Fee causes Web radio stations to shut down
By Jefferson Graham
USA Today
More than 200 Internet-based radio stations have shut down because of a royalty fee that takes effect in September, and more are closing daily.
Most of the estimated 10,000 radio Webcasters are expected to follow suit, "with the exception of Yahoo, AOL, Microsoft and other deep-pocketed conglomerates who can afford a loss leader," said Kurt Hanson, editor of the Radio and Internet Newsletter.
On June 20, a copyright appeals board set a rate of seven-hundredths of a cent per song, per listener. For many stations, run by music fans for music fans, that works out to thousands of dollars more than they make.
Payments are due Oct. 20 for this year and retroactively to 1998, which could add up to tens of thousands more in arrears. The fee applies to both commercial and noncommercial stations.
Many nonprofit organizations have closed their Web stations, including UCLA and New York University. KPIG of Watsonville, Calif., the first commercial station to stream its signal over the Internet in 1995, has stopped Webcasting, as have others with dedicated followings such as All80s, GrrlRock and SavageRockRadio.
Many Web stations already pay copyright royalties to songwriter organizations. This new fee —which traditional over-the-air radio stations don't pay — goes to record companies.
Hilary Rosen of the Recording Industry Association of America said this issue shouldn't be presented as big labels vs. mom-and-pop operations: "If you don't have a business model that sustains your costs, it sounds harsh, but that's real life. If a grocery store can't afford to pay for the vegetables, they can't keep their doors open."
However, many of the stations shutting down are nonprofits. "This isn't a bunch of rich college kids who don't want to pay the fee," said Will Robedee, general manager of Rice University's KTRU in Houston. "Most college station budgets come not from tuition but student fees."
And when the new rates demand per-song, per-listener fees, "the better we do our job, by attracting more listeners, the more it will cost us, even though we're not making money."
The small stations have their supporters. Rep. Rick Boucher, D-Va., said: "The goal is to make sure the small Webcasters who measure their revenues in the tens of thousands are not put out of business by a copyright payment requirement in the hundreds of thousands."
