(Associated Press via NewsEdge) Internet music broadcasters worry that a new ruling could put many of them out of business by drastically increasing the royalty payments they have to make to record labels and artists.
The new rates, which are retroactive to last year, were decided by the Copyright Royalty Board, a panel of three copyright judges, and made public on the board's Web site, http://loc.gov/crb.
The ruling could have the greatest impact on startup companies that make their living from broadcasting music online and selling advertising to pay for it.
For large radio companies like Clear Channel Communications and CBS, online broadcasting still makes up a relatively small portion of their overall business.
Kurt Hanson, who founded an online radio company five years ago called AccuRadio, said his six-employee company managed to 'eke out' a profit last year under the former rate structure that called for paying royalties of 12% of revenues to music publishers.
Under the new rates, which charge per song and per channel regardless of how much advertising money is being generated, would put Hanson's company out of business, he said, increasing his 2006 royalty bill from $48,000 to $600,000. Hanson testified at hearings of the copyright board on behalf of smaller webcasting companies.
Hanson said he was aware of about 50 companies that paid royalties for streaming music online under provisions for small webcasters, including Digitally Imported, Radioio.com and a husband-and-wife company called 3WK.
Larger companies like Yahoo Inc. and Time Warner Inc.'s AOL unit also have significant Internet radio operations that would also be affected by the new copyright rates.
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