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To paraphrase a well-used joke: if an Internet radio station falls in cyberspace, does anybody hear it?
That's the question many online radio listeners around the world will try to answer after U.S. Internet radio stations will go offline Tuesday to protest an upcoming royalty rate hike threatening to wipe out Internet radio.
So far, 45 radio stations representing thousands of channels have agreed to go silent or play a series of public service announcements to fight against a ruling made by the U.S. Copyright Royalty Board last March that raises royalty payments by 300 to 1,200 per cent, retroactive to June 2006.
The ruling, which will go into effect on July 15, is expected to cost large webcasters such as Yahoo and Real Networks millions of dollars, drive smaller websites like Pandora.com and Live365.com out of business and leave a large chunk of the 72 million Net radio listeners in the dark.
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Jake Ward, spokesman for a Washington D.C.-based lobbying group Savenetradio.org, says he's working feverishly to pass a bill through U.S. Congress that counters the board's original ruling to a model based on performance revenue payments that the Society of Composers, Authors and Music Publishers of Canada has proposed to the Copyright Board of Canada in April.
"With this model, big guys wouldn't be punished differently than the little guys, and smaller webcasters would have the incentive to grow and not get bankrupt if you broadcast a high number of channels," Mr. Ward said in an interview.
In Canada, copyright payments are structured differently than its U.S. counterparts with tariffs and licenses. SOCAN has been developing a tariff system based on a percentage of gross revenues and two other groups, the Audio-Visual Licensing Agency and Canadian Musical Reproduction Rights Agency Ltd., offer special license agreements with individual webcasters.
Canada Research Chair in Internet and E-commerce Law and University of Ottawa professor Michael Geist argues that the Copyright Board ruling is shortsighted and will wind up having a negative impact on the music industry.
"Everybody does recognize that this is an industry that has the potential to grow and yet, by shutting some of these sites off before they can develop strong business models, they're harming themselves in the long term," said Mr. Geist.
Moving to a Canadian-based radio station is now an option that Last365.com webcaster Mike Charles has been seriously considering in light of the U.S. ruling. The Edmonton resident has been an Internet radio DJ since 1999 and averages about 38,000 listener-hours each month, and is frustrated by what's going on south of the border.
"What the music industry is asking U.S. Internet radio to do is completely stifling, especially when you consider the early stages of growth the industry is at right now. It's almost like asking a child in elementary school to start paying on debt they're going to have later in life when they start spending money," said Mr. Charles.
Mr. Charles says that he's been fielding e-mails from fans all over the country wondering what's going to happen to his station in July and the only answer he can provide is rumours on message boards that his station may go silent permanently or face bankruptcy.
"We've got the attention of most of the listeners, but we have to make sure they understand the gravity of the situation," he said.
One listener who is concerned is Scott Hughes, a 54-year-old graphic designer from Windsor, Ont., and an avid Internet radio listener. Mr. Hughes says he along with a lack of options to listen to, he also sympathizes with the independent artist that rely on the Internet radio for exposure.
"It's going to ruin it for the listener and it's going to ruin it for the artist. The only people who are going to benefit are the bigger music labels," said Mr. Hughes.
"It's going to be tough for me because if I want to listen to reggae music at four in the morning, and with a few clicks I'm there. That's what I love about it and if it's gone, that's too bad."
Mr. Geist agrees: "Sites like Pandora in particular are looked as a great discovery engine for new music...which leads to purchasing the song on services like iTunes or the physical product. It's a significant marketing technique that has been proven to work," he said.
"Canadian bands in particular — the Feists, the Broken Social Scenes, the Arcade Fires — are very quick to attribute the Internet as a prime reason of a way to find a market and fan base at a time where their music is not carried on conventional radio."
Mr. Geist opines that one positive development that may result from the U.S. ruling is an increased interest in copyright-free music where prominent artists may license their music under alternate licensing agreements that will allow Internet radio stations to operate without paying royalties.
"Given the choice of siding with the labels and seeing our music disappear from webcasters or trying to find a marketplace, they'd probably try to find a market," Mr. Geist said.
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