Small Internet radio stations and startups who rely on cheap music streaming may be put out of business by a decision of the Copyright Royalty Board upholding an earlier ruling that would nearly triple the royalty rates on music streamed over the Web. The ruling can still be appealed, and a petition to Congress has been started. But those efforts are unlikely to stop the change. Soon, there will be a lot less (free) music on the Web. Sites like Pandora, Last.fm and Live365 could go out of business.
The music industry may think this is a victory, but as Mike at Techdirt puts it:
The end result, of course, is actually going to hurt the music industry greatly. Webcasting has always been a huge promotional driver for artists -- especially niche artists who wouldn't get any publicity any other way. The recording industry apparently still hasn't figured out that it can expand its market by letting people promote the content for it. Instead, it wants to charge for that promotion, in a short-sighted effort to charge for every use of the content, even ones that expand the market and allow the overall industry to make much more money.
Of course, there is simple compromise solution here. Instead of charging a flat rate for all Webcasters, there could be a threshold above which the new rates could take effect. And below that—for small players, college radio stations, music bloggers, etc.—the current low rates could remain. That way, the long tail of music promotion won't be killed, but any sites that break out into massive popularity (and, presumably, profits) can be taxed accordingly.
As the culture of participation takes hold and listeners become broadcasters, treating every Web broadcaster the same is tantamount to silencing the audience. And as any music executive can tell you, that is the most powerful source of marketing any song or band can get.