Copyright Royalty Board has released its new rules for royalty rates on Internet radio. .08 cents per song per listener in 2006, and increased every year upto .19 cents per song per listener by 2011. Seems reasonable.
However, when you look closer, you start to realise quickly the rates are completely out of whack. Take Pandora.com, an extremely popular online music site that enables users to easily find new music. Essentially it’s a music promotion tool that’s run at no cost to the record labels. Pandora.com has 6 million subscribers, each of whom can have upto 100 channels (or music streams). The theoretical maximum annual royalty payments of Pandora.com are astronomical (easily in the hundreds of millions of dollars). Even the probable costs will run so high it will be impossible for Pandora.com to run without losing money. They will have to shut down. And so will all other net radio sites run by hobbyists or startups.
You have to wonder about the wisdom of royalty rates this high. Is the purpose of the royalty rates not to raise money for the artists? If so, then these rates won’t cut it, because net radio will simply cease to exist and the royalty payments from net radio stations will be exactly $0 USD. Maybe the true purpose is something else.
More background and insights from independent net radio operators, and Mark Cuban in an article at LinuxJournal.com.
-TPP
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