I’ve written about how royalties have threatened Internet radio in the past. According to this Ars Technica article, it seems like the Sound Exchange is trying to drive nails in the coffins of my favorite Internet radio stations. Ars Technica discusses the awesome-o Pandora in particular, but the disproportionally high royalty fees will affect all of the Internet radio stations I listen to, including SomaFM and Frisky Radio.
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Don’t freak out if you tune into SomaFM today and hear the San Francisco public transit system. Along with several other online radio stations, SomaFM is participating in a day of silence to demonstrate what Internet radio would be like if the increased Internet royalty fees are instated.

While I’m going to miss Soma’s Groove Salad station today, I hope that this day of protest doesn’t turn into a permanent silence.

I got an email message from SomaFM’s General Manager, Rusty Hodge. Rusty is trying to oppose a new bill that will drastically increase the fees paid to the RIAA for Internet radio broadcasts. Sites like SomaFM used to pay a percentage of their income to the RIAA — in Soma’s case, 10% of their annual revenue. The proposed fee structure change will charge on a per-song, per-listener basis. The estimated cost in royalties alone for SomaFM is $628,000. I estimate they paid less than $16,000 last year under the old system. Worse yet, the fees get more and more until 2010, when it would cost SomaFM an estimated $1,000,000+ just in royalties, assuming that their listener base does not increase. This is almost ten times what SomaFM takes in a year in revenue.

Why would the RIAA up the royalties by so much? I can only assume it’s to fund their increasing extortion campaign against alleged illegal MP3 downloaders, and just plain greed.

We may not be able to do anything, but do what you can. Rusty sent out a link to an online petition asking Congress to stop the new royalty policy, and keep the existing percentage policy. Please review the petition and sign it if you agree with retaining the old percentage-based policy. The old system is a good compromise that allows small, independent organizations like SomaFM and FriskyRadio to legally operate and spread music that may not be available in smaller markets. If these stations go away, there will be no way to hear the type of music they play in my area, even over XM or Sirius.

My friend Bushputin, with whom I used to work in Oregon, now works for Internet radio wunderkind Pandora. I told him about this entry, and he asked his company what they were doing. He pointed me to Save Net Radio, which has a link to the aforementioned petition, as well as a resource for writing your Congressperson.

I have included Rusty Hodge’s original email below:

You may have heard, but once again internet radio is facing huge additional royalties for broadcasting music. These royalties are in addition to the ones that we pay to ASCAP and BMI, and are a royalty that is only paid by internet broadcasters. Over-the-air (AM/FM) broadcasters are explicitly exempt from this royalty; it only applies to internet broadcasters and subscription music services.

In the past, we paid royalties based on a percentage of our revenues, in our case 10% of our revenue. But the new royalties don’t allow that percentage of revenue factor, and instead charge us for each song we play times the number of people listening. This works out to about $8 per average concurrent listener per month. In 2006, we averaged over 6000 average concurrent listeners per month, and the royalties we will have to pay for 2006 is about $628,000, over 4 times the amount of money we brought in.

And these rates go up drastically each year, until 2010, where they are 2.5 times their initial rate: by then we will have to pay over $1 million dollars a year in royalties if we want to stay on the air.

So you can see that this puts us in an impossible position. And to make it even worse, the rates are retroactive to 2006.

It doesn’t seem fair that a small radio service like SomaFM has to pay all these additional royalties, when over-the-air stations who reach much larger audiences are exempted from paying them.

If you are in the USA, we would appreciate it if you could sign this online petition which will be presented to members of Congress.

It’s important for us to let Congress know that independent internet radio is about to be forced out of business.

We need to keep our existing “percentage of revenue” royalty rate structure, or better yet, have Congress extend the exemption to internet radio stations as well as terrestrial (over-the-air) stations.

http://www.petitiononline.com/SIR2007r/petition.html

Thanks for all of your support for SomaFM in the past. We will do what we need to do to keep SomaFM on the air and broadcasting. We love you!

