The Baltimore Sun reports: recent fee hikes granted by a royalty review board is knee-capping the bootstrapping Internet radio industry. The recent hoopla over the royalty hikes is causing many casual participants in the marketplace to drop out. So just what are the issues involved?

The Copyright Royalty Board has removed some of the caps on royalty fees. For some broadcasters, the fee increases amount to doubling their dues to the cult of the music industry. In some cases, I can understand and side with the music industry. They are seeking to gain on their investments. But more of my mind and heart fall on the opposite side, with the radiomen.

Music and entertainment are interesting things. In the case of radio, while many stations make money off marketing breaks, or in the case of Internet radio – off of advertising links or banners, etc, radio also does a double service for the music industry. Think about it – the music industry charges you to market their product for them; radio has long been a marketing driver of new music, not the end point on the marketing tool chain.

We have our blessed government who likes to step in and manipulate the marketplace: remove “payolla” marketing dollars from broadcasters hands, regulating radio frequencies to stratospheric price levels for access to airwaves, and other pieces of legislation that is, purposefully or not, keeping people out of radio instead of removing barriers to enter the radio market.

Bands and labels with lesser muscle can not gain traction, even in niche radio, that would put them in spots next to similar and more popular, if not equally talented, artists. Traditional mainstream radio is less apt to take large risks on unknown talent – an area that has been well served by Internet radio. All of the risk falls on broadcasters with little to no risk involved by the music industry. How they think they can cannibalize this marketing channel is beyond me. It makes for stupid business; at the same time, it makes more sense to use ideas such as Creative Commons.

If people ever wonder why I think Steve Albini is a god – here is why.