If you haven’t heard yet, a new law may go in effect soon, drastically raising the royalty rates for playing songs on Internet radio, very potentially and easily putting the vast majority of good Internet radio stations out of business. Here are some excerpts from the Digitally Imported article:

On Friday March 2nd, the U.S. government, through the Copyright Royalty Board (CRB), made a determination of the royalty rates Internet Radio webcasters must pay the owners of sound recording copyrights to license the music they webcast for the years 2006-2010. The license is paid to SoundExchange, a nonprofit organization that collects royalty payments from digital music broadcasters and distributes them to rights holders.

The issue is that the new rates completely ignore the business and market realities of Internet Radio. In a nutshell they expect many webcasters, such as at Digitally Imported, to pay far greater money for licensing than we ever even collect from all of our services, effectively driving webcasters out of business.

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What’s ironic is that even if the Internet radio advertising market was fully mature, which it isn’t, and we played as many audio ads for you as we could - then not only we’d be in for a prize for most ads played by any entity, as one other webcaster joked. But we still would be very far from reaching the required revenue numbers and being able to pay such rates. It’s just completely unrealistic to expect any sort of a model to exist both now and in next years that would come close to being able to justify these rates. Maybe the big corporations of the world such as Yahoo and AOL could in theory afford to loose on such rates and still provide music, but that doesn’t mean all other businesses have to go as a result. Do you really want to have just a few big corporations playing the music for you in the future?

You may ask us about why don’t we just play unlicensed tracks or make an agreement with artists directly to avoid paying so much. The reality of the business is that it is virtually impossible to micromanage things this way. You’d have to have a world class communication company to be able to track down so many artists or labels, find where who is, who to contact, what forms to sign, talk them into it, etc. Plus you’d be surprised just how much of the non-mainstream music you love so much here is really signed to a label. That’s why in theory the law that allows for a blanket license is really convenient - it’s just that the rates which were set now are truly hopeless and stifle any kind of competition. What are we supposed to do, wave a flag and and turn into a payola service? Put a banner out that says “hey, whoever pays us the most in advance gets to have his or her track heard on the radio!”? Because that’s the only model that is going to work with these rates.

So if you care at all about Internet radio (e.g.: maybe you listen to A State of Trance with Armin van Buuren), then please take a few minutes of your time to write emails or letters to your senators and congressmen. Or if you’re lazy, like me, you may just go to this Congress.org page to copy an already-written letter you can paste. If you live near me, though, I highly encourage some variation/deviation from that letter, since I’ve already emailed that in to Kay Bailey Hutchinson and Sam Johnson.

In any case, if you want to act like a good citizen today, take this chance, regardless of whether or not you listen to Internet radio! (Remember, kids, the future of Internet radio is in your hands!) Thanks.