Rusty Hodge,
General Manager and Program Director
SomaFM.com

Way back before Netscape knew their 4.x browser line sucked and before they bought up Winamp and before they co-branded with AOL Instant Messenger, there was a great little streaming internet radio site called spinner.com. Spinner had dozens of streaming radio stations to listen to, most importantly to me, separate techno, ambient, electronica, and trance channels. Thanks to Spinner, I became aware of such groups as Morcheeba, Cirrus, Supreme Beings of Leisure, DJ Keoki, and many many more.

So anyway, Netscape discovers that their browser sucks and that their only salvation is to build a portal and grab up free internet services and applications that tons of people used. First Nullsoft and Winamp, then America Online and Instant Messenger, and then my beloved Spinner. Spinner was rebranded as Radio@Netscape.

The user interface changed, but that wasn’t such a big deal. At first, I was happy — there were more stations!! But it became obvious that Netscape wasn’t sure how to turn a profit on their investment. They soon added a banner advertisement, and then a direct link from whatever was being played to Amazon.com. I clicked on a few banners, but never bought anything. I did, however, buy two albums thanks to Radio@Netscape: Re:Lax, You’re the Only One Here, a sampler of a Lax Recording’s downtempo artists, and Pursuit of Happiness, and absolutely lovely (and only) album from a group named Weekend Players. Great vocals over downtempo tracks, it’s a wonderful album. I still listen to both albums regularly.

But then all turned gnarly in Radio@Netscape land. They began disconnecting users after 40 consecutive tracks. Not a big deal, you could just reconnect — but when I was working 10+ hours a day at my desk, I would get discod a few times a day.

Then something worse happened — you could only listen to about twenty songs per day unless you were an AOL Broadband customer. I loved Radio@Netscape, but I wasn’t about to sign up for a broadband account just to listen to streaming audio.

I know that’s a long intro to SomaFM, but you have to understand that I spend tons of time in front of the computer, and music has always been a big deal to me. So to lose RAN was a big issue, and it was also the only source I had of finding new music. Hardly anything I listen to is available on terrestial radio.

The search was on for an alternative to RAN. I had heard of SomaFM thanks to the Ars Technica forum, but hadn’t really tried it since I had RAN. Soma doesn’t have the diversity of genres like RAN did, but Soma is run independently by a bunch of folks in the San Francisco area. They play trance, electronica, and downtempo type music, which is right up my alley. SomaFM has seven stations, and typically stream to about 6000 people during the day. I mostly listen to Beat Blender or Groove Salad, although their Secret Agent channel is a hoot sometimes.

SomaFM offers streaming music in a variety of bitrates so that you can listen to their music even on dialup. It runs from radio quality (24k) to CD quality (128k). Since SomaFM is run by a bunch of private folks, I try to listen to the lowest bitrate I can tolerate.

The problems that Spinner/RAN encountered were not unique. SomaFM has a breakdown of their costs on their Web site. It’s not super expensive to run the station, but it’s not cheap, considering that the DJs and music directors aren’t paid anything and often have to put in cash out of their own pockets to keep the service running. I sent them $50 — it seemed like a small price to pay for the enjoyment I get out of it, and I plan on sending them another $50 after my one-year listener anniversary is up.

Good points:

• Good diversity of music if you like the techno-ish genre.
• Free to listen.
• As far as I can tell, you can listen as long as you want.
• Run by the “little guys.”

Skipping records:

• Free, until your conscience gets the better of you.
• Not as many channels as Radio@Netscape, and certainly not as many genres.
• Sometimes the server gets full and you have to select a different bitrate or go to a different channel.
• There is a higher song repeat rate on the Secret Agent channel, but it’s still good for a listen.
• Only one real way to donate — money. I would like to see a better store, the tote bag and coffee mugs offered on their cafepress Web store leaves a lot to be desired.

SomaFM, I stream to thee:

Four out of five STFU mugs!

an addendum:

I have been listening to the ArsCrew radio station a lot. They aren’t affiliated with Soma. It’s run by a few fellows at Ars Technica, particulary by a gent named Dominick. The ArsCrew station offers a lot of variety, from the type of music you can hear on Soma to 80s hair metal to folk music. Check it out, but since it’s completely low budget and volunteer the station isn’t on at all times during the day and some of the djs forget to start their shows, etc.