July 15, 2007 may be marked as the date that continuous Christmas music on the Internet died. Due to an ongoing dispute over music royalties from online broadcasters small-time niche radio stations that broadcast Christmas music year round may soon be out of business.

The Grinch in this case, the Ebenezer Scrooge of this story, is the Copyright Royalty Board, an arm of the Library of Congress that sets the fees paid to performers and record labels by broadcasters who play their music. It set July 15 as the date for a sizable rate hike in the booming field of Internet radio, and sparked another round in the running debate over how the music industry can survive financially in a digital age.

Under the plan the board issued in March, per-song fees will nearly triple over the next four years (from tiny fractions of a penny per song to larger, but still small, fractions), and $500 would be assessed on each of the untold thousands of Internet radio channels nationwide.

For tiny independently run Christmas radio stations, it is a death-knell.

Jeremy Walker, Internet radio hobbyist and the DJ behind allchristmasinternetradio.com, says he just won't be able to afford it anymore. Walker, who earns no money on his station, would see the cost of his hobby jump from about $20 a month to $60; he also would owe 18 months of back royalties (the new rates would be retroactive to January 2006), plus the $500 fee.

For as awful as that sounds, small-time operators aren't really the target of the music industry's assault on Internet radio. The real targets are the fat wallets of Yahoo and AOL and other big sites who offer streaming radio a free feature on their websites. Though clearly not happy with the added fees, it is likely that these large operators will sustain online streaming and just absorb the new costs. The net affect is that independent operators like Walker will be pushed aside.

"We think it is a tragedy," said Jeff Westover, owner of Merry Christmas Radio.com, whose website has long covered Christmas Internet radio but has only offered their own stream of year-round Christmas music for about a year. "You can find jazz on Yahoo or you can get broadcast rock or country from AOL. But you're never going to find year round Christmas music on those sites. We're a small niche and we think we and others of the dozens of Christmas music loving sites out there fill that niche nicely. Now none of us will be around. We've never made money on it and that was never our purpose in the first place."

The problem, said Richard Ades, a spokesman for SoundExchange, which collects and distributes royalties for the music industry, is that Internet radio has been growing fast in recent years. It now reaches an estimated 70 million listeners and has become more profitable than it used to be. Royalty rates haven't kept up.

"The bottom line is: What is a fair market rate to be paying artists and labels?" said Ades, whose group has lobbied for the higher rates. "This business wouldn't exist without the music."

But Internet radio will die a quick death if the rate hike goes through, says Jake Ward of SaveNetRadio, a group that includes big radio providers and has launched a campaign against the higher royalties and last month organized a "Day of Silence" in protest.

The four biggest websites — AOL, Yahoo, Pandora and Rhapsody — would together owe $1.15 billion if the $500-a-channel fee is approved, Ward said. Live365.com would immediately owe $5 million.

"The industry would literally fold in on itself," Ward said.

"Oh there's no doubt about it -- if they want the money our mike goes dead on July 16th," Westover said. "We have always wanted our own stream of Christmas music but we stayed away from it for years because of the existing costs of presenting it. Unlike traditional stations, we can't make money on it as it is structured now. Our stations can't, by contractual agreement, run or sell advertising. Up until a few years ago, we couldn't even have a web site. So we just did it and ate the costs. Now they want to increase the cost for us -- who stream to small audiences, frequently fewer than 10 at a time -- at the same rate as a powerhouse radio station in a major market. Actually, on a per listener basis, our costs are astronomically going to be higher. It's very unfair and at this rate will forever be cost prohibitive for us and others like us."

With just days left now before the deadline, little hope is left that much can be done to save Internet radio.