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Increased royalty fees may force some internet radio stations to shut down

Over the last year, the online music industry has been in what many call as a major shakeup. Music artists and labels represented by SoundExchange say they are being treated unfairly, receiving less than a fair amount of money being generated by online radio stations. SoundExchange has been lobbying Congress over the last year to force online radio stations to pay for or pay higher royalties for songs played.

Working closely with Congress, SoundExchange has successfully convinced the industry that increased royalties are a necessity. The D.C. Circuit Court of Appeals has declined to put a stop on increased royalties. This Sunday, Internet radio stations will be slapped with a bill forcing them to pay higher royalties going forward and pay for music aired in 2006. By 2010, royalty rates will nearly triple what stations currently pay. Stations will also incur an annual fee of $500, but the annual fee hasn't been fully worked out. SoundExchange is unsure if it wants stations to pay $500 per station or per channel.

"This is just about the artists getting paid fairly. Artists and labels just want a fair share of the pie," said Richard Ades, a SoundExchange representative.

Late last month, many online stations banded together for a single day of silence, marking their stance against SoundExchange and its demands. Called "Day of Silence," the move created public awareness about how damaging the new proposed royalties could be. Despite the demonstration, SoundExchange chief executive John Simson said, the "rates are fair."

Tim Westergren, founder of Pandora, one of the largest Internet radio companies, said, although his company is able to pay for the new royalties he and his company would not go down without a fight. Pandora along with Yahoo, Rhapsody and Live365 represent the four largest Internet radio companies today. Whether large or small, all types of broadcasters will be affected. SoundExchange said it has taken this into account. Small and non-profit broadcasters will have a royalty cap of $50,000 per year -- still a very large amount.

"Nobody wins when Internet radio gets shut down, including artists who ostensibly are being represented by SoundExchange, the organization pushing for high rates. It's ironic. If SoundExchange gets their way, it means less money for musicians because people will cease to pay royalties all together," Westergren said.

Even with the cap, small broadcasters are still in distress. Michael Clark, owner of two small stations said that after Sunday, he would owe roughly $14,000 USD just for the holiday season of 2007. As for all the music that his station broadcasted during the 2006 year, Clark will owe $8000 on Sunday. One of Clark's stations already closed down because of the new changes and he was unsure of what to do after Sunday, he said.

Jake Sommers, owner of a similarly small station that plays jazz faced similar decisions and consequently closed down his station. closed on April 30th of this year when Sommers realized he would have to pay $2000 per month to keep his station of 20,000 listeners afloat.

"We never made a dime. It was a labor of love. Everything we made we put right back into radio station. It was a bunch of trumpet geeks playing music for other trumpet geeks," Sommers said.

As Patty Smyth once sang, "sometimes love just ain't enough."

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RE: Chicken little
By RaisedinUS on 7/15/2007 1:28:12 PM , Rating: 2
As I have stated, the terrestrial stations pay nowhere near the fees per month as they want to charge internet radio.
This while the world’s three major copyright holders’ groups - ASCAP, BMI, and SESAC - collectively charge terrestrial broadcast radio stations $972 per year per station, for the rights to broadcast exactly the same music to an equivalent or larger audience. From:
It isn't just a $.10 charge per song

Read again. It's $.10 per song PER LISTENER PER STREAM. That is again: $500 per year, per stream. If you have 2 it equals $1000. $.10 per song per listener: If you have 1000 listeners that's $.10 per listener multiplied by how many songs they all listen to. If all 1000 listened to 100 songs, that's how much money???
I fail to see how this fact escapes you. Terrestrial stations do not pay this "performance" tax.

Your logic is harmless against my arguments, your insults
Your "arguments" are based in pure ignorance. As for my insult, I insult you because you are too lazy to read .
Sommers realized he would have to pay $2000 per month to keep his station of 20,000 listeners afloat.
Did you factor in the $500 per month per stream of has this small fact eluded your vast intellect as well? How many streams does he have? And you wonder why I call you an idiot.
Does this mean you have your own radio station?
Yes I do and I am NONPROFIT. And because you don't understand things well, that means I make NO money. It's a hobby. I sell no advertising, I hawk NOTHING.

If the government does nothing, it is the same as letting a robbery go on and doing nothing about it. I don't want to have to pay more any more than anyone who is conscientious about their pocketbook. Do you wear rose colored glasses too? Perhaps you and blurredvision are the same person? Again I ask:What robbery? Answer this simple question. You do realize the fees collected don't go to the artist but to the WRITERS. No, you didn't as you only want to argue instead of factually arming yourself.
Bottom line is this: Why are internet stations being charged with FAR more FEES than terrestial stations and satellite radio are being charged?

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