Internet Radio Stations Tune Out in Protest
By Brad Kava

When 29 million music listeners turn to their favorite Internet radio stations today, many will be greeted with the sound of silence — and that’s not the song by Simon and Garfunkel.

Internet broadcasters around the country, including some public and commercial radio stations that broadcast on the Net, are observing a “Day of Silence” — muting all music on their sites — to protest and publicize increases in the fees they pay record companies and artists for playing songs. The fees, set to go into effect July 15, are so high, they argue, many of them will have to shut down their sites.

The battle is the latest grab for dollars in a war over who should be paid whenmusic is distributed through online sites.

Record companies argue that this legislation is a way to ensure they and the artists get paid by companies that profit from broadcasting their work.

Internet broadcasters both large and small say they aren’t against paying a fee for use of an artist’s work, but they say the new rates will cost more than they earn. Some argue that increases will hurt small Webcasters worse, but larger companies say they too are vulnerable.

“This will be the death of Internet radio,” said Ian Rogers, general manager of Yahoo music. “Some people think the big companies can afford this but they are wrong. We lose money on every radio play under these new rules and there’s no way Yahoo, AOL, or anyone can afford that.”

When the new rates go into
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effect, charges will be raised 300 to 1,200 percent, depending on the size of the broadcaster, and the payments are retroactive to the beginning of 2006.

Rather than paying a percentage of revenue, like satellite radio does, Webcasters will be charged .08 cents a song per listener and an additional $500 a year for each channel. Since big broadcasters such as AOL, MTV, Real Networks and Yahoo host millions of “personal” stations — created specifically for the music tastes of individual users — the cost could reach hundreds of millions of dollars.

Oakland’s Pandora, which also creates individualized radio stations for many of its 7 million users, would have to pay

$100 million on July 15, according to its founder, Tim Westergren, 41, a figure he says would put it out of business. Next Page