Royalty fees may hurt webcasters, including WXPN


Roger LaMay says WXPN has no problem paying royalty fees to the artists it plays on its airwaves and webcasts. So long as those fees are reasonable.

Unfortunately, says LaMay, a recent ruling by the federal Copyright Royalty Board (CRB) is downright unreasonable—and if the ruling is upheld, the future of webcasting will be put in serious peril.

“We believe artists should be paid,” says LaMay, WXPN’s general manager. “But these fees are prohibitive.”

In early March, the Copyright Royalty Board ruled that any station that streams its signal over the Internet would have to pay a minimum $500 artist royalty fee, and that commercial and larger non-commercial stations, such as WXPN, would face gradually increasing fees through 2010. The new fees would be $.0011 per song for 2007, $.0014 for 2008, $.0018 for 2009 and $.0019 for 2010. The stations would also pay retroactive fees of $.0008 for 2006.

The fees may seem insignificant.

But once the numbers are crunched, says LaMay, the full impact of the ruling—which is supported by the Recording Industry Association of America (RIAA)—becomes clear: If the fee structures are upheld, they will cost WXPN $150,000 in just the first couple years.

“[Webcasting] is a nascent business,” LaMay says. “Most non-commercial stations and independent broadcasters are either just breaking even or even losing money. These rules are sort of prohibitive—a disincentive to launch web streams. … With the rates going up, those dollars are going to get a lot bigger in a hurry. They’re basically saying, ‘Hey, don’t get into this means of distribution.’”

SoundExchange, an RIAA-associated royalty collection group, has encouraged the CRB to uphold its ruling, saying in a statement that “no new material facts or fresh evidence has suddenly materialized to give the CRB valid reason to revisit its decision.” SoundExchange says the new rules are simply a way of getting artists the money they deserve.
But LaMay says the fees are just too high, and would pose serious problems for WXPN’s four streams—XPN, XPoNential Radio, Y-Rock on XPN and Folk Alley. The fees would also likely threaten the very survival of many smaller webcasters.

So it’s not surprising that, after the rules were announced, radio stations and webcasters nationwide reacted angrily. National Public Radio, which is appealing the decision before the CRB, called the rules “damaging for public radio and its commitment to music discovery and education.”
LaMay agrees, and adds that many artists rely on outlets such as WXPN, and the WXPN webcasts, to get their music heard. If the government upholds the new fee structure, many webcasters may get out of the business, and while the record labels may profit, many up-and-coming artists probably won’t, LaMay says.

Originally published on April 12, 2007