Category | News

Government ruling could price Internet radio stations out of the show

Published on April 18, 2007 by The Sentinel

    The Web site’s font is large and vibrant. And in
case a visitor’s eyes
somehow still gloss over it, it’s set in boldface and italics to
boot:  “Welcome to Wild West Radio!
    “Quite Possibly The Best Damn Streaming Internet
Radio Station On Planet Earth!”  Scroll down a bit, past the
caricature of a wizened cowpoke, beyond
the name of the song playing and a link to buy the album, and you see
another cheeky, mock-boastful declaration: 
“Warning: If you’re looking for mainstream Vanilla Flavored,
Homogenized, Corporate Country Music, you’ve come to the wrong
place.”

 
Well, now, that’s enticement enough to double-click and check out
the site, owned and operated by Jeff Scammon of Roseville,
Calif.    Listen to a set of Scammon’s commercial-free
music and you’re bound
to come away convinced that the guy makes no idle boasts.

    A sample set: alt-country’s “Bottle Rockets,”
followed by Steve Earle and then Todd Snider. Then, after a station ID
_ Scammon, with a slight drawl, saying, “You’re tuned into Wild West
Radio, playing fewer hits more often” _ on comes a James McMurtry
ballad.

    The odds of hearing any of the above artists on
Sacramento’s commercial country radio stations, KNCI FM and the Wolf
(KNTY FM), are, well, pert-near impossible, podner.

    That’s the beauty of Internet radio, supporters say,
thanks to some computer-savvy users with a couple hundred bucks to
spare on software who go online and create a station: The range of
music options is broadened, and emerging artists are given a boost.

    And folks are obviously listening. About 70 million
people are said to listen to an estimated 10,000 online stations
worldwide, according to Edison Media Research. Digital music streams
are provided by the big boys (Clear Channel and CBS Radio, for
example), as well as the little guys (Scammon’s www.wildwestradio.com).

    But a ruling in March by the U.S. Copyright Royalty
Board could change all that. The board is proposing to raise the
royalty rates paid by Internet stations, which could put smaller
operators out of business and dissuade the larger ones from paying the
hefty fee.

    At least, that’s the doomsday scenario being put
forth by Internet radio providers, who are mobilizing online petition
drives and planning to appeal the ruling before the new regulations
take effect in May.

    Both broadcast radio and online stations pay
royalties to publishers of the music, but over-the-airwaves radio is
exempt from paying “performance fees” to artists and record companies.
Internet radio has no such exemption.

    The music industry is applauding the idea of
increased rates for online music use. A statement released by
SoundExchange, created by the record industry to collect royalties from
Internet streaming, called the board’s proposed action a “fair and
reasonable decision.”

    But guys such as Scammon say it casts doubt on their future.

    “I’m not sure how it’s going to affect me,” says
Scammon, who’s been online for less than a year and reports 200,000
total “hits” for his streaming audio.

    To support his online operation _ which he views
essentially as a hobby _ he accepts donor contributions, which he uses
only to pay royalties to music publishers (currently $22.50 a month)
and for Web site maintenance.

    “If what I hear is (accurate),” Scammon says,
“you’ll see genres like my music disappear. And that would be awful.
Great for corporate radio, but not for the consumer or artists who need
exposure.”

       Other small Internet broadcasters agree. 

  “This would totally put me out of business,” says Bill
Goldsmith, operator of the rock- music Web site Radio Paradise, based
in Paradise, Calif. “We’d be paying significantly more than we plan to
make this year.”

    Under the proposed ruling, Goldsmith estimates, he
would pay $650,000 in royalties in 2007. “And that would come out well
over 100 percent of our gross income,” he says. “I can’t afford that.”

    Even one of the largest online radio operators says
he would be forced to shut down. Kurt Hanson, a Chicago businessman who
runs AccuRadio, says the station gets more than a million listeners a
month and that he accepts advertising.

    He writes in a newsletter that he currently pays
$50,000 in royalty fees out of the $500,000 he makes a year. Under the
new system, he says, he would pay $600,000 annually in royalties.

    “Internet radio is in danger of becoming extinct,” he writes.

    It’s all a matter of fairness, argue the folks at SoundExchange.

    “Artists have earned the right to be fairly
compensated for the performance of their work by webcasters who benefit
_ financially or otherwise _ from their talent,” the organization’s
statement says. “Without these royalty payments, these artists would,
in many cases, be unable to continue contributing to the music world.”

    But Scammon, a real estate agent in his “real” life,
and others counter that Internet radio gives voice to artists.

    “Ninety-nine percent of the stuff I play, there’s no
way that’d be on KNCI,” Scammon says. “A couple of the big stations
have been approached about playing people like (Earle and Snider), but
they say, `Oh, no, our conservative listeners wouldn’t approve of this.’

    “So the corporate broadcasters just play the
regurgitated (music) day after day, year after year, that you can hear
on five different stations in any given market. How does that help
emerging artists?”