The Threat To Internet Radio

In this third month of 2007, you have to wonder how many more hurdles radio operators will continue to face.  The recent announcement that royalty rates are skyrocketing, thanks to the short-sightedness and greed of the Copyright Royalty Board not only threatens radio's revenue opportunity, but its future on the Internet, cell phones, and other new technologies (such as WiMax in vehicles).

Jacobs Media Tech Polls have continued to underscore Internet radio's growth and popularity among radio audiences.  The newest study - just wrapped up earlier this month - continues to affirm the strides that radio has made online.  Now the CRB's move puts all of this in jeopardy, at a time when many radio operators are struggling just to stay even.

Kurt Hanson has initiated a web campaign - www.savethestreams.org.  Yes, Kurt has a dog in this hunt.  His AccuRadio stands to be wiped out because of these cost increases.  But every radio broadcaster shares Kurt's plight, making his call to action very compelling.

It is noteworthy that most broadcasters have struggled to develop content to run inside commercial stopsets during streams.  Well, now you have a message to send to members of Congress.  Use this valuable time to send a message to your online audience.  There's an example of language from SaveTheStreams.org that would be easily convertible to promo form:

As your constituent and a fan of Internet radio, I was alarmed to learn that music royalty rates were recently determined by the Copyright Royalty Board (CRB) which, if enacted, would certainly silence most or all of my favorite online listening services. For most webcasters, this royalty rate represents more than 100% of their total revenues!

The shuttering of the webcasting industry would be a loss for not only independent business owners, but also for musical artists, for copyright owners, and for listeners like me who enjoy the wide variety of choices available via Internet radio.

I respectfully request that your office look into this matter and initiate action to prevent it. As the CRB rate decision is retroactive to January 1, 2006, please understand that time is of the essence - as the immediate impact of this decision could silence many Internet radio stations forever.

There are also has some rational suggestions for arrousing your audience - and your company - from another site focused on the issue, www.saveourinternetradio.com:

Mad as hell about the threat to Internet Radio? Do Something!

1. Sign this online petition and open letter to the US Congress.

2. Send an email to your members of Congress. You can use our suggested text, or write your own.

3. Print out the email (you’ll get a copy) and mail it to your Congresspeople. Follow up with a phone call. You can look up their addresses and phone numbers here.

4. Write a letter to the editor of your favorite magazines and newspapers. If you know someone in the media, let them know what’s going on. Have them read my post below, if you like.

5. Don’t panic. Together we can save the medium that we all love. We have the passion to make it happen!

We realize that the challenges radio broadcasters are facing are immense - and seemingly, neverending.  But Internet radio is one of the new media avenues that terrestrial radio stations have been able to easily and successfully access.  It is indeed the pathway to reaching listeners in the future, but only if it is financially possible to do so.  It's time to send a message.

Comments

[Dick Hungate]

Excellent blog. Timely and substantive.

[Winger]

Why would you want to save the streams if you are an over the air broadcaster? Wouldn't the loss of competition in another medium enhance the value of the license you hold?

[Winger]

Just to follow up. I'm curious when and if you think radio stations will cut costs by selling off transmission equipment and broadcasting exclusively on the internet?

[Russ Butler]

I believe that it could come to charging a fee for any piece of music that is disseminated by any broadcasting technology. I thought, at first reading that the CRB fee decision was just on the "new artists" released on big labels like Sony, etc. to deal with audio downloading copying and satellite airplay to capture revenues they are missing.

So, I guess that it also means that all of the original "old music" on LP's and re-released CD's on inde labels (like Laserlight, etc.) and on the old labels (Capitol, Decca, RCA, Verve, etc.) would all be included as well? Correct? (I'd appreciate someone's response to this.)

Well then, if **every piece** of recorded music is charged a performance fee, the cumulative $$ effect wipes out the small web broadcasters. Terrestrial radio will surely be next and, in turn, it will lower stock values of the big broadcasters...big time!!

To me, if there are indeed 10,000 small Internet radio stations, it sounds like SoundExchange will make a ton of money (Billions) collecting and implementating the fees. How greedy can people get?

If Internet stations now pay substantial ASCAP, BMI, and SESAC fees for licensed airplay, isn't that enough residual money for the music industry? CRB doesn't make sense, broadcasters promote music artists' creative work and promote their CD sales, like sampling a piece of cheese and buying a wheel of cheddar (my Vermont country store analogy around the cracker barrel :>) Here's another analogy: (Stay with me on this...)

When there were real record stores (some of you may remember) you could go the the racks of 78rpm discs, pick out several that looked good, go into the little sound booth and play the discs on their record player to hear the song, the artist, whatever. If you liked it, you bought it (discs were 50-cents or 78-cents then) you didn't want it, you put it back - the store **did not** charge for how many discs you selected, or for spending time in the booth, or for how many times you placed the needle on the record turntable - the stores actually encouraged auditioning discs because it increased sales of all 78rpm discs - every week! What's wrong with that? Every body wins - including the artists and record labels.

This whole CRB thing is negotiable so that everyone gets what they want and small business broadcaters are still in business. Can't we all get together? Come on fellas!

Just some thoughts while shaving from a retired 40+ year broadcaster. So, let's reverse the CRB decision, OK? - it's all political anyway. Don't let greed take over Internet radio. Thanks for reading this far.

[Russ Butler]

...I did want to add one more thought: The Radio Advertising Bureau slogan that their broadcaster members used to promote was = = = "Radio Sells" = = and it does!
Internet radio sells records online....period.

Perhaps the music stores would be subject to the CRB royalty fee too for re-selling used CD's or LP's? How about collectors privately selling their album collections? Background music services that provide ambiant, motivating music in stores and offices would surely be subject to the outrageous CRB fees - ya think?

Where will it go and where will it end?

[Russ Butler]

One more once (Count Basie said that): Remember when record companies sent their promoters to the radio stations to meet with deejays and give them free records of the newest pop artists and build a relationship for airplay of their discs? (Think back - they were white label, 78rpm vinyl discs and 45's and LP's with these words on the label "Not For Sale - For Broadcast Only").

Why would they invest so much money in this team of record promoters of their label without first calculating it would give the company a good ROI? They did it because - airplay sells the records!

By the way, the payola scandal shows the effectiveness of how this label promoting works - it was very successful, albeit illegal.

The National Association of Broadcasters once had a slogan for their radio station members that said "Radio Sells" - and it's true, Internet radio does sell music online.

Have you also noticed that more and more terrestrial stations are also now streaming their over-the-air broadcasts? It's the big chains and small owners alike. They want to reach that online listener who no longer listens to them on AM or FM and they actually promote their web site on their terrestrial broadcasts - cross-selling is good for business. Salesmen sell exposure on all of their media, they're making more money that way!! Newspapers watch out, ad dollars are increasing online.