Long-running Internet radio service Live365 may be in its last days. The news came without warning over the weekend as the company was forced into a massive layoff of employees. Live365’s troubles were set off by new regulations that take affect this month. Those regulations, enforced by the Copyright Royalty Board, change how music royalties are calculated for Internet radio broadcasters. From a Live365 press release:
Recently, the Copyright Royalty Board, the governing entity for establishing the sound recording royalty rates that are paid to copyright holders, has published the new rates for 2016-20. The previous provisions for small webcasters to opt for a percentage of revenue model were not renewed. The current provisions end at the end of 2015. The absence of this license will make legally streaming copyrighted musical content prohibitively expensive for many small to mid-sized Internet broadcasters. Live365 relies on this license for many of their broadcast partners and, as such, has hard decisions to make regarding their future in the streaming industry.
Before these changes came into place, Live365 could make its royalty payments based on a percentage of the company’s revenue. It looks like Internet radio stations that play copyrighted music will now have to pay some sort of flat rate or per-song fee, regardless of revenue. Considering Live365 hosts thousands of small stations, a change like this would be devastating.
To make matters worse, Live365 also lost all of its financial backers:
Two weeks ago, Live365 faced an additional blow, losing the support of its investors who have helped the company with its mission for over a decade. The company was forced to significantly reduce staff and is now actively looking for partners to help continue the service into 2016.
It’s unclear if those investors backed out due to the upcoming royalty rate changes or if something else scared them off. For now, Live365 is still in operation. The company is being run by a small team and its CEO is actively looking for new investors.