No stay of execution for Internet radio
Sheila Lennon treats us to one of the most linkful and comprehensive explorations of Internet radio's scheduled May 15 execution by the Vogons at the Copyright Royalty Board, which decided on Tuesday to deny motions by Internet radio suppliers to let their industry live.
Context & Ripple Effects
This lands six weeks after the royalty rate schedule the RIAA pushed through in March, when the Copyright Royalty Board sided with SoundExchange over webcaster objections — a ruling Techdirt characterized as rates built to kill webcasts rather than price them. Tuesday's denial of the suppliers' stay motions means that schedule now stands unamended, with May 15 as the operative date.
The story is traveling well beyond the usual copyright-watcher circle: Doc Searls flags Sheila Lennon's comprehensive roundup, and Read/WriteWeb separately picks up the same day on the CRB's rejection of the webcasters via an appeal from Pandora's founder to 'save internet radio.' That breadth matters because the affected parties here are consumer-facing services with audiences, not back-office licensing shops.
First-order effects
- Webcasters large and small face retroactive per-performance royalty obligations under the March schedule once it takes effect on May 15, turning many independent stations' cost structures upside down within weeks.
- SoundExchange becomes the sole collecting agent for these rates, giving it direct leverage over every internet-radio operator's survival while the CRB has closed the administrative appeal path.
Second-order effects
- Services like Pandora, whose founder is publicly appealing for listener help, shift from product competition to lobbying and litigation posture, dragging listeners into a grassroots pressure campaign aimed at Congress.
- Listeners facing silent streams have reason to migrate to alternatives outside the per-performance rate base — satellite, device-based playback, or non-US services — redistributing audience away from licensed US webcasters.
Third-order effects
- If the pattern holds — a royalty board setting rates that favor incumbent collectors over new distribution formats — US internet audio consolidates around players who can absorb per-play economics while independents exit, and every future format dispute gets litigated against this precedent.
The trend: Internet audio is colliding head-on with a performance-royalty regime calibrated for broadcast-era economics, and the CRB–SoundExchange axis, more than market demand, is deciding which webcast business models get to exist in the US.