Web Radio Stations Hope Silence Speaks Volumes About Fee Hike

By Mike Musgrove
Washington Post Staff Writer
Tuesday, June 26, 2007

No, music fans, there isn't a problem with your Web connection -- it's just that many Internet radio stations are deliberately offline today.

Many Web-based music services and some conventional radio stations that offer Internet audio streams are scheduled to shut off their online music and programming until midnight tonight. Organizers are calling it Day of Silence and are hoping it will focus attention on a royalty-fee increase that many Internet-based broadcasters say could drive them out of business.

The new rates are set to go into effect July 15, barring swift action from Congress.

Participants in the event include such online-only music services as Pandora, Live365 and Real Networks' Rhapsody, as well as radio stations such as WAMU in Washington and KCRW, based in Santa Monica, Calif. One notable service sitting out the protest, according to organizers, is AOL Radio. A spokeswoman for AOL declined to comment.

Earlier this year, a three-judge oversight panel that is part of the Library of Congress followed the recommendations of a group created by the recording industry to increase online royalty fees when the old rates expire. The group, SoundExchange, distributes royalty payments for online broadcasts to musicians.

SoundExchange said the higher rates reflect the fact that CD sales are collapsing and that the recording industry needs to find new sources of revenue to survive. Although Internet radio stations say they've helped music lovers find new bands, resulting in more album and ticket sales, SoundExchange said the recording industry hasn't seen the trend.

Richard Ades, a spokesman for SoundExchange, said there is confusion in the webcaster community about certain fees. "We are working through this," he said. "We don't expect these companies to pay hundreds of millions of dollars; that's absurd."

As for the Day of Silence, he said, "I think the message you get is: You can't build a business without the music, and if you want the music, you're going to have to pay fairly for it."

But Internet radio executives said the new rates would result in fees of about $1 billion, effectively crushing an industry that paid $20 million in fees last year.

SaveNetRadio, the District group organizing today's protest, said webcasters, listeners and artists have hit Capitol Hill offices with half a million e-mails and phone calls seeking support for a bill that would overturn the new fees. Last week, 31 artists came to Washington to talk about the issue with congressional staffers, the group said.

The Digital Media Association, another trade group, and some webcasters have also petitioned the U.S. Court of Appeals for the District of Columbia Circuit for an emergency stay on the fees, which retroactively apply to last year.

Bills in the House and the Senate called the Internet Radio Equality Act would lower Web broadcasters' rates to the rates satellite radio stations pay.

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