Twilight Of Internet Radio: Maybe

A new law wending its way through Congress may cause the extinction of Internet based radio as we know it. TechTV has posted a story about a proposed law currently before Congress which will force sites who stream music to pay $0.014 per song in royalties. That may not sound like much until you figure that typical Internet radio stations may play thousands of songs per month and generate very little revenue. The TechTV news article, New Law Could Kill Internet Radio, says:

Most upstart Internet companies just do not have the money to pay the additional fees.

"Iive talked to a lot of the other webcasting companies in the last few days, talking to them about the way theyire approaching this. Many of them are considering not going forward, closing down," said John Jeffrey, executive vice president of, an Internet radio portal that hosts 45,000 independent webcasters.

"We were poised to be cash-flow positive before the end of 2002. With the new rate being set... itill be much further out," Jeffrey said.

Like most Internet radio stations, Jeffrey says the recommendation is poorly conceived, and wants to appeal for a lower rate.

"If you [consider] the very fundamentals of what copyright is about, it is to encourage listening," Jeffrey said.

Jeffrey predicts choices for listeners will become very limited if the law passes.

Not only will the consumer be affected by the law, if it passes, but so will the artists. From the article:

How would the new fees affect musicians and songwriters?

"Well I think that no matter what happens to a song -- if itis broadcast or streamed or downloaded... the songwriter needs to get paid. Itis only fair," songwriter Andre Pessis said.

Pessis has written hit songs for many artists, including Bonnie Raitt, Journey, and Huey Lewis and the News. He says he loves the possibilities the Internet holds for songwriters, and plans to build a website showcasing his work.

However, the growing controversy over compensating artists and songwriters that started with file-swapping services like Napster still bothers Pessis. He says he believes the root of the problem lies with the record companies.

"They see this new technology as an avenue to make a greater profit... Now I donit fault business from wanting to make a greater profit, but theyire overdoing it, and weire the ones in the middle," Pessis said.

Check out the details of the article at TechTV.