The SoundExchange (SE) website indicates that for the year 2006, only 1001 services paid royalties under the statutory license. Furthermore, SE reported it collected, before the 2007 CRB retroactive ruling for 2006 fees, $62,158,184 in statutory royalty fees. Conversely, SE paid out $32,813,717 in royalties during 2006.

If the House and Senate bills dubbed the Internet Radio Equality Acts, were just about money, the amount of royalties collected by SoundExchange and those paid by SoundExchange would not merit the first congressional hearing already conducted. There has been no recent progress in passing these bills. The amounts of performance royalty payments involved today are rather insignificant in terms of Congressional standards.

Since SoundExchange cannot disclose what each service pays in royalty fees from internet radio services, it is hard to discern just how many internet radio stations are covered by the 1001 service providers mentioned above. SoundExchange denotes it suspects many internet radio stations have not filed for a statutory license. Consequently, SE may have no idea how many statutorily unlicensed internet radio stations are playing music that should be covered by royalty payments.

 Plus, the actual reporting of music played by a statutory licensee is voluntary and few audits have been completed to insure compliance or the accuracy of reporting. All of this would make you think SE is a pretty trusting organization right? Wrong! SoundExchange can simply turn over the name of the offending webcaster to a group such as the Recording Industry Association of America (RIAA) and the RIAA can take legal action to collect the required royalties.

Those college students pursued by the RIAA for illegal file sharing may look like they were hit with school detention as compared to the wrath the RIAA could muster against those operating an internet radio station without the benefit of a statutory license.  

Becoming a pirate internet radio station is no way to run a business or to live in peace and harmony with the law. The risk is far too great for rewards that are elusive at best for even well funded statutorily licensed internet radio stations.

If you have a passion for the medium and the music, the answer is new legislation. If you have an overwhelming desire to build an internet radio empire, the answer is new legislation. If you simply want to listen to your favorite internet radio station any time you want, the answer is new legislation. There will be few options or choices for any internet radio ambitions unless the current CRB ruling is overturned and a new law crafted.

Congress could very easily blow off an industry problem involving less than 100 million dollars today, but this sticky problem is not really about the royalties generated today. The real issue is the money internet radio will generate in the future and just who will control billions of dollars of internet radio advertising revenue.

Large webcasters may be able to afford higher royalty rates, but small webcasters cannot survive under the high CRB rates effective today. The real issues of fairness across all types and sizes of internet radio operations do not seem to be addressed by any one solution submitted by any party. Fairness to one group equates to the death of another. There has to be a better way than a winner-take-all solution.

In order for new legislation to be fair, reasonable, and lasting each type of internet radio operation must have its own class of license, rules and rates. A one-type, one-size fits all rate structure will simply not work for internet radio today.

A new classification system is needed to address the many problems and opportunities each type and size of internet radio station may have.

Artists and recording companies would love to peg the value of each recording played digitally at a single value for royalty purposes, but this reality applied indiscriminately will not work in our marketplace today. A quest for simplicity is a noble and worthy goal, but simplicity at the expense of opportunity and the fulfillment of artistic and vocational dreams is too high a price to pay.

The music industry has survived and grown by the introduction of new and different artists over time. Children had to learn music and develop their own style and abilities. Musical amateurs became professional only by giving away their talents in practice one engagement after another.

The music industry is unintentionally going to kill off all of internet radio’s students and amateurs with copyright rules intended for the largest audience, best funded and least artistic minded webcasters.

It is time Congress stepped in based upon the merit of a continued and diversified industry, create a copyright royalty system that all types of webcasters and music industry groups can live and grow within. The power to think and be creative was even given to legislators, who by the nature of their vocation can make complexity work to the good of many.

Please encourage your Representatives and Senators to again take up the cause of an entire infant industry. Internet radio deserves a chance to become a teenager before it is expected to join the ranks of the American capitalist army. Ask your legislator to not only change the Internet Radio Equality Act to include different classes of webcasters, but to also then pass the bill as quickly as possible. 

In short, one bad misconception (the March 2007 CRB Ruling) should not be followed with another gross misconception. Internet radio should not be lumped into one class for royalty payments. Internet Radio cannot be equal with any other digital medium nor are different types and sizes of internet radio stations equal. The lesser will not survive if the rates and rules are equally applied.