Internet Radio a Boon to Terrestrial, Web Broadcasters

The Internet gives National Public Radio stations “a place for deeper and more varied content,” said Dana Rehm, senior vice president for the group. NPR.org lets people get more information about music they hear on the radio, while a mobile product lets people get music on cell phones, she added. Web streaming is a way for broadcasters “to adapt their traditional business models to include new technologies that complement free over-the-air radio,” said Withers Broadcasting President Russell Withers. His company owns 30 radio stations.

Increased royalties for the streaming of Internet radio predictably drew the wrath of Tim Westergren, chief strategy officer of music-streamer Pandora, and Withers, chairman of NAB’s radio board. They said terrestrial and Web-only broadcasters are threatened by the Copyright Royalty Board’s decision to raise royalties webcasters must pay to musicians. The new rates are “so high that a viable business model for simulcast streaming is almost impossible,” said Withers. NAB hopes Congress will approve bills in each chamber (HR-2060 and S-1353) to vacate the CRB decision, said Withers.

Increasing use of the Internet has benefitted Pandora, with more than 8.5 million registered listeners two years after it started, said Westergren. All Internet radio services have a total of 70 million listeners, he said. But growth of the medium is threatened by the Copyright Royalty Board’s decision, he said Westergren. Pandora will pay more than $6 million in such royalties under the new rules this year, almost half its revenue, he said. In 2006, Pandora paid about $2 million in royalties. “I am depressed at possibly losing the most powerful music discovery tool ever created,” he testified. “We also want internet radio to survive, and that will not happen unless the CRB decision is revised,” whether by being overturned in court, by congressional passage of legislation or by other means, he added.

Other witnesses stumped for passage of the Local Community Radio Act of 2007 (S-1675), which would make it easier for the FCC to license low-power FM stations. The small broadcasters are an important source of information during emergencies, said National Federation of Community Broadcasters President Carol Pierson. “We need more community radio stations,” she testified. “The most immediate way to do this is to expand low-power FM to urban areas” by allowing them to be licensed closer on the spectrum to existing full-power stations, she said. Free Press Research Director Derek Turner stumped for approval of the Act, too. The Senate Commerce Committee will mark up the bill Tuesday. NAB worries that removing third adjacent channel protection, as the bill proposes, would cause interference to full-power broadcasters, said Withers. “We believe this legislation would allow the FCC to license thousands of micro-radio stations that will cause harmful interference to full power FM radio stations.” The commission has licensed more than 800 LPFM stations, he said.

Radio remains relevant, even though it’s “not as sexy as the Internet or other high technology matters before us,” said committee Chairman Daniel Inouye, D-Hawaii. He sought input from witnesses on how the committee should deal with Internet issues, noting that the 1996 Telecommunications Act which he supported mentioned the Web only three times. “Today, everywhere you go is the Internet,” said Inouye. - Jonathan Make