Episode #77

Internet radio could very well become extinct next month. A ruling by the Copyright Royalty Board increases the fees webcasters pay to play music online by 300-1200 percent and threatens to pretty much put an end to Internet radio as we know it when it goes into effect on May 15. So if you care about music in general or Internet radio in particular, I urge you to read this column and consider taking action. I did, and in the immortal words of the Byrds' Gene Clark, I "feel a whole lot better."

Here's the story.

I often listen to the excellent Internet radio stations bundled with iTunes and am huge fan of Pandora, the coolest Internet radio station of all time.

Note: If you're not familiar with Pandora, I gushed about it in Rants & Raves #66 last June, saying:

Wouldn't it be great if you could listen to a radio station that played new music you're almost certain to enjoy? Well you can, with Pandora. Created by the Music Genome Project, Pandora is uncanny in its ability to expose you to new music that you'll probably like. Just tell Pandora some artists or songs you like and it will create a custom radio station that plays songs you'll probably like, based on its analysis of nearly 400 song attributes. While the song is playing you can tell Pandora that you like it or dislike it; Pandora then uses that info to find songs you're likely to like. Oh, and did I mention that it's free? This is cool stuff -- don't miss it.

I think Pandora is awesome and listen to it almost every day. Heck, I think it should be declared a national treasure, which is why I was so disturbed to find this e-mail from Tim Westergren, the founder of Pandora, in my in box:

Hi, it's Tim from Pandora,??

I'm writing today to ask for your help. The survival of Pandora and all of Internet radio is in jeopardy because of a recent decision by the Copyright Royalty Board in Washington, DC to almost triple the licensing fees for Internet radio sites like Pandora. The new royalty rates are irrationally high, more than four times what satellite radio pays and broadcast radio doesn't pay these at all. Left unchanged, these new royalties will kill every Internet radio site, including Pandora.

In response to these new and unfair fees, we have formed the SaveNetRadio Coalition, a group that includes listeners, artists, labels and webcasters. I hope that you will consider joining us. 

Please sign our petition urging your Congressional representative to act to save Internet radio. 

Please feel free to forward this link/email to your friends - the more petitioners we can get, the better.

Understand that we are fully supportive of paying royalties to the artists whose music we play, and have done so since our inception. As a former touring musician myself, I'm no stranger to the challenges facing working musicians. The issue we have with the recent ruling is that it puts the cost of streaming far out of the range of ANY webcaster's business potential. 

I hope you'll take just a few minutes to sign our petition - it WILL make a difference. As a young industry, we do not have the lobbying power of the RIAA. You, our listeners, are by far our biggest and most influential allies.

As always, and now more than ever, thank you for your support.

 ?-Tim Westergren (Pandora founder)

Of course I looked into it immediately and discovered that according to a recent J.P. Morgan Securities, Inc. study, this increased royalty rate, which is scheduled to take effect on May 15th, will become the single largest operating expense for webcasters, and because of it the majority of them will not be able to generate enough advertising revenue to avoid bankruptcy. Furthermore, because the new rates are retroactive to January 1, 2006, past due royalties alone will almost certainly bankrupt most small and mid-sized webcasters like Pandora, Live365, and many, many others.

Do you want that to happen? I sure don't, so I visited the Save Internet Radio Web site and signed the aforementioned petition. While I was there I used their handy e-mail generator to create and send the following message to my senator (John Cornyn) and representative (Lamar Smith):

Dear _____,

As a fan of Internet radio, I was alarmed to learn that the Copyright Royalty Board has decided to raise music royalty rates by 300 to 1200 percent.  For most webcasters the new royalties exceed their revenue and they simply will go bankrupt and stop webcasting.

The silencing of Internet radio would be a blow to listeners like me who enjoy the wide variety of choices only available via Internet radio. This will kill the great diversity of music that I hear over the Internet and all the independent artists who have a difficult time breaking through on other forms of radio.

I respectfully request that Congress look into this matter and take action to prevent it.  Please understand that time is of the essence since the new royalty rates are retroactive to January 1, 2006 so they will cause immediate bankruptcies if they become effective for even one day.  Please don't let the music die.

As you can tell, I'm a little upset over this. I'd hate for great Internet radio stations like Pandora to die and I hope you feel the same. So if you care about Internet radio even a little, won't you please take a moment and write to your senators and congressmen?

If we don't speak up now, Internet radio as we know it will almost certainly die on May 15, 2007. Please don't let that happen.

P.S. Time is of the essence so please don't delay. Once again, the URL for the petition and e-mail generator is: <http://capwiz.com/saveinternetradio/issues/alert/?alertid=9631541>.

And that's all he wrote...