Internet Law

The Day the Internet Music Dies

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Playing music on the Internet gets more expensive on Sunday—in some cases prohibitively so—because of inaction by a federal appeals court.

Sunday is the day that broadcast royalty rates will increase because of a decision by an obscure group of federal judges called the Copyright Royalty Board, the Los Angeles Times reports. It increased rates for Internet radio stations, made them retroactive to 2006, and eliminated caps on fees for small Internet radio stations.

In a decision released yesterday, the U.S. Court of Appeals for the District of Columbia Circuit refused to issue an emergency stay barring the new rates from taking effect.

“It really isn’t fair,” says Michael Clark, a Web developer in Virginia who plays Christmas music all year long on two Internet radio stations he created. He shut down operations on one station when he realized he may have to pay more than $20,000 in royalties, the Los Angeles Times reports in a separate story. Other small station owners plan to do the same, if they have not already done so.

The royalty board, part of the Library of Congress, decided in March to eliminate a provision that allowed small webcasters to pay no more than 10 percent or 12 percent of their revenue rather than a per-song rate. The move also nearly triples per-song rates by 2010 and adds an annual fee of $500 per station or channel the Washington Post reports.

SoundExchange, which collects and distributes Internet music royalties, had sought the higher fee. It met yesterday with broadcasters trying to negotiate better rates, but no agreement was reached.

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