The day our music died

Think they can’t stop the music? They just did—on the Internet at least. Radio stations across the country are pulling the plug on Internet broadcasts.

An agreement reached July 21 between the U.S. Patent Office and the recording industry will require radio stations to pay royalties for music played in streaming broadcasts on the Internet.

The decision was the result of arbitration that began after the National Association of Broadcasters sued the Patent Office over its initial decision in January 2001.

The decision will drive hundreds of radio stations out of the pioneer industry of Internet broadcasting. For large broadcasters, the royalty fees will be enormous. For nonprofits and student radio stations, the records keeping requirement would be impractical.

“This decision kind of throws a bucket of water on the whole thing,” said Scott Smith, general manager of Anchorage Media Group. “We pulled the plug on all our streams this summer when the decision was first announced.”

“Streaming is not proven to be economically viable anyway,” Smith said. “It was expensive to begin with.”

Nonprofit radio stations like the University of Alaska Anchorage’s KRUA 88.1 pay a lower rate but are not exempt from paying the royalties. The fee for those stations is two-hundredths of a cent per listener per song. KRUA has so few online listeners that it would probably pay the minimum flat fee of $500 per year.

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That’s not unbearable, but the news gets worse. The fees are retroactive to October 1998 when the law was first passed. That would put KRUA’s bill at $2,000, due Oct. 20. With a budget of $132,000, KRUA could pay that as well if they wanted too.

The really devastating news for KRUA is the records keeping requirement attached to the royalties plan. The requirements are still in arbitration, but the Patent Office has set interim requirements making radio stations keep track of the artist, title, label, album and number of times each song is played.

The office warns that a final decision will require “more comprehensive reporting.” The requirements may include tracking numbers for each song, the exact time the song played and the number of listeners online at the time each song played.

“That’s absolutely not possible,” said KRUA station manager Chris Joy. “It would take 10 people to keep all those records. We’d have to have someone monitoring this 24/7. There’s no way I’d even think about it.”

Joy says broadcasting KRUA over the Internet is hardly crucial.

“It’s maybe 1 percent of our audience,” he said. “It’s pretty insignificant, but it’s nice to have that presence. We have a small audience anyway, so everyone helps.”

“I get e-mails from Europe once in a while,” Joy said. “And I got one from a professor at the University of Minnesota who said they have a radio station but ours is better.”

Alumni and the parents of the student DJs are also frequent listeners to the online broadcasts.

Internet broadcasting was also the best way to reach on-campus listeners, who got poor reception because of UAA’s geographic position. Students in the dorms get especially poor reception of KRUA or none at all. KRUA is considering other options to strengthen its reception on campus, such as putting in a signal repeater.

Joy said KRUA has already decided to shut down its Web stream.

“If we’re online after Sept. 1, we get charged.”

“If it’s just $500, I’d bite the bullet and pay,” Joy said. But with the records keeping requirements still up in the air and retroactive fees awaiting those who continue to broadcast online, Joy said KRUA has decided to turn the stream off and hope the situation changes.

Radio stations don’t pay royalties for music played on radio broadcasts because radio has promotional value and drives up CD sales.

Instead, radio stations pay the industry a small amount for the rights to all the music they play. KRUA paid $3,824.93 for the first year of its current five-year contract.

Joy voiced the feelings of many small broadcasters that they are suffering because the music industry is frustrated with the spread of music on the Internet.

“They can’t figure out how to tap that revenue stream, so they try to deter it. Their solution to everything is to charge you until they figure out how to handle it,” Joy said.

The music industry counters that music is being used to create a new industry on the Internet, so the artists should be compensated.

All hope is not yet lost for Internet broadcasters. The recording industry is still considering creating a special license for small Internet broadcasters like KRUA. And legislation has been introduced in Congress that would slash the royalty rates for Internet broadcasters.

Despite its low listener numbers and the weakness of Internet radio as a revenue source, Joy says Internet radio is still important to small stations.

