LOS ANGELES -- Hundreds of Web radio stations are planning a "silent" protest on Wednesday against proposed royalty rates they say could bankrupt many members of the fledgling industry.
The stations said on Tuesday they were opposing rates recommended in February by a Copyright Royalty Arbitration Panel working for the U.S. Copyright Office.
Under the Digital Millennium Copyright Act (DMCA), the Librarian of Congress is required to set sound recordings' performance royalty rates for Web radio stations by May 21.
The CARP recommended Webcasters pay recording companies a rate of 14/100ths of a cent per listener per song.
While it appears small, Webcasters say it would add up to 200 percent or more of sales, threatening their business.
"The proposed fees would definitely put us out of business," said Bill Goldsmith, the owner of rock station RadioParadise, another station planning to protest.
Kurt Hanson, publisher of Radio and Internet Newsletter, said the proposed fee would amount to about $9,000 a month for any mid-sized Webcaster or about double what the station's revenues would be.
This week, 20 members of the House of Representatives sent a letter to the Librarian of Congress, saying the proposal was "contrary to the intent of the DMCA and Congress's general policy not to stifle innovation" on the Web.
Webcasters are hoping with their efforts on Wednesday to prompt listeners to also contact lawmakers.
Many are planning an entire day of silence, beginning at dawn and ending in late evening. Others plan to replace music streams with periods of silence interspersed with public service announcements on the subject.
The Recording Industry Association of America (RIAA), which represents all the major labels like AOL Time Warner's Warner Music and Vivendi Universal's Universal Music, lobbied Congress for the royalty payments in the first place and had sought even higher rates.
John Simpson, executive director of RIAA affiliate SoundExchange, which collects licensing fees, said he is pleased with the proposed rates, which put the industry one step closer to implementing the right of licensing, collecting and distributing performance royalties for Webcasts.
He said he did not believe the rates would cripple the industry and were fairly valued.
"When I look at the cost of this, it's not a lot when you see the value of the business. The most important component of their business is music and they (Webcasters) don't want to pay for it. We've unfortunately gotten too used to the idea of giving music away for free," he said.
"I think the ones that have businesses will not go out of business. For some trying to get into the business, this is one of the costs," he said, adding, "I think it's kind of interesting that we haven't seen the Webcasters launch a day of silence to protest bandwidth costs," he said.
Meanwhile, Webcasters said if the rates wind up putting their stations out of business, more pirate services will flourish in their absence.
Several major traditional broadcasters, who stream simulcasts on the Web, also plan to support the effort with either silenced streams or a combination of banner ads, public service announcements, information on their Web sites, according to Hanson.
Traditional radio stations pay no performance royalties for music played on air because they have proven promotional value.
These operators would only be required to pay half or 7/100ths of a cent for music they streamed on Web simultaneously with their radio stations, according to the CARP proposal.
