This is just plain upsetting. After the many hours I've spent tinkering with Pandora.com and all the money that I've spent on Yahoo! Music, I don't want all that taken away!
I still remember the early days on the Web when things were free and every site boldly displayed their "under construction" signs and icons. Yahoo was this neat new little upstart you'd just stumble upon and garish backgrounds with matching graphic balls and rules was the latest in web design. No one even knew how to make money online. Back then many seemed to believe that the web would promote democracy, knowledge, and freedom everywhere it went.
Well, times have changed. Since the Dot Bomb shakeup, people now make money online. Yahoo's megalopolis is now overshadowed by Google's. Any site with under construction graphics with bars and balls could use some cuneiform to look more up to date. Despite all of these changes, it's still pretty wild online. Despite the largely corporate landscape, independent web developers, bloggers, and wiki writers still hold a lot of sway. Small independent ISPs gave way to Yahoo! GeoCities and Blogger.com. There is still reason for some optimism.
The fact is, we still don't have it all figured out. Business models and venture capitalists come and go. Web 2.0 is feeling its way, though no two experts seem to agree what it really is. And net radio is finally finding its footing. Some stations are even making profitability. Public and commercial radio stations are broadening their reach.
Then comes one of those net shaking court decisions that seems to come out of the blue. A few years ago, while the first pioneers were figuring out how to deliver netradio, they were hit by fees to the RIAA for royalties to labels and musicians. There was some reason for concern since everyone was new to the game and they haven't even figured out how to make a reliable buck. These were fees that apparently AM/FM stations didn't have to pay. On the other hand, Napster and other mp3 trading sites made music piracy very easy.
But they persevered. Some companies folded, others started after that crash. Now we have net radio stations like Yahoo! and Pandora that allows you to create tailored radio stations that play only music you want to hear or that it suggests based on our tastes. This is something that traditional radio couldn't hope to offer. Also, can you get access to a lot of less obvious musicians that won't get air time on radio. Along with playing the tune, you get a link to buy the song or album right there.
So now we seem to have a netradio system that supports all the users. Listeners get the music the want. The RIAA gets fees that are proporionately higher than commercial or satellite radio. Musicians and labels get air time PLUS song and album sales. And entrepreneurs get to start businesses and develop innovative technologies. And, all of that could end on May 15th.
When the fee structure was established, it had a deadline for replacement by the end of 2005. So, as of January 1, 2006, netradio companies have been shelling out payments at the old rate. In the meantime, a replacement deal hadn't been agreed on. So, it seems, it all came down to the judges of the CRB. They decided, dispite objections of many voices of the broadcasting and music industry, that the right thing to do is give everyone a flat rate regardless of revenues, resulting in a 300 to 1200 percent increase! And, this is to be paid retroactively from January 1st, 2006.
The rates are so high that nearly ALL small broadcasters will be bankrupted in the process. Many of them are just making ends meet or see profitability in the near future. This ruling most likely makes profitability under current models impossible. Pandora.com stated that with its venture capital backing, it might be able to handle the fees. Yahoo! Music may be forced to pay around 50% of it's revenues in royalties. I'm thinking that free music on the internet is nearing its end. Also, to get into the black, netradio would probably have to turn to top 40 hits and other radio favorites to make things profitable again.
It's just one more blow to the hopes and dreams of a free and democratic internet.
The future of Internet radio is in immediate danger. The Copyright Royalty Board in Washington, DC has more than tripled the royalty rates for webcasters and left unchanged they will kill Internet radio. These exorbitant rates go into effect on May 15 (retroactive to Jan 1, 2006!). Without Congressional action the majority of webcasters will go bankrupt and silent on this date. We need your help. Please take a moment to send a letter to your member of Congress to keep Net radio from being silenced.