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World Wide Web

Net Radio Goes Silent To Protest Royalty Hike

Net Radio Goes Silent To Protest Royalty Hike
June 26, 2007 10:44AM

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Internet-only webcasters and broadcasters that simulcast online are protesting royalty hikes in a "Day of Silence," alerting their listeners that "silence" is what Internet radio might be reduced to after July 15, the day on which 17 months' worth of retroactive royalty payments are due to the SoundExchange collection organization.


If you tried to tune in to your favorite Web radio show this morning, you were likely met with silence. That's because much of Internet radioland is observing a national "Day of Silence."

The interruption is a protest against the recent 300 percent royalty fee increase for online music webcasters. The goal of the industry-wide, daylong blackout is to raise awareness of the threat webcasters believe these new rates pose to the future of Internet radio. Protesters are hoping to rally support for legislation pending in Congress.

"With nearly a half-million e-mails and phone calls from webcasters, listeners, and the artists they support sent to Congress in just the last two months, this national grassroots campaign has certainly captured the attention of lawmakers, but there is more to be done and time is running out," Jake Ward, a spokesperson for the SaveNetRadio Coalition, said in a statement.

Calling All Listeners

Internet-only webcasters and broadcasters that simulcast online are alerting their listeners that "silence" is what Internet radio might be reduced to after July 15, the day on which 17 months' worth of retroactive royalty payments are due to the SoundExchange collection organization.

What's more, the royalty rates will increase when the old rates expire. Many believe the higher rates are designed to compensate the recording industry for slumping CD sales. The new rates could ring up fees totaling about $1 billion compared to last year's $20 million and put many webcasters in the permanent silent mode.

Yahoo, Live365, Rhapsody, MTV Online, AccuRadio, Radioio, Born Again Radio, Pearadio.com, Ear.fm, and scores of others are participating in the day of silence. Notably, AOL Radio is not participating. AOL could not immediately be reached for comment on its decision.

"During the National Day of Silence, webcasters will urge their listeners to contact their congressional representatives and ask them to support the Internet Radio Equality Act and preserve the future of Internet radio," Ward said. "The silence of tens of thousands of webcasters will make the call to save Internet radio heard loud and clear."

Silent Protest

Josh Martin, a media analyst at Yankee Group, said he was impressed by how covertly the Day of Silence was organized. "This event may just be a reality check -- this is what will happen if the royalty payment structure isn't changed. It's not going to work the way it is currently set up," he said. "It's such a fledgling market that everyone has to work together to evoke change."

Bid4Spots, an auction site that sells Internet radio ad space, is allied with Net radio in working toward change. The collective hope is to sway the House Committee on Small Business, which will hold a hearing to assess the effects of the increase on recording artists and webcasters on June 28.

"We want the industry to know we stand with the broadcasters in their fight to save Internet radio," Dave Newmark, Bid4Spots CEO, said in a statement. "As a business, we're looking forward to getting this issue resolved so we can all get back to what we like to do -- which, for us, is helping broadcasters generate advertising revenue."

The Internet radio industry "Day of Silence" was organized by Radio and Internet Newsletter (RAIN). Kurt Hanson, publisher of RAIN, said in a statement, "In this case, 'silence' is an extremely appropriate metaphor, since silence may be what listeners hear from most webcasters starting on July 16."

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