“It makes our crappy little station here in the middle of nowhere accessible to everyone.”By Joe Duray

Northern Light

 

Think they can’t stop the music? They just did—on the Internet at least. Radio stations across the country are pulling the plug on Internet broadcasts.

An agreement reached July 21 between the U.S. Patent Office and the recording industry will require radio stations to pay royalties for music played in streaming broadcasts on the Internet.

The decision was the result of arbitration that began after the National Association of Broadcasters sued the Patent Office over its initial decision in January 2001.

The decision will drive hundreds of radio stations out of the pioneer industry of Internet broadcasting. For large broadcasters, the royalty fees will be enormous. For nonprofits and student radio stations, the records keeping requirement would be impractical.

“This decision kind of throws a bucket of water on the whole thing,” said Scott Smith, general manager of Anchorage Media Group. “We pulled the plug on all our streams this summer when the decision was first announced.”

“Streaming is not proven to be economically viable anyway,” Smith said. “It was expensive to begin with.”

Nonprofit radio stations like the University of Alaska Anchorage’s KRUA 88.1 pay a lower rate but are not exempt from paying the royalties. The fee for those stations is two-hundredths of a cent per listener per song. KRUA has so few online listeners that it would probably pay the minimum flat fee of $500 per year.

That’s not unbearable, but the news gets worse. The fees are retroactive to October 1998 when the law was first passed. That would put KRUA’s bill at $2,000, due Oct. 20. With a budget of $132,000, KRUA could pay that as well if they wanted too.

The really devastating news for KRUA is the records keeping requirement attached to the royalties plan. The requirements are still in arbitration, but the Patent Office has set interim requirements making radio stations keep track of the artist, title, label, album and number of times each song is played.

The office warns that a final decision will require “more comprehensive reporting.” The requirements may include tracking numbers for each song, the exact time the song played and the number of listeners online at the time each song played.

“That’s absolutely not possible,” said KRUA station manager Chris Joy. “It would take 10 people to keep all those records. We’d have to have someone monitoring this 24/7. There’s no way I’d even think about it.”

Joy says broadcasting KRUA over the Internet is hardly crucial.

“It’s maybe 1 percent of our audience,” he said. “It’s pretty insignificant, but it’s nice to have that presence. We have a small audience anyway, so everyone helps.”

“I get e-mails from Europe once in a while,” Joy said. “And I got one from a professor at the University of Minnesota who said they have a radio station but ours is better.”

Alumni and the parents of the student DJs are also frequent listeners to the online broadcasts.

Internet broadcasting was also the best way to reach on-campus listeners, who got poor reception because of UAA’s geographic position. Students in the dorms get especially poor reception of KRUA or none at all. KRUA is considering other options to strengthen its reception on campus, such as putting in a signal repeater.

Joy said KRUA has already decided to shut down its Web stream.

“If we’re online after Sept. 1, we get charged.”

“If it’s just $500, I’d bite the bullet and pay,” Joy said. But with the records keeping requirements still up in the air and retroactive fees awaiting those who continue to broadcast online, Joy said KRUA has decided to turn the stream off and hope the situation changes.

Radio stations don’t pay royalties for music played on radio broadcasts because radio has promotional value and drives up CD sales.

Instead, radio stations pay the industry a small amount for the rights to all the music they play. KRUA paid $3,824.93 for the first year of its current five-year contract.

Joy voiced the feelings of many small broadcasters that they are suffering because the music industry is frustrated with the spread of music on the Internet.

“They can’t figure out how to tap that revenue stream, so they try to deter it. Their solution to everything is to charge you until they figure out how to handle it,” Joy said.

The music industry counters that music is being used to create a new industry on the Internet, so the artists should be compensated.

All hope is not yet lost for Internet broadcasters. The recording industry is still considering creating a special license for small Internet broadcasters like KRUA. And legislation has been introduced in Congress that would slash the royalty rates for Internet broadcasters.

Despite its low listener numbers and the weakness of Internet radio as a revenue source, Joy says Internet radio is still important to small stations.

“It makes our crappy little station here in the middle of nowhere accessible to everyone.”