Internet radio booming but threatened

San Jose Mercury News: Internet radio booming but threatened. Excerpt:

With a growing audience of up to 54 million monthly listeners, Internet radio is one of the biggest trends in digital music. But if you believe the industry's leaders, it's threatened with extinction.

They say the rates they have to pay the recording industry are bankrupting them. They're appealing the government-set rates, pressing Congress to change the rate structure and pursuing negotiations with the industry.

Now a congressman has stepped in to oversee the negotiations and Webcasters are ramping up the rhetoric.

"We're very supportive of paying royalties, but this structure is wrong, unfair and unaffordable," Tim Westergren, founder of Oakland-based Pandora, said in an e-mail to the Mercury News. ...

Small, independent AccuRadio owes about $67,000 a month in royalty fees this year, though its monthly revenue is only $40,000 to $50,000, said CEO Kurt Hanson.

The current fee structure is a disgrace and amounts to legal extortion imposed by the federal government on behalf of record companies.