US internet radio faces fees dilemma

Internet radio stations in the USA will face a price hike next week when new guidelines mean they have to pay higher royalties.

Many channels, which are small and run on tight budgets, may have to close as their costs rise by up to 1,200 per cent, according to campaign group SaveNetRadio.

It follows a ruling by the US Copyright Royalty Board earlier this year that the fee per track would rise from .08 cents to .19 cents by 2010.

The new system will charge per-song, per-user as well as a cost for each channel. Before stations paid an annual cost and 12 per cent of profits.

Tim Westergren, of online station Pandora, told his listeners: "Disaster looms. The new ruinous royalty rates will be going into effect on Monday threatening the future of all internet radio."

Jake Ward, from SaveNetRadio, added there would be a "devastating effect" on internet radio.

He added: "An invoice of more than $1bn (£500m) must be paid in four days, which is unfathomable for an industry that grossed less than $200m (£100m) last year."