On June 20, a copyright appeals board set a rate of seven-hundredths of a cent per song, per listener. For many stations, run by music fans for music fans, that works out to thousands of dollars more than they make.
Payments are due Oct. 20 for this year and are retroactive to 1998, which could add up to tens of thousands more in arrears. The fee applies to both commercial and non-commercial stations; many non-profits have closed their Web stations, including University of California-Los Angeles and New York University. KPIG of Watsonville, Calif., the first commercial station to stream its signal over the Internet in 1995, has stopped Webcasting, as have others with dedicated followings such as All80s, GrrlRock and SavageRockRadio.
Many Web stations already pay copyright royalties to songwriter organizations. This new fee — which traditional over-the-air radio stations don't pay — goes to record companies.
Hilary Rosen of the Recording Industry Association of America says this issue shouldn't be presented as big labels vs. mom-and-pop operations: "If you don't have a business model that sustains your costs, it sounds harsh, but that's real life. If a grocery store can't afford to pay for the vegetables, they can't keep their doors open."
However, many of the stations shutting down are non-profits. "This isn't a bunch of rich college kids who don't want to pay the fee," says Will Robedee, general manager of Rice University's KTRU of Houston. "Most college station budgets come not from tuition but student fees." And when the new rates demand per-song, per-listener fees, "the better we do our job, by attracting more listeners, the more it will cost us, even though we're not making money."
Small stations have their supporters. Rep. Rick Boucher, D-Va., is expected to introduce a bill this week to offer relief. "The goal is to make sure the small Webcasters who measure their revenues in the tens of thousands are not put out of business by a copyright payment requirement in the hundreds of thousands," he says.
But with time short and Congress in recess in August, Boucher concedes, "This is not going to be easy to pass. Any legislative process will be staunchly opposed by the people who benefit from the high and exorbitant rate."
A concert is slated for tonight at 7:30 ET at the State Theatre in Falls Church, Va., and on the Web at www.webcasters.org, to benefit small Webcasters.
John Simson, executive director of the SoundExchange, formed by the RIAA to collect royalties from new media, says he's willing to work out a compromise with the small Webcasters that could keep them in business, but hasn't come up with a plan yet. "We want to reach a resolution well in advance of the Oct. 20 deadline," he says.
Rosen contends that most college stations won't owe more than $500 a year. "Given our problems with digital piracy on university servers, it is almost comical that they have the nerve to complain about $500," she says.