Turn the (online) radio off
TEXT OF STORY
Tess Vigeland: If you listen to music over an Internet radio station, you're in for radio silence tomorrow. Online stations across the country are going dark to protest new royalty rates that threaten to put the whole industry out of business. Marketplace's Jeff Tyler explains why webcasters are mad enough to turn off the tunes.
Jeff Tyler: AM and FM radio stations pay royalties to a song's composer. Satellite and Internet radio stations pay those royalties too, but they also pay an additional royalty to be split between the song's performer and the record label.
It's these royalties which are scheduled to rise.
Jonathan Potter is with the Digital Media Association. It represents online broadcasters. He says new higher royalty rates will drive Internet radio stations out of business.
Jonathan Potter: For some companies, the increase will be 300 percent. For some companies, the increase is gonna be 1,200 percent.
But not everyone agrees that online DJs are being driven bankrupt. John Simson is with Sound Exchange. It collects royalties from Internet radio.
John Simson: We want Internet radio to thrive. They pay us royalties. This isn't something we want to see go away. It's a growing revenue stream; we want to make sure we're being paid fairly.
Simson says his organization is negotiating with smaller Internet broadcasters to exempt them from the higher rates — for now.
I'm Jeff Tyler for Marketplace.