On May 1, 2007, the United States Copyright Royalty Board approved a rate increase in the royalties payable to performers of recorded works broadcast on the internet. This was the result of a two year proceeding, with dozens of witnesses and hundreds of documents from over twenty different parties, including large and small webcasters, NPR, college stations, and SoundExchange. The CRB was privy to private financial records and business models of the webcasters, and after reviewing the evidence and testimony, issued their decision on May 1, 2007 (which is currently under appeal). If enforced, this decision will undermine the business models of many Internet radio stations, which had previously relied on the rate of $0.000768 per song that had been unchanged from 1998-2005.[8] These rules were scheduled to go into effect on May 1, 2007, with the first due date being July 15, 2007, and apply retroactively to January 1, 2006.
According to a report by Club Net Radio released in March 2007[dead link], under the new rates, annual fees for all station owners are projected to reach $2.3 billion by 2008. This figure is more than four times that for traditional radio broadcasters who, due to terms set forth in the 1998 Digital Millennium Copyright Act, are exempt from the additional royalties imposed on digital broadcasting outlets, which compensate the performers and copyright owners of recorded works. Both traditional radio and Internet/digital radio broadcasters are responsible for royalties collected by performance rights organizations (ASCAP, BMI, SESAC) on behalf of the composers of recorded works.
