Ruling could hit Internet radio's stop button

Screen shot from Live360 website.

KAI RYSSDAL: Internet broadcasters were on Capitol Hill today as well. They were warning lawmakers about a sharp increase in federally-mandated music royalties they say could drive them out of business. The music industry says it's only looking for fair compensation for its artists and recording labels. Marketplace's Bob Moon has more.


BOB MOON: Let's just say you have . . . different . . . musical tastes, and at long last, you've been able to find what you're looking for.
KCRW ANNOUNCER: We're going to listen to some gypsy music.

Only, on the Internet.

KCRW ANNOUNCER: KCRWMusic.com . . .

Ruth Seymour is the manager of LA-area public radio station KCRW. She reacted in mock horror today when I told her I'd been listening to one of the station's Web channels.

RUTH SEYMOUR: Get off the music site! You're costing money!

A new ruling from three judges who make up the Copyright Royalty Board could prove costly, indeed.

David Oxenford is an attorney representing independent Web broadcasters. He says fees on some smaller outfits are set to double or triple this year.

DAVID OXENFORD: They simply don't make enough money to pay those royalties. These royalties will be several hundred percent of their total revenues.

KCRW's Ruth Seymour remains hopeful public radio stations might collectively be able to bargain for a better deal.

SEYMOUR: Having introduced a lot of new artists which then went on to sign with record labels and made them quite a bit of money, we're valuable to these people.

At SoundExchange, an organization set up by the recording industry to collect music royalties, director John Simson agrees there might be room for some sites to negotiate.

JOHN SIMSON: I think there is the ability for them to go to a group of copyright owners and say, "Hey, we're different, and we need a different license, and can you accommodate us?"

But Simson also points out electricity generally costs all customers the same. And that, he says, is how the free market is supposed to operate.

In Los Angeles, I'm Bob Moon for Marketplace.

About the author

Bob Moon is Marketplace’s senior business correspondent, based in Los Angeles.

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