Showdown looming in Congress over Internet radio

It looks like the fate of Internet radio is going to hinge on Congress.

Four major companies who stream on the web – RealNetworks, Yahoo, Pandora, and Live 365 sent letters to all 535 members of Congress regarding the increase of royalties that will have to be paid effective on July 15, with rates that were retroactive to January 2006 due immediately.

The companies said that Congress should look again at the rates and if they go into effect, it could bankrupt the industry.

Sound Exchange, the outfit of the RIAA who collects the fees media pays for royalties, has indicated that it will not go down without a fight.

Today, the Chicago Tribune weighed in on the issue, and it’s saying what almost everybody else is: The new rates are bogus and will do more harm than good. Everybody but the greedy RIAA and the SoundExchange.