In January 2005, 91.5-FM WPRK radio host Dave Plotkin tried to set a world record for the longest radio broadcast by a single DJ. For 110 consecutive hours, Plotkin stayed behind the Rollins College station's microphone. He didn't get the record — unbeknownst to Plotkin, a Canadian DJ had broadcast 120 straight hours in 2003 — but he did score a public relations coup for the station, whose signal struggles to reach beyond Winter Park. More importantly, Plotkin's broadcast was a fund-raising bonanza for the station, enabling it once again to stream its eclectic content on the Internet (www.wprkdj.org).
The station's first online stream died in 2001 when its streaming partner left. In 2002, it looked like WPRK and most other small online music broadcasters would go forever silent. The Recording Industry Association of America pushed the Library of Congress to force webcasters to actually pay more royalties than terrestrial broadcasters, who must pay royalties to composers but not performers. The association wanted webcasters to pay both composers and performers, and sought to make the royalties retroactive to 1998, when Congress passed the 1998 Digital Millennium Copyright Act.
That would have cost WPRK $10,000 it didn't have, station manager Dan Seeger said at the time. Other webcasters said the change would cost them more than 150 percent of the revenue they took in. Internet radio was a fledgling industry that didn't produce a lot of money. Having to pay steep royalties would have killed it.
In 2002, webcasters appealed to Congress, and they found an unlikely champion: Sen. Jesse Helms, R-North Carolina. Helms pushed through, and President Bush signed, the Small Webcasters Settlement Act of 2002. That law required small webcasters to pay up to 12 percent of revenue toward royalties, which stung but didn't kill. Some larger webcasters — including KPIG, one of the first commercial stations on the Internet — died. Others survived. Thanks to that settlement, when WPRK raised the money, it could go back on the web.
But the RIAA didn't give up. In 2004, Congress created the Copyright Royalty Board, a group of judges designed to evaluate royalty fees with the Library of Congress. On March 2, that board issued a ruling that doesn't bode well for Internet radio.
If the ruling stands, Internet stations will have to pay royalties per-performance — in other words, based on how many people listen to each song the station plays. And the royalties would be retroactive to 2006.
For WPRK, the changes don't mean much, because very few people listen to the station online. Its bandwidth only allows for 100 listeners at a time, and Seeger says that within the last month, the station peaked at 75 listeners. For these smallest of webcasters, the board ordered a flat rate of $500 per year. Although that doubles WPRK's normal royalty payment, it's not a death knell, Seeger says. (He does note that, under the ruling, the station now owes royalties for last year as well.)
"It's still better than what was promised on the horizon `in 2002`," Seeger says. "It's more of a problem for Yahoo! webcasts than the WPRKs."
Like WPRK, the University of Central Florida's station, 89.9-FM WUCF, doesn't have many online listeners. Station manager Kayonne Riley says she doesn't know what effect the new rates would have on programming because "I haven't done the numbers."
WUCF is planning to launch another radio broadcast that could be received on high-definition radios. She also plans to stream that HD station over the Internet, and thinks that because some of the content could be student-directed, it may pick up more listeners. For that second stream, the station will have to pay more royalties. Because WUCF runs National Public Radio content, NPR will help foot the bill.
The ruling could be an issue for the giants of the Internet and broadcasting world, including Pandora, KCRW.com and Clear Channel Communications, which owns five broadcast stations in the Orlando market that play music and stream their content on their websites. The larger their listenership, the more they pay. And if the online streams weren't bringing in enough ad dollars to justify the expense, why bother webcasting? A Clear Channel spokesman says the company won't comment on the situation.
On the surface, the rates don't seem that high — only 8 percent of a penny per performance. But, as the website www.saveourstreams.org points out, a station with an average of 10,000 listeners over a 24-hour day that plays 16 songs per hour would be spending $3,072 in royalties daily, and more than $1.1 million every year. That's the retroactive rate for 2006. For 2007, the rate jumps 37.5 percent, meaning the same station would pay $1.5 million. In 2008, it jumps another 28 percent, and another 28 percent in 2009. By 2010, the same station webcaster would have to pay more than $2.6 million in royalties.
The majority of webcasters don't come anywhere close to making enough money to cover that cost. Only the smallest streamers — like WPRK — are exempt, and the new rules make no exception for noncommercial (i.e., nonprofit) stations.
AccuRadio, which bills itself as the largest independent webcaster, will see its royalty payments go from $48,000 to $600,000 because of the new rates, CEO Kurt Hanson told National Public Radio last month. His network of more than 300 web stations took in $400,000 last year.
A number of webcasters, including Clear Channel and NPR, have asked the Library of Congress for a rehearing. If that's declined, they can appeal to the U.S. District Court of Washington, D.C. And if that fails, they can try to reach independent settlements with the recording industry, or get Congress to pass another law in their favor.
"I'm keeping my fingers crossed," says WUCF's Riley.
And if all else fails, Internet radio could simply go silent.[email protected]