controversy since it issued increased streaming radio rates in early March. Now, a consortium of internet-based music and radio companies represented by Washington, DC-based Digital Media Association (DiMA) has stepped up its protest by asking the CRB to reconsider its ruling.

The group, which includes Apple, AOL, Mercora, Napster, RealNetworks, and YouTube, first announced its intentions on Monday. “We do not believe that the Copyright Royalty Board intended to shut down the vast majority of legitimate online radio services immediately when it issued its decision, yet that is the sober reality facing many services,” said group executive director Jonathan Potter.

The refreshed CRB rates replace a royalty calculation that is based on a percentage of overall revenues with a per-play fee. This change has caused concern among small and mid-size broadcasters, who fear that the charges will quickly exceed their annual revenues.

Potter outlined three core changes that the group hopes the CRB will consider. The first request is a clarification of the $500 per station flat fee, a structure that could become incredibly expensive for services that dynamically generate thousands of stations based on user preferences. Other models, including those popularized by Live365, allow individual users to create their own stations, an approach that results in a massive number of channels.

The second request is to allow stations to pay royalties “per tuning hour,” instead of per track played. This would allow broadcasters to pay royalties based on the number of listeners tuning in, rather than the number of songs played.

The third request is for the CRB to consider opinions outside of those proposed by SoundExchange, which has been accused of gearing its argument to maximize profits from non-interactive streaming providers. “This gamesmanship by SoundExchange suggests that the Judges’ reliance on the SoundExchange’s expert to set internet radio royalties was erroneous and should be reconsidered at this rehearing stage,” the statement asserted.

The DiMA pushback follows a similar protest by both NPR and member station KCRW, who have called for a congressional review of the CRB’s decision. In a letter to the chairman of the House Judiciary Committee, Congressman Howard Berman, NPR CEO Ken Stern wrote that the CRB’s decision “will have the effect of virtually shutting down public radio’s online offerings.” Stern also noted that the new rates would increase NPR’s streaming costs from $1.5 million to $6 million annually.

In response to the protests, SoundExchange CEO John Simson has defended the CRB’s ruling, stating that the new rates are “fair and reasonable” and that they will help ensure that artists and copyright owners are fairly compensated for the use of their work. Simson has also argued that the new rates are necessary to keep up with changing technology and to ensure that artists receive fair compensation in the digital age.

However, critics argue that the new rates will stifle innovation and creativity in the online radio space, particularly among smaller broadcasters who may not be able to afford the new fees. They also argue that the per-play fee structure is unfair, as it does not take into account the number of listeners tuning in to a particular station.

The battle over online radio rates is likely to continue for some time, with both sides digging in for a fight. In the meantime, many broadcasters are left wondering how they will be able to afford the new fees and whether they will be forced to shut down their online operations altogether.

Overall, the battle over streaming radio rates highlights the ongoing tension between copyright owners and technology companies, as they struggle to find a balance between protecting intellectual property rights and promoting innovation and creativity in the digital age. The outcome of this battle will have far-reaching implications for the future of online radio and the broader digital media landscape.