Story: New Internet Radio Royalty Fees Pressure Webcasters, 05/21/07
http://www.pbs.org/newshour/extra/features/jan-june07/internetradio_5-21.html

Reading Comprehension Questions:

1. Why is Internet radio in the news right now?

2. List some Webcasters who pay to stream online radio.

3. Under the new rules, how would Webcasters pay royalties?

4. Why do Webcasters say the increase would devastate their industry?

5. What is the name of the bill introduced in Congress and what impact could it have on the Copyright Royalty Board's decision?

6. According to SoundExchange, how much will large Internet broadcaster save if the bill is passed?

7. How much does John Simson think the new royalty fees would cost a Webcaster?

8. Why does Tim Westergren think his company shouldn't have to pay the new royalty fees?

Discussion Activity (more research might be needed):

1. What do you think about the decision by the Copyright Royalty Board to increase royalty fees? Who will benefit the most? Who will lose the most? Explain your answers with clear examples.

2. Do your own cost analysis for Pandora Internet Radio. Assume the following:

• Pandora had 6.5 million users each month in 2006
• Each user listens to 16 songs each hour
• An average user listens to 40 hours of Internet radio per month
• Pandora earns $0.012 per listener per hour in advertising revenue
• Pandora offers an ad-free subscription service at $36 for 12 months
• The number of users will increase each year by 10 percent
• The advertising rate will increase each year by $0.002 per listener per hour

a. Calculate the royalty fees per year per Pandora listener for each year between 2006 and 2010.

b. Assuming it has no paid subscribers, how much would Pandora need to earn in advertising each year between 2006 and 2010 to offset the costs of the new royalty fees?

c. Assuming it has no paid subscribers, how much would Pandora earn in advertising for each year between 2006 and 2010?

BONUS. What percentage of Pandora's listeners would have to be subscribers to offset the new royalty fees for each year between 2006 and 2010? Based on your calculations, how do you think the Internet radio business would need to change to survive the new royalty fees?

Re-evaluate the assumptions and discuss how changes would affect your calculations.

Write a 300-500 word essay on either of these topics providing clear examples. Send your completed editorial to NewsHour Extra (extra@newshour.org). Exceptional essays might be published on our Web site.