Just after the new year, the news hit that steaming radio service Live365 is preparing to come back from dead. The company is under completely new ownership. In fact, the new boss is a young entrepreneur and recent University of Pittsburgh graduate who already runs another streaming media company by himself, along with the help of 14 independent contractors.
Live365 was the highest profile online radio platform to close in the wake of the massive increase in music royalty rates paid by internet radio stations that aren’t run by a terrestrial broadcast station or a non-profit. While Live365 was having financial difficulties before the new royalty rates were put into effect–the company had already lost key investors–the threat of having royalty payments multiply several times over put the final nail in the coffin.
The company hosted approximately 5,000 of internet stations, many of them small or hobby projects without little or no commercial revenue. Thus the shutdown on January 31, 2016 had a devastating effect on American internet radio as a whole.
According to a profile in the The Herald of Sharon, Pennsylvania, the new owner, Jon Stephenson (who is from nearby Hermitage), picked up Live365 in bankruptcy court. He started his other company, Empire Streaming, while still in high school. Empire provides hosting for streaming audio and video, as well as ad insertion services.
Stephenson told The Herald that “Live 365 focuses on what we call microcasters, so very small radio stations,” which should be music to the ears of many webcasters who were left hanging a year ago.
But the biggest question for any internet radio platform that will also cover royalty obligations is how it can price its service in a way that it is accessible to these small webcasters, while still covering all its costs. The new Live365 website indicates that the company will cover U.S. music licensing under all of its plans, beginning at $59 a month for 1,500 total listening hours (equaling the number of listeners multiplied by the number of hours they listen). That music licensing includes songwriting royalties (ASCAP, BMI, SESAC) and recording royalties (SoundExchange).
(Those recording royalties, in particular, are based upon total listening hours. That means the more listeners a station has, the more royalties it owes, regardless of any income.)
By comparison, as recently as July, 2015, the old Live365 charged $39 a month for a similar tier of service that covered music licensing fees, but with 500 fewer listening hours. The new Live365’s $99 a month plan is actually more generous than the old company’s $109 plan, offering 500 more listening hours for $10 less.
Given the relative similarity between the old pricing and the new pricing of Live365, it stands to question how the new company will better cover costs than the old one. Of course, without actually having insight into the old company’s books, we can only conjecture that royalty costs were a significant or primary problem.
Another point of comparison is StreamLicensing.com, a prominent service that stepped in to help small webcasters cover royalty payments. The company only offers royalty coverage to go along with a broadcaster’s existing streaming host, starting at $59 a month for up to 4,000 listening hours, provided the station has less than $20 a month in revenue.
Pricing of internet radio hosting without royalty coverage varies quite a bit, but it seems like plans run from about $10 – $30 a month for service that will match any of the new Live365’s plans. Adding the top end of that fee onto StreamLicensing’s entry level plan brings us pretty close to Live365’s $99 tier in terms of both pricing ($89 vs. $99) and coverage (4,000 listening hours vs. 3,500). Given this, it’s quite plausible that Live365’s new pricing is sustainable, at the very least.
Right now the revived Live365 isn’t yet signing up new customers; there’s a waitlist to reserve a spot. Though I’m not ready to start my own station (yet), I am anxious to learn more about Live365 and see it get off the ground.
