Online radio can be a costly exercise.

Fred Wilson has a post here about Internet Radio Royalties, as they operate in the US.

The Copyright Royalty Board (CRB) has announced its decision on Internet radio royalty rates, rejecting all of the arguments made by Webcasters and instead adopting the "per play" rate proposal put forth by SoundExchange(a digital music fee collection body created by the RIAA).

RAIN has learned the rates that the Board has decided on, effective retroactively through the beginning of 2006. They are as follows:

2006 $.0008 per performance
2007 $.0011 per performance
2008 $.0014 per performance
2009 $.0018 per performance
2010 $.0019 per performance

A "performance" is defined as the streaming of one song to one listener; thus a station that has an average audience of 500 listeners racks up 500 "performances" for each song it plays.

In the UK, each time a piece of music is played to an audience, a royalty payment is due. There are three main bodies that are responsible for collecting royalty fees from radio stations and apportioning the money to their member. They are as follows:

Most music radio stations own a 'blanket' licence, that allows them to play whatever music they wish, in return for an annual licence fee (based on audience size and revenue). Broadcast radio rates are up to 5.25% of net advertising revenues. An exception to this is Student Radio which gets a separate licence deal.

To allow the likes of PRS to apportion the revenue, PRS ask each station to return a detailed summary on what was broadcast, via a series of random "sampling periods", where all music played including jingles, advert music, and even the presenter singing, gets logged and returned to PRS for analysis

These arrangements affect online music services like last.fm, pandora and others. Obviously, depending on your service, pay per play could quickly result in a sizeable bill being run up, independent of any revenues you may generate. It is this that could have a material affect on online radio service.

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posted by John Wilson @ 10:22 PM Permanent Link newsvine reddit



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