New Jersey Stage 2016: Issue 1 | Page 117

The royalty rate for all radio stations is $0.0017 cents per song. For internet radio stations, that rate is then multiplied by how many listeners are hearing the station at the time. This means the cost for internet radio stations becomes 17 cents per song if 100 people were listening, while AM/FM stations pay just $0.0017 cents. For internet stations, the costs quickly add up. If an Internet radio station had an average of 100 listeners at one time throughout the day and played 10 songs per hour, the cost per hour would be $1.70 per hour. That’s $40.80 per day and over $1200 per month. For a large business $1200 a month might be workable, but many internet radio stations operate as hobbies by music fans. These station owners are likely former DJs, music writers, or music fans who want to introduce NewJerseyStage.com others to the artists they love. Stations run as hobbies are free to play whatever they want, often broadcasting independent artists or niche genres. Even if the stations made the jump from a hobby to a business, the move would be counter-productive because royalty rates increase if the station actually earns revenue to help pay for the royalties owed! The royalty rate increase is due to the expiration of the Webcaster Settlement Act of 2009. This allowed online stations to base their royalties on the amount of revenue produced by the station. In essence, this is the most logical way royalty rates should be handled. Stations could be run as a hobby as long as they paid their share of music royalties. If the station grew popular and profitable to the point it could be a viable business, the owner would be paying higher royalties based on higher revenue. 2016 - ISSUE 1 Table of Contents 117