The death of Internet radio?

Marketplace Contributor Mar 7, 2007


SCOTT JAGOW: Congress holds another hearing today on a subject near and dear to our hearts: radio. Specifically, the royalties that Internet radio stations pay to record labels for streaming music. Those rates are going way up, retroactive to last year.

We asked our technology reporter Lisa Napoli to give us an example.

LISA NAPOLI: You know, AOL Radio has a site and for just one month it would owe in backpayments over $1.5 million. It could total something like $20 million for the entire year for AOL Radio. Now AOL Radio is rich, but if you think about little startup companies, it in essence would wipe them all out.

Of course, the people who collect the royalties say an increase is fair since ad revenue for Web radio has gone up tenfold in the last three years.

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