10 Questions

We asked Steve Shaw, owner of Lana'i Sounds about the immediate crisis facing Internet Radio and what's to come in the future.

1. Lana'i Sounds: I understand there is a new proposal for royalty rates for Internet Radio. Can you tell us about it?

Steve Shaw: The Copyright Royalty Board (CRB) announced catastrophically high new royalty rates as well as a $500/year minimum per station. Despite the outcry of nearly all Webcasters, the CRB denied the request for a rehearing and has proceeded with their original ruling. The new rates go into effect on May 15, 2007 and are retroactive to Jan 1, 2006.

2. Lana'i Sounds: What will be the impact of the higher fees?

Steve Shaw: The ruling calls for a serious escalation of fees, to the point where most small, medium, and even large Internet Radio Broadcasters would not be able to afford to continue broadcasting. The majority of Webcasters will go silent on this date.

3. Lana'i Sounds: Are you currently paying royalties?

Steve Shaw: Since our inception, Lana'i Sounds has always paid both composer (to ASCAP, BMI and SESAC) and performance royalties (to SoundExchange). Over the last few years, Internet broadcasters have paid millions to SoundExchange alone.

4. Lana'i Sounds: Are all music stations faced with higher royalties?

Steve Shaw: Internet radio is singled out from all other radio, burdened with fees not paid by AM or FM stations, and at rates at least 3-4 times paid by satellite and cable radio. The ruling even included an absurd minimum of $500 per station per year to penalize the smallest Webcasters with the highest rates.

5. Lana'i Sounds: What will be the overall impact of the ruling?

Steve Shaw: The vast majority of Webcasters are barely making ends meet as Internet radio advertising revenue is just beginning to develop. There's little doubt most Internet radio services will go bankrupt and cease webcasting if this royalty rate is not reversed by the Congress.

6. Lana'i Sounds: What is the size of Internet Radio listenership?

Steve Shaw: In just the last year, Internet radio listening jumped dramatically from 45 million listeners per month to 72 million listeners each month. Internet radio is very popular and it is already benefiting thousands of artists who are finding new fans online every day.

7. Lana'i Sounds: If Internet Radio is that big, shouldn't the higher royalty rates be affordable?

Steve Shaw: Internet radio is a relatively new industry with advertising models still developing. Some services rely on banner ads; others are selling traditional audio ads; and still others rely on sponsorships. The vast majority of Webcasters will not be able to generate enough advertising revenue to pay their new, higher royalty fees.

8. Lana'i Sounds: Is there something the listeners can do to help?

Steve Shaw: H.R. 2060, The Internet Radio Equality Act was introduced by Representatives Jay Inslee (D-WA) and Donald Manzullo (R-IL) to save the Internet radio industry. Please call, write or email your congressperson to ask them to co-sponsor H.R. 2060. And be sure to tell them the future of Internet radio is in immediate danger and needs their help immediately! Click HERE to act now!

9. Lana'i Sounds: I know I can listen to Internet Radio on my PC, but how about on my home stereo?

Steve Shaw: Logitech has a couple of wireless music systems that stream audio files wirelessly from your computer or laptop to your home stereo system. You simply plug the wireless transmitter into your PC and plug the music receiver into your stereo system. It's that simple.

10. Lana'i Sounds: When will I be able to listen to Internet Radio in my car?

Steve Shaw: If you thought Satellite Radio increased your choice universe, imagine what it would be like if you could access any of the Net's audio streams, estimated by some to now surpass 100,000. And Internet Radio in your car isn't just idle talk. KVH already has a system that provides TV and Internet to RVs and boats. The company feels its TracVision A5 antenna could be adapted and developed into a feasible receptor for standard road vehicles to receive streaming audio. Internet Radio in your car in right around the corner.