Net Radio Dies this Sunday

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Court rejects Webcasters' plea for relief

A federal appeals court has declined to grant a petition by Webcasters to delay the onset of new royalty fees that they argue could imperil their offerings.

In a one-page order filed late Wednesday, the U.S. Court of Appeals for the District of Columbia said the opponents of the fees "have not satisfied the stringent standards required for a stay pending court review" and rejected their request for an emergency stay.

Barring an 11th-hour agreement, then, between Internet radio operators and the music industry, the new fees are scheduled to kick in on Sunday.

Jonathan Potter, executive director of the Digital Media Association, whose members include larger Internet radio operators like Yahoo, Live365, Pandora and RealNetworks, said he was hopeful Webcasters could still reach a compromise with the music industry.

But until then, Webcasters will be "forced to make very difficult decisions about what music, if any, they are able to offer," he said in a statement. "The result will certainly be fewer outlets for independent music, less diversity on the Internet airwaves, and far fewer listening choices for consumers."

The new rules (PDF) issued by the U.S. Copyright Royalty Board earlier this year prescribe rate hikes of 0.08 cent per song per listener retroactive to 2006. They would also climb to 0.19 cent per song by 2010. According to the advocacy group SaveNetRadio, smaller Webcasters could face payment increases of up to 1,200 percent of what they owed before, while larger ones could owe up to 300 percent more.

Each station would also have to hand over a minimum $500 royalty payment per "channel" under the ruling, which DiMA says could cost the three largest Net radio operators--Yahoo, RealNetworks and Pandora--more than $1 billion in the first year alone.

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