Commentary: June 26 Day of Silence (Jun 28, 2007)

Some 14,000 webcasters, roughly half of all U.S. Internet radio broadcasters, turned off the tunes as part of a boycott to protest the steep royalty rates they could be forced to pay record labels

Many of the major streamers have redirected their listeners to the website savenetradio.org, which was overloaded with visitors looking for links to contact their House and Senate representatives. The protest drove so many calls to congress that their phones were inundated all day with internet radio fan's cries of support.

Many major newspapers published coverage of the event from a few lines to a full page depending on the newspaper. The sounds of silence has never been louder.

This proves taht Internet radio needs to be saved as a major way of being entertained.

Other major streaming providers taking part in the protest include Real Networks, KCRW, MTV, AccuRadio, Bluegrasscountry.org, sky.fm. TwangTownUSA, Jesus Freaks Radio, The Wolf Radio, Wizard Radio, Pirate Radio KQLZ, Groove Radio, Radio Nigel, ipartyradio.com, Energy 98, OWL Radio, Radio David Byrne, and the list goes on and on.

On top of overloading servers and phones with this tremendous response, the invaluable positive press coverage keeps flowing. Here is a brief list of publications that heard the silence: BBC News, KCRW, The Washington Post, WIRED, The Seattle Post-Intelligencer, The San Jose Mercury News, The Sacramento Bee, The Los Angeles Times, The Boston Globe, Fox News, Business 2.0 Magazine, Associated Press, Information Week, U.S. News and World Report, Hartford Courant, ABC NEWS, FOX News, The Seattle Times, MSNBC, Fox11 Los Angeles.

According to Launchcast, two major holdouts too corporate to show their solidarity were AOL and Clear Channel radio. That goes to show you that they're too big to care about you, the listener and the music fan.

After spending Tuesday trying to listen to Clear Channel and CBS Radio in San Diego, I concluded that Internet radio is the reason why corporate radio doesn't play what I like and they're not serving my needs.

The first payments of the retroactive royalty rates to the SoundExchange organization from the streamers are due before July 15th (a Sunday). The bill for Live365 alone is $7,000,000, an amount too high for them to afford, so they plan to shut down and declare bankruptcy.

The streamers can't make enough revenue to pay for the high CRB rates. Advertising and subscriptions are not enough to overcome the possibility of bankruptcy and going out of business. Every streamer loses money beginning July 15th. If the streamers can't get higher advertising rates to help pay for the royalty rates, then the only answer is to close down the business. Nobody wants to operate an Internet radio station as a loss-leader. It wasn't that way back in 1997 when there were dozens of streaming radio stations and no royalty payments, which helped grow the radio stations' online prescences in the good old days of the Internet. The pay-per-stream royalty rates is basically all screwed up and should be declared unjust and unreasonable by Congress. Internet radio should not have to pay more to broadcast music than a terrestrial radio station, which currently plays less royalties (just the ASCAP and BMI fees) for the terrestrial-only broadcasts. Streaming is like broadcasting and should be treated like terrestrial broadcasting, thus, not be subject to outrageous royalty fees that SoundExchange is demanding.

By shutting down most of the Internet radio stations, diversity in programming will suffer. Local radio has become so homogenized with either all teen, contemporary, and Spanish language programming, thanks to corporate radio, that there is no diversity if all we get are three diverse kinds of programming.

Yahoo Music says in its blog that "Less than 3% of our radio listeners are subscribers. Subscription is a feature for users who would prefer no interruptions, not an interesting business for anyone."

The axis of evil, Clear Channel, AOL, RIAA, The Copyright Royalty Board, and SoundExchange, may not be allies of each other, but as individual organizations, they are doing their part to not care about the listeners or the musicians with the way they're running their business.

In short, the CRB must be abolished!

From Yahoo Music: "Sound Exchange issues press releases which spin the truth wildly, including this one which talks about how Yahoo!, Clear Channel, and Microsoft are trying to short change artists, neglecting to mention that Microsoft got out of the Internet Radio business YEARS ago because the RATES WERE TOO HIGH. Thankfully, no one buys their story."

Webcasters form SaveNetRadio.org, Representatives Jay Inslee (D-WA) and Donald Manzullo (R-IL) introduce the Internet Radio Equality Act, and Sens. Ron Wyden (D-OR) and Sam Brownback (R-KS) introduce the Internet Radio Equality Act. Co-sponsors sign on in numbers beyond webcasters’ expectations. Both bills must pass before July 15 to cancel out the retroactive rates or else Internet radio will cease to be.

Some other facts cited from Yahoo Music: "while [the CRB rates is] asking Internet radio to pay more than 100% of revenue in royalty fees, satellite radio pays about 7% of revenue and terrestrial radio pays 0%. Killing the newest, most diverse, with the most growth potential, is asinine for all involved.

NPR's station KCRW hosted a show that included the largest internet radio service (Yahoo! - Ian thanks for stepping up big time, I'm sure it took some work) and Ted from BagelRadio who broadcasts from his over-crowded living room - all speaking in one voice. That doesn't happen everyday.

What do streamers want? The musicians, songwriters, publishers, and composers should be treated fairly with reasonable compensation according to the terrestrial broadcasting radio model with rates low enough for every streamer to pay. IMHO, it should be $1,000 per station (not per stream) and no other royalties paid on a per-listener or per-stream basis. That flat-per-year fee is low enough for the radio business to thrive.

From Radio Paradise: "The US Copyright Office has set a royalty fee structure for Internet radio that is — in almost all cases — at least 10 times greater than the royalties paid by any other type of radio, anywhere in the world. No existing Internet radio services would be able to operate profitably under this fee structure. It would mean the end of stations like Radio Paradise, and the end of the royalty payments to artists that we're currently making."

If you haven't done so already, please contact your members of Congress now via SaveNetRadio.org and urge them to take action before the new rates take effect on July 15th. With your help and support, we are confident that sanity will prevail in DC (at least on this issue...).