Say goodbye to web radio.

If you haven't heard the buzz surrounding the RIAA royalty hikes for Internet radio, now is a good time to start paying attention. On May 15, Congress will decide on a new royalty fee that will more than likely put every web radio station in the country out of business.

The skinny on this debate is that the RIAA want webcasters to pay per listener, per song, hugely increasing their fees beyond the income of nearly all these stations. This is something that all digital broadcasters pay, including Sirius/XM and your local cable provider. Regular FM stations pay nothing (and deliver nothing - I am a Sirius/web listener myself). The difference? Not much, but for some reason the RIAA wants to drive web radio out. The fees that the other guys (satellite and cable) pay are fractions of what they want webcasters to pay. Its a clear move to drive an entire industry out of business.

Some have taken up the initiative to stop it, but so far Congress has not been friendly.

There are a couple of things that we as regular consumers need to take a good look at. First, what the RIAA is actually doing here is extremely suspicious with respect to copyright law. The RIAA, since 2000, can legally collect royalty fees on any music regardless of whether they are members of the RIAA or not. Including independents. In other words, if you broadcast your own music you would be subject to paying royalty fees to the RIAA, supposedly to protect the copyright of, well, yourself. Sound strange? It is. What the US government has basically done is issued a tax on all music streamed over the Internet and given that tax to a profit organization.

The second thing is that the fee rates are retroactive. On May 15, 2007, webcasters will owe fees all the way back to January 1, 2006. These webcasters already paid royalty fees under the then-current law, but if all goes according to RIAA plan, the webcasters will owe additional fees under the new terms.

In other words, imagine if you financed a car at 6% interest. 3 years into the loan, the bank calls you and tells you the interest rate is now 30% effective immediately. You must continue paying at 30%, and by the way, you owe us cash for all the interest you would have paid at 30% since the beginning of the loan.

How did they accomplish this? I don't know, but it is interesting to see how this will affect financial contracts. As for the RIAA? I do not know why they want to abolish web radio, but I guess suing little kids didn't bring in as much cash as they'd hoped.

Note: I am a regular web radio listener, so my opinion is bias.