In April of 2006, Live365 Chairman and CEO Mark Lam testified before the US Senate Judiciary Committee’s hearing on “Parity, Platforms and Protection: The Future of the Music Industry in the Digital Radio Revolution”
At that hearing, Lam noted the wide disparities between royalty rates paid by terrestrial, satellite, and internet radio stations. From the transcripts:
Since 1998, Live365 and other DiMA members have paid tens of millions of dollars in royalties to recording companies and recording artists. In part, these payments reflect widespread consumer adoption of Internet radio, which is regularly enjoyed by more than 30 million Americans. However, the very fact of and the amount of these payments underscores how the Copyright Act discriminates against Internet radio based solely on our choice to deliver music to consumers via the Internet, rather than broadcast, cable or satellite technologies.
Live365 and all Internet radio services compete directly against terrestrial radio for a limited universe of listeners and advertisers, and compete directly against cable and satellite radio for an even smaller universe of subscribers and advertisers. Paying higher royalties than our competitors requires Internet radio to reduce programming or performance quality, or increase advertising prices or frequency. Every option is unpleasant, and they unfairly inhibit Internet radio’s growth and competitive opportunity.
With the new rates, stations such as Ram Radio might find themselves moving offshore, beyond the reach of U.S. copyright law, indirectly absolving themselves of the responsibility to pay for any performance royalties.
“I broadcast American music and this is going to bump us right out of our own country,” said McClusky.
Many stations will simply close shop and cease broadcasting. Ultimately it is the listener and the artist themselves who will suffer from this decision. As more internet radio stations face the financial reality of their situation, less money will be filtered into SoundExchange, meaning fewer royalties to pay out to artists.
Article comments
1 - marjoryt
I absolutely NEED internet radio! Around here there is ONLY canned pop, canned lounge, canned hiphop, and canned country, and canned rock. The country, hiphop, and rock stations play ONLY music by male singers. When you think about it - MTV, VHS, and BET do exactly the same. That's a shame, because there are great artist of both sexes (and some artists that change sexes, but that's another story). Celtic? Not around here, nor is there alternative, or historic, or world - this ruling will effectively close down my enjoyment of music. In addition, my office has terrible reception - internet radio was a very elegant reception method, and I AM a subscriber to Live 365.