RIAA Tacks on New Fees, Threatening College Radio

Although internet radio may be a strange, hybrid beast, something about “tuning in” online—perhaps it’s niche music communities, perhaps more listener control—has made it an island of success in the otherwise tempest-tossed contemporary broadcasting industry.

But stormy skies threaten the future of webcasting.

Recent legislation aimed at correcting the copyright errors of the past and preventing the copyright infringements of the future is jeopardizing the ability of internet-only radio stations and smaller terrestrial stations (such as college and high school stations) to continue with their online programming.

The prohibitive costs of the legislation, coupled with difficult logging and tracking procedures and the favoring of large stations over educational and internet-only stations, threaten to turn the internet radio community into yet another ClearChannel playground.

Unlike other countries, the United States requires terrestrial radio stations to pay licensing fees only to song composers, instead of paying royalties to composers and performers.

Organizations such as Broadcast Music, Inc. (BMI) and the American Society of Composers, Authors, and Performers (ASCAP) have long collaborated with both large radio stations, and college stations, requiring the stations to log what they play for a given period of time—usually three days—and then assigning a certain fee to the stations based on the artists they represent. These companies have already included a web-streaming fee in their agreement.

However, BMI, ASCAP, and others only represent the composers, and due to legislation proposed in 1998, digital broadcasters (i.e. webcasters) now have to pay royalties to performers as well. The major players (from large commercial radio stations to educational stations) have been wrangling in Washington to determine how much stations need to pay and how much of their programming they need to report.

Enter SoundExchange, an offshoot of the Recording Industry Association of America (RIAA) that acts as a royalty collecting agency for performers. Unlike BMI and ASCAP, SoundExchange seems determined to be anything but friendly to the stations it interacts with, particularly the college radio broadcasters who are attempting to negotiate a different rate for educational stations (full disclosure: WHRB is one of the negotiating parties).

Difficulties range from the trifling—SoundExchange does not send invoices for payment—to the substantial.

The company is arguing for four two-week logging periods (one per quarter), one of which will necessarily be during the summer, when college radio stations typically broadcast automated air.

Unlike BMI, SoundExchange provides no clear guidelines for how the data should be compiled nor do they remind stations to submit the information, setting up a trap for smaller stations.

They also accept data only in digital format, making it difficult for stations that play CDs and LPs and do not use automated software for the bulk of their programming to comply.

Beyond the administrative and logistical nuisances is the threat to the financial viability of small, streaming operations.

Internet radio’s low overhead allows for stations to broadcast on a shoestring budget and still access a worldwide audience. For some college stations that only have small transmitters or broadcast in small communities, streaming actually becomes the main source for listeners.

The newest SoundExchange royalty rates are so dangerous to internet radio because they effectively eliminate both of these advantages to streaming. Not only will royalties see a 150 percent increase over the next five years, but a $500 fee per channel will also be introduced.

If stations want to increase their listener capacity on one channel above 200 listeners, they will be forced to pay more for each accrued listening hour. Finally, since the settlement was supposed to have taken effect in 2007, stations are already in the position of having to retroactively pay the missed fines to SoundExchange within 90 days of receiving notice, which may again be during summer hours when stations are not operating at full capacity.

These prohibitive costs will force internet radio towards the current commercial model of terrestrial radio. College radio stations and other small stations will undoubtedly find the cost to be too high, forcing them to either stop streaming, increase advertisements, or negotiate directly with the RIAA for different terms, lengthening the already lengthy legal battle.

With SoundExchange holding all the cards, internet radio may quickly find itself being bullied into a model the recording lobby finds most profitable.

Such a model precludes the more free-minded and eclectic programming so often found on internet radio and could force streamers to use content burdened with Digital Rights Management technology, bringing all the baggage of illegal downloading to streaming radio.

While SoundExchange may be looking to fix the mistakes of the radio industry from years past, it does so without recognizing the state of radio today. It may not kill internet radio, but it is certainly doing its best to limit its potential.

—Staff writer Kimberly E. Gittleson and contributing writer Evan L. Hanlon are the president and rock director of WHRB, Harvard’s student-run radio station. Gittleson can be reached at gittles@fas.harvard.edu.