Internet radio broadcasters were dealt a blow this week when a panel of copyright judges threw out requests to reconsider a ruling that raised the royalties they must pay to record companies and artists. Many public and private broadcasters including radio stations, small startup companies, National Public Radio, and major online sites like Yahoo and AOL, had objected to the new royalties set on March 2. They believed the royalties would force a drastic cutback in services that are now enjoyed by some 50 million people.

In the latest ruling, the Copyright Royalty Board judges denied all motions for a rehearing. They also declined to postpone the deadline by which the new royalties have to be collected. The one point of leniency allows webcasters to calculate fees just as they had been by average listening hours, as opposed to the new system of charging a royalty each time every song is heard online. The new per-song, per-listener fee structure goes into effect next year, the exception only lasts until the end of this year.

Webcasters are afraid the much higher royalty fees will put them out of business. CEO of Live365 Inc., a privately held company that aggregates audio streams from thousands of radio stations and other small webcasters, N. Mark Lam said that

Under the new royalty rules, “there is no industry.”

In an attempt to retaliate, several Internet radio broadcasters announced a campaign to raise awareness of the issue and encourage listeners to write to their representatives in Congress since they were able to receive relief from Congress in the past. A lawyer representing several of the webcasters say they will likely appeal the ruling, but the process could take up to a year. The head of the Digital Media Association, Jonathan Potter, supports this idea of taking it to Congress.

He sees “a lot of legislative support.”

The royalties in question only cover digital transmissions of music. Since traditional radio play promotes sales of recorded music for record labels, the royalties do not apply to terrestrial radio stations. Both digital broadcasters and regular radio stations pay a separate royalty to the publishers and composers of music.

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