Before you go any further, I'd take a sec to read this post on why Canadians should care about a proposed American law. Once you're done, check out what AccuRadio's Kurt Hanson--a guy with a bunch of dogs in this fight--has to say. (Via Billboard)
As an Internet radio broadcaster and member of the Small Webcaster Alliance, I've been involved in the issue of copyright royalty rates for Internet radio for many years. And I've seen vividly that the current royalty rate system threatens to strangle the life out of an industry that is providing both choices for consumers and opportunities for musicians.
Both in 2002 and again in 2009, after the U.S. Copyright Office published rate-setting rulings that would have bankrupted all or most Internet radio providers, Congress had to intervene and ask record labels to negotiate a more-workable rate with webcasters.
The resulting rates are still wildly higher than those paid by other forms of digital radio (i.e., satellite radio and cable radio) and have been barely survivable for most webcasters - with many forced to exit the business entirely. Meanwhile, other companies who could spur innovation in Internet radio remain on the sidelines due to concerns over unsustainable royalty rates.
The problem with the current "willing buyer/willing seller" Internet radio standard for rate-setting is that while it is intended to lead to a market-based rate, the fact that the large record labels negotiate as a group means that a true market rate has never actually been determined.
The result has been a nightmare for our industry ever since. Copyright Office decisions have forced webcasters - the ones that were able to remain in business - to pay unreasonably high royalty rates, hindering innovation and growth.
Read more here.