Even the big buys can’t manage the new rates: Yahoo! and AOL may shut down their Web radio services after being hit with a 38% increase in royalties to air music, reported Bloomberg.
"We’re not going to stay in the business if cost is more than we make long term,” Ian Rogers, GM at Yahoo’s music unit, said in an interview.
Yahoo and AOL stopped directing users to their radio sites after SoundExchange began collecting the higher fees in July, after the March ruling by the Copyright Royalty Board (CRB)
Yahoo is promoting a music service offering videos and songs for sale rather than its Launchcast, the largest web radio site, Rogers said. As a result, the number of people using Launchcast fell 11% to 5.1 million in October, according to ComScore. AOL Radio users declined 10% to 2.7 million from 3 million. Radio sites attracted 51.2 million U.S. visitors last month, more than a quarter of all U.S. Web users.
"The current math doesn’t add up,” Lisa Namerow, managing director of AOL Radio told Bloomberg. "If the rates remain as they are, it would be very challenging to sustain a business that is profitable.” The radio sites generate revenue by selling advertising.
Congress may be the last resort for the Webcasters. Bills introduced in the House by Rep. Jay Inslee (D-WA) and in the Senate by Senator Ron Wyden (D-OR) would repeal the royalty increases.