Listeners might have to pay to keep online stations alive.

An upcoming decision by the Library of Congress may disconnect you from your favorite Internet radio station.

The Copyright Arbitration Royalty Panel, a special arbitration team appointed by the US Copyright Office, has recommended that online radio stations pay .14 of a penny for every song streamed online.

America Online says its site, Spinner, streams roughly 160 million songs per month.

Under the new law, Spinner's bill would work out to $224,000 per month or $2.6 million per year. In addition, the charges would be retroactive. That adds up to a lot of back payment, since many Internet radio stations started broadcasting as early as 1998.

Will online stations survive?

Most upstart Internet companies just do not have the money to pay the additional fees.

"I've talked to a lot of the other webcasting companies in the last few days, talking to them about the way they're approaching this. Many of them are considering not going forward, closing down," said John Jeffrey, executive vice president of Live365.com, an Internet radio portal that hosts 45,000 independent webcasters.

"We were poised to be cash-flow positive before the end of 2002. With the new rate being set... it'll be much further out," Jeffrey said.

Like most Internet radio stations, Jeffrey says the recommendation is poorly conceived, and wants to appeal for a lower rate.

"If you [consider] the very fundamentals of what copyright is about, it is to encourage listening," Jeffrey said.

Jeffrey predicts choices for listeners will become very limited if the law passes.

Exploring other options

A typical broadcast station pays a small percentage of its yearly revenue to publishers. Top stations pay three percent, about $750,000 annually, to play songs over the air. Jeffrey wants the same deal for online stations.

But under the new proposal, traditional radio stations will have to pay their yearly fee to publishers along with the new webcasting royalty fees to the record labels. Currently, conventional radio stations do not pay royalties to labels.

Stations already hesitant to stream music on the Web may forego the option. However, conventional radio stations get a little break. The price for streaming an over-the-air broadcast is cut in half to .07 of a cent.

Impact on songwriters

How would the new fees affect musicians and songwriters?

"Well I think that no matter what happens to a song -- if it's broadcast or streamed or downloaded... the songwriter needs to get paid. It's only fair," songwriter Andre Pessis said.

Pessis has written hit songs for many artists, including Bonnie Raitt, Journey, and Huey Lewis and the News. He says he loves the possibilities the Internet holds for songwriters, and plans to build a website showcasing his work.

However, the growing controversy over compensating artists and songwriters that started with file-swapping services like Napster still bothers Pessis. He says he believes the root of the problem lies with the record companies.

"They see this new technology as an avenue to make a greater profit... Now I don't fault business from wanting to make a greater profit, but they're overdoing it, and we're the ones in the middle," Pessis said.

According to the Recording Industry Association of America, Pessis and other songwriters will be compensated fairly.

In a statement about the proposed rates, RIAA President Hilary B. Rosen said, "Artists and labels who have supported these new businesses from the start with their music are one step closer to getting paid."

"We're still hopeful and we think that it's very possible that the Library of Congress will review this decision and... make it fair to start-up businesses like ours," said Live365.com's Jeffrey.

In the meantime, many start-up Internet radio stations already have shut down, and a lot of Internet radio lovers will not be happy.

"I'd be devastated. It's become part of my work culture," said Daphne Domingo of San Francisco.

Originally, the RIAA had hoped for a rate closer to 0.4 cents per song, while webcasters supported by the Digital Media Association wanted a rate closer to 0.014 cents per song.

One more thing may change: Your favorite Internet radio station may no longer be free.

Online radio stations: