In the weeks since the landmark change to the royalty rate Internet radio sites pay the major record labels to stream music, a lot has happened on both sides of the battle for the future of Internet radio.

Pandora's interface.

The broadcasters, which include public radio sites like KCRW in LA, Internet radio sites like Live365.com, and music discovery sites like Pandora, asked for and received a hearing in front of the body that made the March 2 ruling, the Copyright Royalty Board.

This week saw the Copyright Royalty Board deliver another smack to Internet radio, upholding its prior ruling that would send royalty payments to the labels skyrocketing, regardless of how much advertising money is being generated by the broadcaster.

The new rates would require Internet broadcasters to pay $.0011 per "performance," defining a performance as the streaming of one song to one listener; thus a station that has an average audience of 500 listeners will rack up 500 "performances" for each song it plays.

Anil Dewan, director of new media at KCRW, told MP3.com that the rate change would send his station's royalty payments skyrocketing to $350,000--more than twice the station's current webcasting budget. N. Mark Lam, the CEO of Live365, told the Associated Press that under the new royalty rules, "there is no industry."

The board also denied a request to postpone a May 15 deadline by which the new royalties will have to be collected. But it did allow the webcasters to continue paying royalties based by average listening hours, as they had been, for 2006 and 2007. The new per-song, per-listener fee structure goes into effect in 2008.

The broadcasters now hope to appeal to Congress, with many asking users to write their federal legislative representatives.

Pandora's Tim Westergren

In a letter to Pandora users, the site's founder Tim Westergren asked people to sign the Save Internet Radio petition.

"Understand that we are fully supportive of paying royalties to the artists whose music we play, and have done so since our inception," he wrote. "As a former touring musician myself, I'm no stranger to the challenges facing working musicians. The issue we have with the recent ruling is that it puts the cost of streaming far out of the range of ANY webcaster's business potential."

With victory at hand, SoundExchange, a nonprofit group that collects the online royalties from webcasters and distributes them to record labels and artists, hailed the ruling and said today that "it is in discussions with some webcasting services, both commercial and non-commercial, following the recent rate-setting decision. SoundExchange is exploring mutually beneficial business arrangements that help to foster growth of Internet radio and provide fair compensation to creators of music."

"Our continued outreach reflects our long-standing position that these are two businesses--webcasting and creating music--that are joined at the hip and that need each other," SoundExchange executive director John Simson said in a statement. "We recognize that there may be certain needs and expectations, as expressed by webcasters in recent days, that might possibly be addressed through direct discussions."

Stay tuned...