This is a complicated issue, so bear with me. Also, if anyone knows more about this, feel free to educate me.

Traditional radio and satellite radio are losing marketshare to innovative services responding to market demand such as Pandora, which I subscribe to for $12 per year. Pandora allows me to create radio stations based on their music genome project, which takes traits of music by certain artists and finds other artists with those traits. So, if I create the Elton John channel, it finds other artists appealing to Elton John fans. I create several channels named for my favorite artists, set the player to mix and it plays music I like all day with no commercials, and it introduces me to new artists and provides links for me to buy their music. (Now there’s money that’s really IS going to the artist in CD sales AND trackable listens.) Here’s the kicker: because of these kind of services, I NEVER listen to the radio except when I’m in my car, and then I only listen to public radio. I think that the big-monied traditional and satellite media companies would like to see internet radio stamped out. I think this is the reason for the royalty rate hikes set to go into effect for internet radio broadcasters next month. I think at the highest levels, that it has little to do with compensating artists for their work and everything to do with mainstream media trying to wrestle the internet users into forced submission to their services.

Yes, big internet broadcasters like AOL, MTV online and Live365 are also protesting the royalties hike for internet radio, but think about it. Who’s likely to survive and who’s likely to be silenced by increased royalties rates? Mainstream crap like AOL, MTV online and Live365 will survive while great indie internet radio and innovative, user driven services like Pandora, will be wiped out.

That’s my cynical view. Now that I’ve done a little reading on this I think we all have to raise hell about this. Voice your protest to the Copyright Royalty Board:

http://www.loc. gov/crb/contact/

Perhaps we should all write our members of Congress and local editors as well. The music business is shifting into the hands of artists and consumers. Sitting silent about this kind of thing could allow corporations to wrestle it away from us again. Again, if I’m wrong about this in your view, please tell me. I’m interested in getting to the truth and working for the good of our industry.

-Dave

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ABC News
Online Music Hushes in Face of Money Fight
Federal Discord Over Royalty Hikes
By MOLLY FRANCES NORRIS

June 26, 2007 —

Silence speaks volumes for Internet radio stations today as they protest new fees and royalty rate hikes that could mute many of them permanently.

The day of silence by webcasters marks the latest jab in a legislative battle to roll back new fee structures put in place in March by the federal Copyright Royalty Board. The major note of contention stems from an annual $500 per channel minimum royalty payment set to go into effect next month and retroactively bill Web sites millions of dollars for the previous year. The new fees are scheduled to take effect July 15.

Announcements about the protest action by major providers like AOL, MTV Online and Live365, as well as small local and niche stations, will occasionally interrupt the gray noise. The hundreds of thousands of personalized digital radio streams built by sites like Pandora, Rhapsody and Yahoo will all unify in the Zenlike quiet.

Opponents say this fee clashes with the new media landscape where many outfits offer listeners a wide array of channels, each of which would be eligible for the $500 charge.

"It's going to be a disaster," said Tim Westergren, founder of Pandora, whose user-generated, multichannel model represents the entrepreneurial ventures threatened across the Internet. "If this goes through, even more pirate radio is going to pop up all over the Web. The innovation you're going to see is people getting around this law."

At least 52 million people listen to Internet radio monthly. This group includes desk workers who often tune in all day long and young people. Almost half of listeners make up the desirable 18-34 year-old demographic, according to industry research.

Music drifted from the Capitol building earlier this month during a recent concert of a coalition of artists singing support for a bill that would turn back the board's impending fees. Rep. Jay Inslee, D-Wash., took the stage and quoted Bob Dylan's "Time They Are A-Changin.'" He was joined by co-sponsor Rep. Donald Manzullo, R-Ill., who admitted to being a "rock 'n' roll freak."

"One of the first rights we preserved in 1776 was the right to petition your government for the redress of grievances, and the artistic community and the 70 million Americans who enjoy music over the Web have a big grievance," Inslee said.

According to Inslee and Manzullo, the Internet Radio Equality Music Act represents the redress. The bill would not only roll back the new decision, but would put Internet radio royalty fees in parallel with those fees being paid by satellite and traditional radio broadcasters.

As Internet music streams go silent for one day in protest, the two sides of this legislative battle both insist that they are fighting for artists' rights against corporate interests.

On the other side of the issue is an organization called SoundExchange, a nonprofit group empowered by Congress to collect royalties on behalf of artists and labels. SoundExchange argues that without these royalty fees, Internet radio stations are failing to pay artists their compensation.

SoundExchange counters that Tuesday's protest is not representative of free speech, but rather part of a lobbying effort by corporations -- like the radio behemoth ClearChannel -- that are trying to escape paying market royalty rates.

"I don't see any other way to characterize this as anything other than naked corporate greed. It's just not fair to artists," said John Stimson, executive director of SoundExchange.

Jake Ward, a spokesman from SaveNetRadio, countered, "It's disingenuous that this is a cash grab. Nobody can afford these royalty rates. Dead webcasters pay no royalty fees."

Trade groups and lobbying firms from the record and digital music industries are on both sides of this issue.

In light of the fact that everyone claims to be fighting for the little guy, one small operator, Bill Godsmith from RadioParadise, said, "No webcaster, regardless of their business model, can afford to pay the [Copyright Royalty Board] rates and remain in business."

An estimated 4.5 million people are tuned into Internet radio at any given moment, according to industry figures. One dedicated listener is office worker Mark Hiew, 25, who like many young professionals plays daily cuts from the BBC or KCRW from Santa Monica, Calif. "Internet radio is the delicious nectar of cubicle subsistence, " wrote Hiew in an e-mail to ABC News.

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