Enjoy great online radio at AccuRadio

CRB's chilling effect could force Net radio to migrate north

Posted on: 04/09/2007

From the Toronto Star: "Online radio is one of the Internet’s quiet success stories. While podcasting and Internet video  garner the lion’s share of attention, webcasting has emerged as a major force with millions tuning in daily to thousands of services that freely stream their signals online…

"Despite their popularity, there is growing fear that a recent U.S. royalty decision could effectively shut down thousands of webcasting services. The U.S. Copyright Royalty Board recently established a new royalty scheme that dramatically increases the fees that webcasters will be required to pay to stream music online…

"Given the concern about the future viability of Internet radio in the U.S., there has been mounting speculation that some webcasters may consider setting up shop in Canada, where the U.S. rates do not apply. For example, Mercora, a service that allows individuals to launch their own webcasts, has established a Canadian site that falls outside U.S. regulatory and royalty rules…

"The Canadian fee structure is still under development with webcasters likely to face several charges. Next week, the Copyright Board of Canada begins hearings on Tariff 22, a tariff proposed by the Society of Composers, Authors and Music Publishers of Canada (SOCAN) to cover the performance of music online…

"SOCAN has asked the Copyright Board to grant a tariff that features a minimum monthly fee of $200 and establishes a royalty rate that runs as high as 16.7% of gross revenues (or gross operating expenses if those are higher) for on-demand streaming. The webcast rates vary from 3% to 9% of gross revenues, depending on the type of webcaster. Several groups are challenging the SOCAN tariff request and a final decision  from the Copyright Board is not expected for months.

"In addition to the Tariff 22 royalties, there are at least two other potential licences. The Canadian Musical Reproduction Rights Agency Ltd. (CMRRA) licenses the music reproduction right. CMRRA… is now negotiating individual licences for Internet-only radio stations.

"The Audio-Visual Licensing Agency (AVLA), which licenses the duplication of master sound recordings, has also created a licence for webcasters that copy music on to Canadian servers for webcasting to Canadians. The agreement establishes transmission and subscriber fees as well as sets limits on the number of songs that can be webcast for any individual artists (no more than four in a three-hour period) and prescribes the quality of the transmission (no greater than 96 kilobytes per second).

"The net effect of these tariffs and licences is that webcasting in Canada can get expensive, particularly for non-commercial and niche webcasters.

"By wisely focusing on a percentage of revenue model rather than the U.S. per-stream approach, the Canadian framework may enable webcasters to get off the ground, yet a streamlined system for streaming will be needed before Canada develops into a genuine Internet radio haven."

Read this entire Toronto Star article here.

The problem with moving webcast operations offshore is that eventually there will be reciprocal agreements between various countries’ rights organizations. In this scenario, webcasters would be required — at least theoretically — to pay royalties to various countries’ rights organizations based on the location of the listener, not the webcaster.

This still leaves at least two options for webcasters if the current royalty decision stands (and shuts down U.S. webcasting):

A. Webcasters could move to a country whose record industry is not a participant in the IFPI (International Federation of the Phonographic Industry). A wildly successful webcaster could still be blocked from U.S. listeners at the ISP level, but a smaller-sized one might not be.

B. Webcasters could change their target audience to the country into which they move — for example, we could move AccuRadio to Vancouver and target Canadian listeners, or to Shanghai and target Chinese listeners, until 2010 (when hopefully sane royalty rates might kick in under the 2010-15 CRB determination, and we could move back to Chicago).

We’ll discuss this issue in more detail next Monday at the RAIN Las Vegas Summit. Be sure to join us if you can! —KH

share:  del.icio.us.  post this at del.icio.us  Reddit  post this at Reddit  Digg  post this at Digg  Yahoo   post this at Yahoo! my web  Wink   post this at Wink  Windows   post this at Windows Live  Google  post this at Google Bookmarks  Newsvine  post this at Newsvine

Commenting is closed for this article.

AccuRadio is powered by...
Conference schedules
Sep. 12 SF Music Tech Summit: San Francisco, CA
Sep. 13 RAIN Summit Chicago @ NAB/RAB RadioShow: Chicago, IL
Sep. 14-16 NAB/RAB RadioShow: Chicago, IL
Sep. 24 IBS Radio/Webcast Conf.: Chicago, IL
Oct. 6-7 Digital Music Forum West: Los Angeles, CA
Oct. 13-14 Digital Content Summit/Music: New York, NY
Oct. 18-22 CMJ Music Marathon: New York, NY
Oct. 27-30 CBI Fall Convention: Orlando, FL
Nov. 5 IBS Radio/Webcast Conf.: Boston, MA
Nov. 19 IBS Radio/Webcast Conf.: New York, NY
Dec. 3 IBS Radio/Webcast Conf.: Los Angeles, CA