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Court denies stay of internet radio execution

Three days and counting...

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The internet radio death watch continues. Late yesterday, a federal appeals court denied an emergency stay petition from webcasters, refusing to delay the arrival of massive royalty hikes that threaten to bring down online radio as we know it. The new royalty rates - which could mean a 300 per cent payment increase for large stations, 1200 per cent for smaller broadcasters - are due to kick in this Sunday.

The stay was rejected with a single sentence from the U.S. Court of Appeals for the District of Columbia Circuit. "Petitioners have not satisfied the stringent standards required for a stay pending court review," the order read.

Jake Ward, a spokesperson for SaveNetRadio, a coalition of Internet radio broadcasters that's been lobbying Congress for a repeal of the rate hikes, told The Register he was "surprised" and "very disappointed" by the court order, but said webcasters will continue to fight the good fight. "We're not giving up," he said. "There's plenty of work to be done, and we'll be doing it."

The Internet Radio Equality Act - which seeks to introduce a more-forgiving royalty model - now has 128 sponsors in the House of Representatives, and though broadcasters hope to get this legislation passed before Sunday, Ward says the push won't end if the big day comes and goes without a new law in place. "The Court’s failure to act has put the ball squarely in the hands of Congress, and Members of Congress work for the people, many of whom enjoy net radio everyday.”

A similar response came from the Digital Media Association, the national trade organization whose members include big-name broadcasters Yahoo! and Live365. "DiMA members and all webcasters are disappointed by the Court’s decision, and are now forced to make very difficult decisions about what music, if any, they are able to offer," said DiMA executive director Jonathan Potter. "We’re hopeful that Congress will take steps to ensure that internet radio is not silenced."

In March, the U.S. Copyright Royalty Board set down new royalty rates that would require webcasters to pay 8 hundredths of a cent each time they broadcast a song to an individual listener. That's $0.0008 per song per listener - and it's retroactive to the beginning of 2006. According to Ward, this amounts to a 300 per cent rake hike for the even the largest internet radio stations, 1,200 per cent for the smallest webcasters. Most, he says, could not afford to stay in business. By 2010, rates are scheduled to hit $0.0019 per song per listener.

When SoundExchange, the nonprofit organization charged with collecting online radio royalties, comes knocking with the bill this Sunday, some broadcasts may not answer the door. "We've heard, from our coalition members, almost every conceivable position," Ward said. "Some may pay in full until they can't pay anymore - and then go bankrupt. Other may continue paying 2005 rates. And some may refuse to pay at all."®

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