Dead Air?

In recent years, Internet radio has emerged as an oasis in a desert of bland corporate broadcasting and ever-shrinking playlists. Connecting to the World Wide Web via streaming-media software like Real Audio and Windows Media Player, listeners can access creative, diverse content like never before—from a teenager’s basement recordings to the simulcasted signal of an FM station in Indonesia.

But webcasting in the U.S. is about to be forever changed. Already, at WEVL.org, the home page for Memphis’ popular community radio station WEVL-89.9 FM, this announcement is the first thing you see: “Important News! WEVL has discontinued live audio streaming on the Internet.” Likewise, at the site for Middle Tennessee State University’s student-run station WMTS-88.3 FM (mtsu.edu/~wmts), a pop-up window reads, “SAVE INTERNET RADIO!!!”

Such statements are becoming increasingly prevalent across the Web, with the Librarian of Congress poised to rule by May 21 on a proposal that would establish rates and requirements for the streaming of music over the Internet. It’s these looming rates and requirements—arrived at by a congressionally mandated, three-person Copyright Arbitration Royalty Panel (CARP)—that have all but the most well-funded corporate webcasters fearing for their future.

“If this did go through, it would definitely jeopardize our webcasting,” says Jake Doris, general manager of Vanderbilt University’s WRVU-91.1 FM, which currently simulcasts its signal at WRVU.org. “Because I don’t think we could afford, as a nonprofit radio station, two-hundredths of a cent per song per listener.”

Doris is referring to the currently proposed “per-performance” royalty rates for sound recordings—$.0014 for commercial, Internet-only streams; $.0007 for Internet simulcast of a traditional, over-the-airwaves commercial station; $.0005 for noncommercial, Internet-only streams; and $.0002 for Internet simulcast of a noncommercial over-the-air station. These rates essentially split the difference between the Recording Industry Association of America’s (RIAA) suggested rates of $.004 to $.006, and webcasters’ ideal fee of $.00014. The fees may sound small at first glance, but they are not based solely on how many songs are streamed by a station; they are multiplied by the number of listeners on the receiving end. In that light, it’s easy to see how fractions of a cent can compound very quickly.

Take Steve Wolf, the founder and operator of the Nashville-based Internet-only station WOLF-FM (wolffm.com). He says listeners spend 1.3 million hours a month tuning into his 24-hour-a-day broadcast of hits from the ’70s, ’80s and ’90s. Although his station has yet to turn a profit despite advertising sales, WOLF-FM would, by his calculations, owe $292,723.60 for 2002 alone. The total jumps to “somewhere around half a million dollars” when applied retroactively to the station’s first Internet broadcast in early 1999. Indeed, any station webcasting since the passage of the Digital Millennium Copyright Act in 1998 would be subject to back pay at the proposed rates. If the Librarian of Congress were to approve the CARP proposal as is on May 21, all royalty fees—current and retroactive—would be due in full sometime in mid-July.

“If you go to any small business with four employees or less and say, 'All right, suddenly you owe us $300,000. You have to write us a check right now,’ they’re going to shut down,” Wolf says. “It’s going to kill ’em. And I believe the rates and the reporting system that the RIAA has wanted to put in place were not designed to be fair or to compensate the artists—they’re merely to squash the competition out.”

This whole process started in 1995, when Congress passed legislation granting a new, specific type of performance right to copyrighted sound recordings. Before that, recording artists were ineligible for royalties when their songs were performed publicly (as over broadcast radio). Instead, only the songwriters and/or publishers of the underlying musical works received royalties, while the performers themselves were left to rely on the promotional value of radio to spur record sales. Despite repeated attempts by the RIAA—a powerful lobbying organization representing the major record labels—to enact a song performance right for radio play, the equally powerful broadcaster lobby prevented such legislation. But when digital transmission technology showed its potential in the ’90s, the RIAA successfully convinced Congress to enact the Digital Performance Right in Sound Recordings Act of 1995 (DPRA), which assigned a performance right to all copyrighted songs transmitted digitally—via a service such as XM Satellite Radio, for instance.

Still, the new law didn’t specifically address webcasting, then only an emerging technology. So three years later, when Congress enacted the wide-ranging Digital Millennium Copyright Act (DMCA), it mandated that webcasting was indeed subject to the new digital performance royalty. That law allowed webcasters who adhered to certain guidelines to begin broadcasting copyrighted works with a statutory license, paying flat royalty rates per song without having to negotiate with each copyright owner individually. The flat fees hadn’t been established; they were to be negotiated in the wake of the new copyright law.