The end of Internet Radio?

By Pete | @kingpetey | 14 Jul 2002 has been following the progress of Internet Radio over the last few months, and earlier this month the US government released how much it is going to charge people to broadcast online. The fee structure in place for US-based broadcasters basically forces all broadcasters, hobbyist or not, to either move to content that is not label-owned, or pay the labels (via a company called SoundExchange) approximately $7 per month for each average listener maintained within that month.

What's more, broadcasters will also pay an additional 8.8% of those fees for the rights to store that content on a hard drive, and will be required to pay all fees that would have been owed retroactively, that is, since 1998. Most internet based radio stations do not make any money at all and even if they tried to make small amounts of profit from banner clicks they could clearly not make enough money to survive with these outragous fees. Not only will broadcasters have to pay so much per month per listener but they will also have to pay for all broadcasting back to 1998.

For example, Live365 now faces fees of upwards of $1.5 million from previous webcasts, and will have to come up with the money to pay the "instant fine" from webcastings since 1998 now that the US Copyright Office has set the royalty structure. On top of that, the company will have to figure out how it can afford to pay $200,000 per month in order to break even with it's webcasting service. Noncommercial broadcasters are not exempt from the fees as many thought they would be initially.

A noncommercial broadcaster now is required to purchase a $500 license to simply legally broadcast music for free and face almost certain fee's from service providers such as Live365 for the use of their service (which now costs Live365 quite a bit to simply technically provide). I talked to Simon from who is having to close down his internet radio station because of the royality fees. Even though his station isn't American some of his servers are based in America, so he would have to pay. I can see over the next few months 80% of internet radio stations closing down as they can simply not pay the royality fees, others will be either forced abroad or to have adverts in the stream making internet radio more like commercial analogue radio, which upto now has been the one good thing to distinguish the 2 types of radio.

For instance i could have a party and leave digitiallyimported radio on all night with no one realising it was even a radio station. While the fees have been finalised some still think things can be changed, whatever the outcome we can expect big changes to internet radio and possibly having to pay so much a month like many other internet services have gone to. Pete