There’s a reason you haven’t seen much in-depth coverage of what’s probably the most important federal ruling to affect the music business since the Digital Millennium Copyright Act of 1998–a ruling that, if it goes into effect, will change how tens of millions of people listen to music and very possibly silence Internet radio altogether. The reason is it’s painfully boring. To weigh in with more than a sound bite, you’ve got to navigate legislative language that even the most impassioned players in the debate admit is difficult and dry. But all that legalese is hiding an ugly truth: the music industry, led by the RIAA, has once again enlisted the government to do its dirty work. This time it may very well have derailed the evolution of radio into the digital age.
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Presently small webcasters pay a percentage of revenue as royalties and big ones pay per listener-hour. The new ruling requires an across-the-board switch to a per-play model and a steep rate hike. The retroactive rate for 2006 is $.0008 for each song increasing to $.0019 by 2010, paid not just per play but per listener. Local webcasting company AccuRadio (accuradio.com), which last year posted revenues of roughly $400,000 and has an average audience of just a few thousand, would owe about $600,000 for 2006 under the new rules. Another regulation sets a $500 minimum fee per channel–not a big deal for AccuRadio, which has 300 channels or so, but bad news for services like Pandora, where millions of users can create up to 100 channels apiece.
Many members of Congress, says Maloney, “are very much not in touch with the cutting edge of technology. And I say ‘cutting edge,’ but even things that people take for granted day to day. Cell phones, Blackberries, instant messaging.” (Remember Ted Stevens, the Republican senator from Alaska, and his “series of tubes”?) And because they don’t understand the digital world, he says, they’re easily manipulated by lobbyists for digital businesses. The DMCA is one famous result: it gives the home-electronics and entertainment industries unprecedented control over how consumers can use products they’ve legally purchased and even criminalizes acts that don’t infringe on copyright, like breaking DRM to make a fair-use copy of a song. “Lawmakers don’t write these laws. Lobbyists write these laws,” says Maloney.
What might stop it is the Internet Radio Equality Act, H.R. 2060, introduced April 26 by Washington Democrat Jay Inslee and Illinois Republican Donald Manzullo. The law would nullify the CRB’s ruling and put webcasting on the same footing as satellite radio–that is, with a royalty rate of .33 cents per listener-hour or 7.5 percent of total revenue, chosen by the provider. (According to estimates by tech site BetaNews, AOL would owe $916,000 for 2006 under H.R. 2060, as opposed to $23.7 million under the CRB’s scheme.) July 15 may seem a ways off–until this Tuesday the deadline was May 15–but Maloney and McSwain urge everyone to call their representatives in Congress now. The two went to Washington earlier this week to lobby legislators face-to-face, and they plan to return. Saturday at Subterranean there’s a show to raise awareness about the issue, hosted by Radio Free Chicago and savenetradio.org (a good source for updates). And Tuesday, May 8, the webcasting industry is planning a Day of Silence, for which many major webcasters will go off-line in protest.
