A new ruling on royalties has put online radio stations and musicians on the offensive…
Mark Kerr was named a Blues Hall of Fame ambassador for the state of Louisiana in March. It was not because of the many albums he has sold or because of his long career in playing the blues. He says he received the honor because of the online radio stations that played his music before he had ever recorded an album.
“The independent radio stations that sprouted up when the Internet came online 12 years ago have become a really strong force,” Kerr said.
But now he finds himself fighting alongside other independent musicians and radio stations, including National Public Radio, to stave off the death of online music. On April 16, a panel of copyright judges upheld the U.S. Copyright Royalty Board’s (CRB) ruling that Internet radio stations must pay fees for each song they play.
An online station with at least 30 listeners would pay 33 cents for each song. This means a typical hour of 15 songs would cost $4.95, or about $826 a week, retroactive to January 2006. The station managers say these fees far exceed the minimal budgets of most independent radio stations.
“Major recording labels are trying to retain their death grip on the music industry,” Kerr argued. Changes to the royalty structure have been under consideration since February 2005, and the CRB was created last year in part to rule on a fee schedule.
The new fees were devised by SoundExchange, the nonprofit royalty collections arm of the Recording Industry Association of America (RIAA), and are scheduled to take effect next year.
The recording industry association did not return phone calls seeking comment.
Groups like Digital Media Association, a national organization whose members include AOL, YouTube and Amazon, had hoped to get the royalty ruling overturned.
“It could very well mean the end for small and medium-size webcasters,” said Ann Brown of the Digital Media Association.
Despite the CRB’s ruling, many musicians and online radio stations refuse to give up the fight. One such station, iwebradio.com, is organizing the “Don’t Buy Into It” campaign, asking its nearly 44,000 listeners to boycott major record labels for six months starting in October, the start of the holiday shopping season.
John Fowler, program director for iwebradio.com, says the new fees would cripple his independent station, which only had $2,000 in revenue last year. “The fees are retroactive, so as of right now, we would owe $76,000,” he said. And lesser-known artists like Kerr would be unlikely to earn much from the royalties, Fowler added.
“If the major labels have all this money and wield all this power because of their money, then I’m going to do whatever I can do to shut off their money,” Fowler said.
Internet radio ushered in a new era for the music industry in 1995, allowing listeners to become station owners by creating their own radio broadcasts online. These stations typically play a wider variety of music than broadcast stations and can help boost exposure for lesser-known independent musicians.
“People are just not getting the quality of music or programming on FM that they did when FM first started,” said Kerr, who is encouraging his fans to sign petitions asking the copyright board for a hearing. “They’re leaving and going to listen to independent radio.”
In fact, Internet radio use jumped by 10 percent from 2000 to 2005, according to a study by Arbitron, an audience measurement company. Today, an estimated 50 million people listen to Internet radio.
Fowler believes the station owners, artists and listeners are all in this together, and argues that RIAA’s claim that it is helping all musicians by creating the fee structure is disingenuous.
Blues rock musician Shane of the group II Ton Heavy Thing agrees with Fowler, saying the ruling hurts those smaller, more personal stations that are competing with large, powerful businesses.
“The DJs at these online stations take real requests and play them,” Shane said. “The DJs connect with the listeners. Where else except online radio could this environment occur? For financial reasons, this ruling will drastically reduce the chances of an indie artist being played alongside a successful, signed artist.”
Fowler sees the ruling as a roadblock to the evolutionary development of the music industry and as a slippery slope for the consumer. “If the CRB and RIAA will charge us to play a song for X number of listeners, how long will it be before they go after people playing music in their cars, with passengers?” he said.
