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The decision, due to take effect sometime during the next two months, could raise royalty fees paid by some online radio stations more than tenfoldenough to put many smaller stations out of business, Hanson says.Currently, most small Webcasters have paid royalties calculated as a percentage of revenue.Under the new rule, those outfits will begin paying on a per-song, per-listener basis."The more intensively an individual service is used and consequently the more the rights being licensed are used, the more the service pays, and in direct proportion to the usage," according to the 115-page ruling. The station employs six full-time staff members and records about 0,000 in annual sales, mostly from advertising.A decision by the Copyright Royalty Board to raise royalty fees could put some small online radio stations out of business Olga Kharif Kurt Hanson runs a Chicago-based online radio station that streams more than 300 channels of classical, jazz, oldies, and other music genres aimed at adults.The station, Accu Radio, lures more than 1 million visitors a monthnot bad for a startup that's only been around since 2002. 5 decision by the Copyright Royalty Board (CRB) takes effect, Accu Radio may not be around much longer.Specifically, from 2006 to 2008, Web radio music royalty rates will double to 0.14 every time a song is streamed to a listener.
The last time royalties were negotiated, in 2002, "we had the same exact response: that this is terrible, it's going to put everybody out of business," says Sound Exchange Executive Director John Simson.
Before the Internet, an average consumer only bought about 0 worth of CDs a year.
Negotiations over fees could take months, however, while the impact on the Web radio industry is expected to kick in almost immediately.
Some Webcasters hope Congress will get involved and establish different royalty rates for small broadcasters.
The now-expired Small Webcaster Settlement Act of 2002 stipulated that certain noncommercial Web radio stations didn't need to pay royalties at all, while other small businesses only paid a percentage of their expenses or sales.
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Of that, Hanson pays record labels about $50,000 in royalty fees.