LOS ANGELES—In December, the Copyright Royalty Board announced new and higher statutory rates that webcasters will be forced to pay for the years 2016 through 2020. Previous provisions for small webcasters to opt for a percentage-of-revenue model were not renewed and ended Dec. 31, 2015.
“While the larger Internet radio streaming corporations should be able to absorb the rate increases, smaller online stations...cannot possibly pay these massive royalties and stay in existence,” according to chicagoradioandmedia.com.
Let’s take a look at several examples. Just over three years after its launch, Rick O'Dell has announced that he will have to shut down his website and online radio station, SmoothJazzChicago.net. Its final day of operation will be Thursday, December 31st. To be fair, the new CRB rate structure has contributed to the demise of the service, but is not the only reason given; Mr. O’Dell is busy with other work ventures as well. “We're actually kind of a victim of our growth over the past three years. We've gone up in the rate tiers for both streaming and royalty payments because our audience has grown. Unlike the case of terrestrial radio, additional listeners in internet radio cost you money, because you need to increase your bandwidth once you reach certain thresholds. On top of that, royalties also go up when you increase your total listening hours and revenue. It's a tough hill to climb. We were doing OK, but as a pure-play webcaster, there was no way we could overcome the significant increase in the royalty rate come January 1, 2016," said O’Dell.
LIVE365, which for the past 17 years has offered small webcasters the opportunity to stream music and talk content, has announced a downsizing, due to the new royalty rates, according to allaccess.com.
LIVE365 also lost the support of its investors, forcing it to significantly reduce staff and is now actively looking for partners to help continue the service into 2016.
Note that an earlier version incorrectly said that the old rate ended Dec. 31, 2016.