p2pnet news | Music:- Yahoo and Time Warner’s AOL stopped sending people to their radio sites after hard-core Big 4 record label organization SoundExchange started grabbing higher fees in July.
The royalty hikes may, “stifle the growth of Internet radio, which increased listeners 39 percent in the past year,” Bloomberg News has ComScore saying.
Now both companies may shut down their web radio services altogether after being hit with a 38% increase in royalties to air music, says the story.
Radio sites have been “dealt a severe blow,” it has analyst Jeffrey Lindsay stating. “It seems very unlikely that at this stage a solution will be reached.”
SoundExchange, an RIAA (Recording Industry Association of America) spin-off, caught in one in payments controversy after another, “represents record companies including Sony BMG, Warner Music Group Corp., and Vivendi SA’s Universal Music Group, sought the royalty increase amid a drop in industry revenue,” says Bloomberg.
“The two sides couldn’t agree on new rates in late 2005, putting the matter before the Copyright Royalty Board, a panel of three judges appointed by the U.S. Copyright Office.
“Siding with the music companies, the board in March ordered that royalties be raised to 0.11 cent for each song listened to from 0.08 cent last year. The rate is scheduled to reach 0.19 cent in 2010.
But, “The current math doesn’t add up,” says Lisa Namerow, managing director of AOL Radio in the story. “If the rates remain as they are, it would be very challenging to sustain a business that is profitable.” The radio sites generate revenue by selling advertising.
Meanwhile, according to Bloomberg, Yahoo and AOL are hoping to “wrest a reduction in the royalties” in discussions with SoundExchange, which has offered lower fees to smaller Internet radio sites.
“The major Webcasters are represented in the talks by the Washington-based Digital Media Association, which also has asked the U.S. Court of Appeals in Washington to overturn the royalty board,” says the story, adding:
“Congress may be the last resort for the Webcasters. Bills introduced in the House by Democratic Representative Jay Inslee of Washington and in the Senate by Democratic Senator Ron Wyden of Oregon would repeal the royalty increases.
Democratic Representative Edward Markey of Massachusetts said in July that Congress may act if a compromise isn’t reached.”
Bloomberg News – Yahoo, AOL May Abandon Web Radio After Royalties Rise, November 28, 2007
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