The Future of Internet Radio
"We’ve been working hard since day one to ensure that all artists, labels, and rights-holders receive their relevant royalties," says Ward. "As a leading music website, this is an absolutely necessary process for us."
Over-the-air stations are exempt from the raised rates for now, but that is expected to change. Stoddard acknowledges that "the terrestrial guys are learning now that it’s not just an internet radio issue. It’s an issue for everyone."
"As soon as one set of music distributors is paying a certain amount that’s so much more than anyone else, well, guess what? That just means that your rates are going up, too," he says. "Not to mention that everybody is moving into IP-based delivery anyway."
King speculates that the impact of the rate hike will speed over-the-air’s transition to online-only. He predicts that "most of the small-town radio stations will go out of business" if said stations are asked to shell out beaucoup bucks, which is a move he supports.
"It will be interesting to see how that affects Abacast radio customers because it may well be that they shut down their terrestrial operations and simply go online, where things are cheaper to distribute, and become much smaller organizations," he says, adding that "there is no doubt that’s the direction consumer music consumption is going. The question is how fast it gets there."
Simulcasters are already feeling the pain, says Lewis. "Terrestrial broadcasters were hit quite hard by the introduction of royalties," and the company’s business model has had to change quickly.
"Prior to 2003, we were focused on building out our delivery network and getting our feet wet with next-generation media players," he says. "When the first round of royalties hit, we needed to adapt quickly to prove to stations that they could make money by using ad replacement technology and enhanced media player tools to attract a new breed of advertisers."
At the station level, the challenge lies in creating the reporting required by the RIAA, since the amount owed is figured on a per-listener, per-play fee. Brian Ma, IT director at New Northwest Broadcasters, an Abacast client, says one of the biggest headaches has been "creating the reporting that [the RIAA] requires."
"[It took] a lot of man hours at the beginning to try and figure it out, putting down the titles and album names, trying to figure out what they wanted from us," he says. But one man’s burden is another’s blessing. "If people do their reporting correctly," little-known artists who weren’t previously getting paid will get their due, he says.
To ease the burden on its stations, Liquid Compass launched an RIAA Reporter tool that allows stations to receive performance stats within seconds simply by typing in their specific call letters and a specified date range.
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