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Sounds of Silence Muffle Internet Radio

By® Staff

Originally Posted

Hundreds of the 10,000 or so Internet radio stations went dark on May 1 to protest new royalty payments proposed by the U.S. Copyright Office. Others played non-stop public service announcements concerning the issue, which they believe will all but destroy the fledgling industry.

It may be no way to build an audience, but the station operators are hoping they can make a point. The proposed rates, Webcasters claim, are more than 200 percent of most Internet stations' gross revenues.

In February, an arbitration panel, responding to the famed Digital Millennium Copyright Act and egged on by traditional radio interests, recommended that the Copyright Office stick it to the mostly free, mostly non-commercial, mostly niche, shoestring-budget stations.

The miniscule-sounding fee -- 14/100ths of a cent -- mounts quickly when multiplied by the number of listeners and number of songs played. Add a nightmare of government bureaucratic reporting requirements and fees retroactive to 1998, and the new royalty scheme poses a death knell for most of the small stations.

How much of a market is it, really? Nielsen/NetRatings says Yahoo's Launch is the most popular, with 5.97 million listeners in March. MSN Music grabbed 2.4 million; Spinner came in next at 495,000. According to Measurecast, Great Britain's JazzFM, boasts about 71,800 listeners each week, followed by simulcasters Top 40 Virgin Radio (48,700) and classical WQXR (22,500).

But, of course, most of the small Internet operations are lucky if they can cobble together an audience of 2000 listeners a day.

New technology offers new flexibility, but traditional radio stations and recording companies are heavily invested in the status quo and don't like the sound of change.

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