The Copyright Royalty Board (CRB) has announced its decision on Internet radio royalty rates. The board rejected all of the arguments made by Webcasters and adopted the “per play” rate proposal from SoundExchange, which is part of the RIAA/big music labels fee collecting process.

The new rates are

• 2006 $.0008 to stream one song to one listener
• 2007 $.0011 to stream one song to one listener
• 2008 $.0014 to stream one song to one listener
• 2009 $.0018 to stream one song to one listener
• 2010 $.0019 to stream one song to one listener

These fees will be applied retroactively to 2006 webcasting.

RAIN is reporting that this pricing could be the end of web radio

According to the comScore Arbitron ratings report for November 2006, the AOL Radio Network had a average audience (”AQH”) between 6AM and Midnight of 210,694 listeners. Multiplied by about 16 songs per hour, 18 hours per day, and 31 days per month, plus adding an additional 10% to account for overnight (Mid-6AM) listening, suggests that AOL played about 2.1 billion songs that month. At the CRB’s royalty rate ($0.0008 per play), I’m guessing that would create a royalty obligation to SoundExchange for the month of November of about $1.65 million. Annualized, that’s about $20 million for 2006.

Here at RAIN, we’re guessing that Pandora has an audience approaching that size. (Pandora founder Tim Westergren claims that Pandora now accounts for 1.5% of all Internet traffic.) Such a royalty obligation might exceed the total proceeds of all their recent rounds of venture capital plus all their sales revenues to date.

Since Last.fm is based in the U.K., another possible outcome is that Pandora dies and Last.fm becomes the “social music networking” player.

Online petitions are being formed right now to raise attention to this decision.

• http://www.savethestreams.org/
• http://www.petitiononline.com/SIR2007r/petition.html
• http://www.saveourinternetradio.com/