Thursday, April 05, 2007

Once upon a time, radio was a free avenue to great new music. Not the Top 40 AM stations that repeated the same playlist incessantly, but the edgy FM stations that played the music I wanted to hear, even if I didn’t realize it at that moment. Today, most FM stations are wastelands of programmed repetition. In order to find new artists and true alternatives, one must seek out the occasional hourly program on Sunday nights, or seek out low-wattage college radio. This is precisely why I’ve embraced streaming audio through alternative FM stations nationwide, and the various playlist web-sites like Finetune and Pandora that I’ve previously discussed. Virtually all of the music I’ve purchased last year by new artists (or at least new to me) I’ve discovered in this manner. Now, the Copyright Royalty Board is proposing drastic modifications to the royalty system for streaming audio that threatens to extinguish the entire premise of free on-line radio. This pisses me off. I’m willing to endure a few ads on the music sites I frequent, but according to a recent article in the Chicago Tribune, the income from these ads will barely scratch the surface.

Basically, the old royalty system provides for a percentage of a station’s revenue, in the area of 12 percent. The revised system accounts for a per song, per listener fee, which would translate to at least a ten-fold increase in royalties for most stations. For Pandora, which operates by allowing users to create their own ‘channels’, the system mandates a $500 minimum per channel, resulting in a $3.5 billion fee, based on it’s 6 million users. Obviously this would render Pandora not economically viable.

Although many in the industry believe that a compromise will be reached, it seems likely that big changes are near. For more information, I urge you to check Bill Goldsmith's blog at Radio Paradise.

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