In a move to protest a ten fold increase in royalty payments fees, Internet-based radio stations around the United States began participating in a day of silence on Tuesday. The new plan as set by the Copyright Royalty Board is scheduled to go into effect on July 15, and requires stations to retroactively pay 17 months of royalties at the higher rate.

Popular Internet radio stations including Yahoo!, Live365, MTV Online, AccuRadio, Pandora, Radio Paradise, are all participating in the day of silence. According to Jake Ward, SaveNetRadio spokesperson, thousands of stations are participating in the day-long event.

Live365 joins the day of silence.

"Webcasters of every size and from every corner of the country will stand united... to protest a very real and fast approaching threat to their livelihood," he said. "During the National Day of Silence webcasters will urge their listeners to contact their congressional representatives and ask them to support the Internet Radio Equality Act and preserve the future of Internet radio. Tomorrow the silence of tens of thousand of webcasters will make the call to save Internet radio heard loud and clear."

At the heart of the matter are the new royalty rates stations will pay for the music they broadcast. Under the old schedule, stations would pay between 10 and 12 percent of their gross income. The new rate plan, however, could leave stations with a royalty bill that adds up to about 125 percent of their income.

Kurt Hansen of The Radio And Internet Newsletter stated "Because a typical Internet radio station plays about 16 songs an hour, that's a royalty obligation in 2006 of about 1.28 cents per listener-hour. In 2006, a well-run Internet radio station might have been able to sell two radio spots an hour at a $3 net CPM (cost-per-thousand), which would add up to .6 cents per listener-hour."

Except for the few stations that can afford to absorb the cost in other parts of their businesses, most will be forced to stop broadcasting or face substantial financial losses.

Following an outcry from station owners and the public, both the House of Representatives and the Senate introduced bills to overturn the Copyright Royalty Board's (CRB) new payment rates in favor a plan more inline with satellite radio broadcaster payments.

SoundExchange, the RIAA's arm that proposed the new rate fees the CRB enacted, sees the actions of the radio stations and U.S. government as a move to shelter the big name online broadcasters. "The true beneficiaries are the mega-multiplex services like AOL, Yahoo!, Microsoft and Clear Channel, which will benefit from rates substantially lower than those set by the Librarian of Congress in 2002," commented John Simson, Executive Director of SoundExchange.

Some stations are broadcasting "day of silence" messages.

Although SoundExchange sees the new rates as fair and reasonable, Internet radio stations large and small do not. Online broadcasters are hoping the day of silence will help raise awareness with the public, and ultimately strike a deal for more affordable royalty payments - either by striking a deal with SoundExchange and the CRB, or through legislation.

While some online stations are truly silent today, others are broadcasting a message asking listeners to contact their congressional representatives to show their support.

The Internet radio day of silence is only one day, but it does offer a taste of what may be in store should the SoundExchange royalty rates stand. Come July 16, the next day of radio silence could last a lot longer than 24 hours.