Copyright Royalty Board: Wiping out a Lifestyle

Perhaps it's something in the water, but terrestrial radio just can't seem to get a break. It seems as though the industry is getting pecked apart by nuisance-media and forces beyond its control. It's like that water torture where little drops of water wear down even the mightiest soldier driving them crazy with the tap-tap-tap of dripping water on the forehead.

First Napster, then the Internet boom, then the Internet bust which sent the industry in a tail-spin around 2000. However, that was no one's fault but radio's as they asked for, and got, exorbitant ad rates for any and all Internet start-ups willing to spend prime rate just to try to brand their new businesses. Radio was still cool then. Then the bottom fell out.

Then 9/11 derailed every one's business, then MP3 players - especially the iPod - started nicking away at radio's precious time-spent-listening - even in-car. Satellite radio has barely even scratched terrestrial's dominance, but it's there nonetheless and attempting to merge.

Bridge Ratings has been conducting research on the importance of Internet streaming to terrestrial radio and when promotion is done properly on terrestrial, on-line listening improves. In fact, our just released study shows that terrestrial simulcast listening is growing faster than any other Internet radio component. The industry has been encouraged by this growth and what it means for the future of an industry that was somewhat late to the streaming party.

Now, another bite - perhaps the biggest yet - is looming. The new Copyright Royalty Board rates. The decision this week not to readdress the industry's objections and to carry on with the increases which at the new 2007 levels will surely send most webcasters folding their tents, but by 2010 the rates get so onerous it's difficult to imagine even the big boys (AOL, Yahoo, Pandora) surviving.

If the rates go into affect (payments based on the new rates are due May 15, 2007) and Congress doesn't step in, traditional radio will be sent back 5 years and its advancement into the digital age will be still-born.

But, wait a minute! What am I thinking? Aren't I advocating for webcasters the same government intervention to prevent failure as Mel Karmazin and the satellite radio companies are seeking for their troubled companies? Sure, Mel says both companies can survive - even flourish - if the merger doesn't take place, but that just doesn't make sense. In fact, Bridge Ratings' March satellite radio consumer tracking shows subscription rates and consumer interest in satellite radio is at an all-time low.

In fact, that's not what I'm advocating. From what I've heard this week at the NAB, only a handful of webcasters are making any profit at all from their business models - only a handful! The thousands of others are either breaking even or losing money! The new royalty rates will wipe out an industry. Even those making a profit, aren't making much.

Satellite radio has 15 million listeners - Internet Radio has 72 million a month based on Bridge Ratings' most recent information. We're talking about an industry that will grow to 100 million listeners within two years and it's about to be extinguished. Congress wouldn't be saving an industry as much as they would be saving a lifestyle. Internet Radio has become a lifestyle and millions enjoy it every day.

The Internet radio industry needs a spokesperson - an agency with some lobbying clout to get out there NOW and disrupt this steamroller royalty rate before it snuffs out an industry and a lifestyle. Unfortunately, I don't see anyone stepping up to take on that role.

And unless someone does soon, those who enjoy Internet Radio will have whiplash and deep withdrawal when all those webcast links go dead.

So, why hasn't terrestrial radio sent in their best to clarify the point? That's really the question, isn't it?