What was initially described as a move to protect royalty payments owed to recording artists for music played on internet radio has exploded in what is now claimed by internet radio broadcasters to be a blatant attempt by the industry to render internet radio extinct. SoundExchange is the sole agency charged by the US Copyright Office with the task of collecting these royalties, which apply only to non-interactive streaming internet radio stations and not websites whose listeners can dictate which sounds they hear. SoundExchange describes itself as “a nonprofit performance rights organization jointly controlled by artists and sound recording copyright owners through an 18-member board of directors with nine artist representatives and nine copyright owner representatives” on its official website. The organization was created by the Recording Industry Association of America (RIAA). On March 1, 2007 the US Copyright Office released a ruling on royalty fees based exclusively on numbers of listeners tuned into individual Internet radio stations, rather than on those stations’ revenues. Each song played is termed “a performance”, which is defined as the streaming of one song to one listener. The royalty payments are retroactive through 2006, and costs to radio stations will run as follows:
2006 $.0008 per performance
2007 $.0011 per performance
2008 $.0014 per performance
2009 $.0018 per performance
2010 $.0019 per performance

The fractions of dollars charged above appear minuscule, but the reality is very different following some simple arithmetic. The new ruling, requested by the RIAA via SoundExchange, means that an internet radio station with just 1000 listeners would be obliged to pay around $134,000 in royalties for 2007 - plus $100,000 in back payments for 2006. This figure is slated to rise to around $220,000 for 2009. Webcasters were quick to respond, citing the devastating effect on the internet radio industry that this ruling brings. Bill Goldsmith, owner of Radio Paradise, a station with global listeners now on the brink of collapse, said, “The Internet’s paradigm-shifting gift to radio programmers and music lovers - at least those in the US - is now in danger of being taken away by the misguided actions of the US Copyright Board.” Goldsmith went on to compare this latest development with the situation in the 1970’s when the music industry tried to quash the home-taping boom. The industry failed, but still went on to become richer and more powerful than ever. Many state that, if anything, the service that internet radio provides actually benefits the music industry. The blogs and other discussion sites are currently ablaze with anger and speculation about this unexpected new twist in the infotainment age, and if you care at all about industry-inflicted extinction of a beautiful species, you will wade in with your opinion, too. Oops, now you have mine...