Stream On

After I wrote about local webcasters recently, folks started crying to me about the imminent death of Internet radio. Some got downright rude about the fact that I didn’t devote my entire column that week (Buckle Bunny, April 19) to the struggle to save net radio. I came to understand why. Their situation did seem pretty dire for a while.

In March, the Copyright Royalty Board decided to drastically increase royalty rates for online music broadcasters. The hikes, which were set to go into effect on May 15, would undoubtedly put hundreds of webcasters out of business, making them responsible for 300 percent to 1,200 percent more in royalty fees through 2010, along with a minimum annual payment of $500. Plus, the fees would be retroactive to January 1, 2006.

Staci Craig, a grain trader from KC who’s been playing Internet disc jockey for about eight years, tells me that she’d have to pay as much as $250,000 in back royalties for her iTunes-available Web stream, Whiskey From a Wire. “I’ve got to write a big old check,” she says, “or give them the finger.”

Craig’s stream is set up to handle only about 50 listeners at a time, but the CRB ruling wasn’t any less alarming to more popular sites. Tim Westergren, founder of Pandora.com, told Newsweek, “If this rate does not change, it will wipe out the vast majority of Web radio.”

It’s not that webcasters don’t want to pay royalties. And the exposure that online radio gives new independent artists is arguably worth more than royalties. The bottom line is, royalties should be fair across the board and not inhibit the ability to do business.

As written, the CRB’s rules would affect other industries, too. Because their background music constitutes a public performance, restaurants and stores will have to pay more to play music from
a digital source. Frank Arena, co-founder of The Big Dumb Fun Show, an internationally syndicated Web music and talk program recorded in Independence, says he and his partners will have to shut down. And he’ll have to jack up his rates as an event DJ. “It [the ruling] will cause the cost of a wedding DJ to go from 500 to 700 bucks,” he says.

But recent developments have given Arena reason to hope.

The date that the new rates go into effect has been pushed back 60 days, to July 15. And if passed by Congress, the Internet Radio Equality Act will significantly reduce the amount for which webcasters are liable.

According to that bill, streamers would pay a flat annual fee of 7.5 percent (through 2010) of the revenue generated by their programming. Or they would pay 0.33 cents for each hour of recordings transmitted to each listener.

The bill is a step in the right direction. That it was drafted so soon after the initial ruling nods to the lobbying power of a budding industry.

Ted Edwards isn’t surprised. The manager of KCPlanetOnline.com, which is the online manifestation of late local FM station KZPL 97.3 (the Planet), says he has never doubted the survival of Internet radio, which is now growing faster than satellite and HD radio. A recent study by Bridge Ratings revealed that 25 percent of Americans had listened to Internet radio during the previous month; that number could grow to 31 percent by the end of the year, the study concludes. “To shut down an entire growing industry in our capitalist society is seemingly incomprehensible,” Edwards says.

But even if Congress upholds the CRB’s original royalty demands, the music won’t die, though formats may change.

Some webcasters will just turn pirate.

Other true believers in the industry, such as Edwards and PopFreeRadio.com host Chronic the Hedgehog, will find creative ways to feed the stream legally.

Chronic (Justin Bale) says Pop Free is drawing up a contract to take to some 900 record labels. The idea is to circumvent the prohibitive royalty rates through private agreements.

Pop Free is also planning remote events, such as a concert Saturday at Davey’s Uptown, to promote the station. Ultimately, Chronic hopes to court advertisers willing to invest in his dream.

Edwards says it’s only a matter of time before advertisers, now obsessed with banner ads, start to realize the potential of audio.

Because Internet radio still is the future, even if its commercial-free golden days are coming to an end.