The Copyright Royalty Board has decided to drastically increase the royalties paid to musicians and record labels for streaming songs online - a decision that was made public Tuesday on the board's Web site. The decision, which is retroactive to last year, also ended a discounted fee for small Internet broadcasters. The board's new rules dictate that the current rate of 0.08 of a cent each time a song is played would more than double by 2010. For music sites run by tax-exempt nonprofit organizations, the board set a flat $500 annual fee per radio channel for a certain number of listening hours per month.

Now, opeartors of Internet-only radio stations fear that the new costs may put their online stream out of business, and some terrestrial radio stations may have to scale back on their online streaming as well. KCRW/Los Angeles GM Ruth Seymour called the ruling draconian and told the Los Angeles Times that the station, one of the largest National Public Radio (NPR) affiliates in Southern California, could owe more than $350,000 for 2006 and 2007.

"Do I build a gate, where you can only listen online if you're a subscriber? I'm opposed to that idea," Seymour said. "I'm a public broadcaster, after all." She added that she is optimistic that NPR and the Corporation for Public Broadcasting could negotiate a better deal with the recording industry.

Meanwhile, SoundExchange, an organization that collects and distributes digital music royalties, feels the new fees are fair. Executive Director John Simson said the fees simply level the playing field for Internet radio and force Web sites to adequately compensate artists and record labels. "This is money that they've earned from valuable recordings they've created," Simson told the Times.