News From the
Committee on Small Business
Nydia M. Velázquez, Chairwoman

For Immediate Release
June 27, 2007  

CONTACT: Kate Gilman/ Austin Bonner,  (202) 225-4038

Committee Seeks to Ensure the Continued Development of Small Internet Radio Broadcasters
New Royalty Fees Threaten the Future of Webcasters

WASHINGTON – As the internet continues expanding, the public’s desire for instant access to media and entertainment increases as well. The growing internet radio industry is meeting that demand by providing more options and presenting a wide selection of music that may not be available on traditional radio stations. However, new royalty rates put into place by the Copyright Royalty Board (CRB) are drawing the ire of many broadcasters who claim they cannot afford the increased fees. At today’s hearing, the Committee examined how these new regulations will affect small webcasters, and ways to ensure their continued success while maintaining the intellectual property rights of artists. 

“Internet radio provides an important opportunity to diversify listening options and promote lesser known artists who otherwise would not have their songs broadcast,” Chairwoman of the Committee on Small Business, Nydia M. Velázquez, said. “This is a new and exciting field with vast potential for growth, but the CRB regulations will be a major obstacle for expansion of the industry.”

In 2002, guidelines were set in place regulating royalties that webcasters must pay to artists and studios for broadcasting rights. Firms paid a percentage of their revenue, a system beneficial to small companies with lower profit margins. The new CRB regulations, however, would designate a flat fee that must be paid each time a song is played. For many small braodcasters, this would drastically increase their fees and some industry insiders have projected that royalty payments will more than double. The new regulations are set to go into effect on July 15, 2007 and will cover all broadcasts since January 1, 2006, leaving webcasters open to high back fees and possible legal action for unauthorized public performance.

 “The need to protect and fairly compensate artists is clear, but the new fees imposed by the CRB are overly cumbersome,” Chairwoman Velázquez said. “If these regulations are put into place, the future development of the industry will be uncertain - we cannot allow that to happen.”

At the hearing, the committee explored ways of revising the regulations, maintaining a wide variety of listening options, and ensuring that artists are fairly compensated. Witnesses from webcasting companies testified as to the impact a flat fee system would have on their businesses, and supported maintaining the current revenue based payment approach. Musicians discussed how the internet is an important vehicle for getting their music out, particularly for newer artists who do not yet have a strong fan base, demonstrating the vital role webcasters play in the music industry.

“We must find a solution that will satisfy webcasters while safeguarding the rights of artists,” Chairwoman Velázquez said. “It is critical that we take steps now to enable the internet radio industry to thrive.”

###