Next month’s royalty scheme could jeopardise US web radio industry.

Web radio faces extinction

A sharp rise next month in the royalty fees that online radio stations must pay every time a listener logs on could bring an end to the online radio revolution – in the US at least – an industry body has warned.

As of May 15th, US webcasters face a steep climb in their royalty payments. The BBC reports that stations will be charged a flat fee per-song, per-user in addition to a $500 fee for every channel owned by a station. Fees will increase every year until 2010.

Previously, stations paid an annual fee plus 12 per cent of their profits.

"If these rates stand I believe we’ll see a virtual shutdown all of US webcasting," Kurt Hanson, CEO of AccuRadio, stated. "That will be bad for listeners, webcasters, musicians, and the record industry alike."

But the group that will collect the new fees, SoundExchange, says that the move is the right thing for the industry.

"Our artists and labels look forward to working with the internet radio industry so that together we can ensure it succeeds as a place where great music is available to music lovers of all genres," said SoundExchange’s executive director John Simson.

And whilst the UK radio webcast industry is safe for the moment, many who fear that similar moves might follow on this side of the Atlantic have attacked the decision.

"It’s ludicrous that America, a country that portrays itself as an internet innovator, may be the first to shut down its web radio,” co-founder Felix Miller said.

"Pricing internet radio off the air in the US is clearly a retrograde step and very bad news for anyone who cares about the way music is listened to now. We’d like to think that the UK would take a less short-sighted view."

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