Internet webcasting fees force college broadcasters off air

SAN DIEGO -- The signal from San Diego State University's KCR station is so weak it can barely be heard on campus -- if at all. Yet for the past six years its eclectic programming has reached the entire world.

"The Internet has been a vital part of our broadcasting," said Rachel Bradley, 23, a graduate student and the station's general manager. "It seems to be our lifeline to be an actual, viable radio station."

KCR and many other college stations fear they'll have to give up their newfound "antenna" by year's end because of new webcasting fees.

For listeners, this could mean being cut off from most of the nation's 1,300 college radio stations, which operate on small budgets and play music not heard on commercial radio.

In June, the U.S. Copyright Office issued rates for royalties that webcasters must pay music labels and musicians for sound recordings. The minimum is $500 a year but fees are retroactive to 1998, and many college station's simply can't afford the assessments of at least $2,000.

"Within days I was receiving e-mails from radio stations saying, 'We're going down. You can add another station to your list,'" said Will Robedee, vice chairman of Collegiate Broadcasters Inc.

Stations that have already halted or suspended webcasting include University of California-Los Angeles Radio, KBVR at Oregon State University and New York University's WNYU.

"We didn't want to be liable for any of these huge fees that would cripple us or threaten our existence," said Gabriel Mousesyan, an economics major and general manager of WNYU, which killed its four-year-old webcast in April.

Retroactive fees

For college stations and other nonprofit webcasters, the fees work out to two cents per listener per 100 songs, plus an 8.8 percent surcharge to cover temporary copies of music needed for streaming.

So a station playing 12 songs an hour around the clock would owe $23 per listener each year. Averaging 21 simultaneous listeners keeps the station at the $500 annual minimum. Beyond that, the station has to pay extra.

WNYU averaged about 100 listeners, which could result in retroactive fees of more than $9,000. John Simson, executive director of SoundExchange -- a collector and distributor of royalty revenue -- said he would be surprised if more than a few college stations exceeded the minimum.

Robedee, who also acts as the general manager for KTRU at Rice University, said the station averages just under 20 listeners at any one time.

However, KTRU's audience has been doubling every 10 months as use of the high-speed Internet connections needed to listen to Webcasts increases.

Because most college radio stations are classified as noncommercial, they cannot run ads to offset the additional costs. San Diego's KCR operates on a $3,500 annual budget -- a budget it spends down to the penny.

Royalties could triple

KTRU has a budget of $5,000.

Should stations change their status to commercial, their royalties would more than triple. Commercial broadcasters pay seven cents per 100 songs per listener, and they, too, have been complaining and, in some cases, shutting down.

Webcasters and over-the-air radio stations already pay composers and music publishers royalties for the music they play, based typically on a percentage of their revenues.

Traditional radio broadcasters have been exempt from paying separate royalties to music labels and musicians after successfully arguing they already were promoting the music.

But the music industry succeeded in persuading Congress in 1998 to require such fees from webcasters, and the U.S. Copyright Office set the rates after years of hearings.

The Recording Industry Association of America says the fees are needed to compensate copyright holders. The music industry is looking to the Internet as a source of supplemental income so it will not have to live and die by the sale of CDs, Simson said.

He added that there is no evidence to support broadcaster assertions that webcasting has promotional value. He said artists and copyright holders lose money every time their music is played for free.

Wayne Coyne -- singer, songwriter and guitarist for The Flaming Lips, a college radio favorite -- agrees the promotional value is marginal. But he does not believe college stations should be charged.

Administrative costs

"I have faith that people love to shop," Coyne said.

Simson said he is willing to work on a separate deal with college stations. He denied the new fees were intended to curtail webcasting and said the RIAA and SoundExchange wanted the new medium to continue.

"This is a great new revenue stream," Simson said.

College broadcasters also fear yet-to-be-released record-keeping requirements; the Copyright Office is expected to rule soon on what information broadcasters must report about every song they play.

Stations say if the royalties do not shut them down, the administrative costs associated with the reporting requirements will.

"We are a nonprofit radio station on a college campus, so your options for funding are very limited," Bradley said. "How many bake sales can you do, and how many bowling fund-raisers can you have to offset the costs?"