The US Copyright Royalty Board has rejected an appeal by internet radio broadcasters against a plan to increase royalty fees.

Many US web broadcasters are saying that the royalty hikes, which will be backdated to January 2006, will put them out of business, as well as affecting the diversity of music available online.

Before the ruling, webcasters paid an annual fee plus 12% of profits in order to stream music to listeners.

Under the new fees, they will pay a flat fee per song, which will rise every year up to 2010, and eventually be almost three times higher than current charges.

Web radio companies will also be charged $500 per channel, hitting those with multiple channels offering different types of music and affecting the diversity of services on offer.

Kurt Hanson of AccuRadio believes most small and medium sized broadcasters are under threat:

“Under the judges’ decision, we owe $600,000 for 2006 — which is about 150% of our total revenues! That would absolutely bankrupt us and will force us to shut down. And that’s true for almost everyone who’s a stand-alone webcaster.”, a group of webcasters which is protesting against the ruling, claims that internet radio is being charged higher rates than satellite or broadcast radio stations.

While broadcast radio pays no royalty fees per performance, and satellite radio stations pay between 3% and 7% of revenue in performance royalties, SaveNetRadio claims that royalties for web radio will be as much as 58% of revenue.

A coalition of web radio broadcasters, including Yahoo and AOL, had objected to the increases and asked the Board to reconsider the charges, but a new hearing was rejected as the judges said that they had not shown any new evidence which would influence their original decision.