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New Internet Radio Fees Raise Costs And Eyebrows
By Mi2N
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Following the recent announcement by the U.S. Copyright Royalty Board regarding the establishment of new internet radio royalty fees and planned rate escalations through 2010, broadcasters and musicians alike are scattering to find safe ways to continue doing business as usual.

The new rules authorize SoundExchange, a royalty fee collection agency created by the Recording Industry Association of America, to collect fees for streaming online musical content. These fees, coupled with SoundExchange's ability under law to collect retroactively, are causing controversy across the internet radio community.

In Los Angeles, for bands like electronic duo Techno Squirrels, the new royalty collection service is not being welcomed as one might expect. Techno Squirrels member, Lisa Eriksson, explains, "It seems like SoundExchange is counting on musicians seeing dollars coming in and ignoring where those dollars are coming from ... but these dollars are coming from largely non-commercial and independent streaming radio stations that have embraced our music and made our growth as a band possible."

The music industry has undergone radical transformation since the year 2000. While online music sharing technologies have cut into record industry profits, major record labels have often taken a litigious approach to repairing the damage. Critics charge collecting money from independent internet "webcasters" through SoundExchange is the latest strategy by members of the Recording Industry Association of America (RIAA), a trade group representing some of the biggest record labels in the United States.

The problem for bands like the Techno Squirrels is that SoundExchange is not an optional program. Unlike traditional radio collection agencies like ASCAP and BMI, if a band declines to join SoundExchange it does nothing to stop SoundExchange from collecting royalties on that band's behalf and withholding those royalties.

Though internet streaming radio is still a small niche market for early adopters, many people are making their dissatisfaction with the new SoundExchange collection rates well known across the internet. Independent broadcasters feel the new rates would easily bankrupt even a modest webcaster.

The rules are being seen as unfair and extraordinary when compared to commercial radio stations. Ryan Harlin of Techno Squirrels points out, "They are not counting each play a song gets. They're counting each person who hears the song. So if you have 500 people streaming your radio station, they charge you for 500 plays. Under their system, the bigger your station becomes the worst off you are!"

Bands and webcasters alike have begun using the only exemption provided for by the new rules. Under the rules, if a station and a band enter into a "Statutory Licensing Agreement" SoundExchange is unable to collect royalties regardless of how many times a song was played and how many people heard it. "It sounds big and legal," says Harlin, "but something as simple as an email from the band to the station authorizing them to play their music without cost will do."

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