Many of the leading Internet radio stations are silent today in protest over the new Sound Exchange royalty rates that are supposed to go in effect on July 15th. Yahoo Music has a good blog post explaining what is going on.
I have mixed views on this subject. First and foremost, I don’t like congress setting any rates. I believe the markets should be allowed to work. However, there is a compulsory license meaning that rights holders are forced to license their music to radio stations. That’s the reason congress is involved in the first place.
I also believe that the current audience size for Internet radio is sufficient that an advertising model could cover a lot of royalties to rights holders. The claim that higher rates are going to put Internet radio out of business seem a tad overblown to me.
But I am with the Save Internet Radio coalition in the end because I think the rate increases are too steep and there’s not enough of a reliance on a revenue share model. This is ultimately a market that can make both the Internet radio services and the music rights holders a lot of money.
But growing new markets takes time and patience. It sure feels like the steep rate increases are more about squashing this new medium instead of letting it develop along a normal timeline.
So I am for a compromise. Sure, take the minimum royalties up from where they are. Nudge all the Internet radio providers into a commercial model. But do it slowly and carefully so we don’t kill the golden goose before it even lays the egg.