Internet radio may finally take off

Back in 1995, I foolishly proposed a project for the Blacksburg Electronic Village that would have us partner with the local public radio station to begin broadcasting over the new Internet thingy that was just beginning to take off. It was very modest, and involved streaming audio news reports over the Internet--5 to 10 minutes of mostly local news a day, but in four languages, because of the large international population in Blacksburg.

No one believed anyone would ever be interested in listening to audio over the Internet.

A few years later, streaming radio and podcasting took off in a big way. But streaming radio got knocked down almost immediately by huge increases in royalties that made it financially impossible for small start-up Internet radio stations to develop a market, and even for bigger operations, the cost of royalties was difficult.

A tentative agreement has been reached between the RIAA, which controls music royalty, and the radio industry. For Internet radio operations, they will pay 10.5% of annual revenue instead of a per song fee. This makes perfect sense, as it will allow small niche Internet radio operations grow without high royalty fees that are not linked to actual income. And musicians and songwriters will still get compensated in some indirect proportion to the number of people actually listening (radio stations with a large audience will have more revenue, and will so the royalty revenue will be higher).

This approach is identical to the revenue sharing models adopted by broadband projects like nDanville and The Wired Road. Revenue share models allow many new and innovative services to start up inexpensively because the fees to content owners or the network are paid in proportion to success.

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