Rights and royalties
If you're new to broadcasting, or have not streamed your station online before, reading the following brief explanation of compensation rules for musicians may save you a great deal of trouble later.
Independent music radio on the Internet is not what it might have been, due to royalty demands from SoundExchange in the USA, and similar organisations in other territories. These organisations are usually membership societies or government-sanctioned national authorities which are intended to collect money from broadcasters to compensate musicians for the use of their work. The royalty collection societies require payment before you can stream just about any music released on a commercial CD to the general public — whether you make any money out of streaming, or not. It's not so much the percentage of revenue demanded, but that there is usually an annual minimum fee to pay, which hurts small stations disproportionately.
For example, in the UK, the MCPS-PRS Limited Online Music Licence covers non-commercial music streaming by groups and individuals, as long as their gross revenue is less then £12,500 per year. The cost is on a sliding scale, up to £1,120 plus 20% tax per year for delivering up to 450,000 individual streams or serving 25,000 files; after that, you have to apply for a full MCPS-PRS Online Music Licence. That doesn't sound too bad at first, but 25,000 files per year works out at less than four downloads per hour for a round-the-clock website. This licence only covers publishing rights, not recording rights, so you have to negotiate an additional licence from Phonographic Performance Limited to actually play records or CDs.
Typically, you have to provide full statistical details to the royalty society of all music streamed or downloaded from your site. Even if your radio station is mostly speech, there are many limitations in the small print of these music licences. For instance, you can't use music for promotional purposes, and you can't stream a whole opera, without negotiating separate licences. Weirdly, you are not allowed to play a piece of music in a 'derogatory context' to the writer or performers; no drummer jokes allowed, then.
However, the biggest pitfall is that these MCPS-PRS licences only cover listeners in the UK. So if your Internet station picked up a significant number of listeners in other countries, you would have to pay for similar music licences in those countries as well. It's no wonder that many not-for-profit radio stations have disappeared from the virtual airwaves over the last few years, since not having the right licences could leave the operator liable to legal action. If you want to go down the paid licence route, and you can afford it, check out the http://www.prsformusic.com and http://www.ppluk.com websites for UK licence details. In the USA, the http://www.soundexchange.com website currently quotes a 500 dollar minimum annual fee for non-commercial webcasters, plus a usage fee above a certain number of listener hours, for the right to stream music from its member record labels.
Free content streaming offers the chance that DIY Internet radio could rise again. Since royalty collection societies like MCPS-PRS and SoundExchange can only represent the interests of their own members, it follows that if you are not a member, you can stream your own self-produced content without paying for their licences. If you state somewhere on your website that the stream is of your own copyrighted material, and is made available to the public under a specific licence, then no-one should misunderstand your intentions. You might be able to persuade other people to allow you to stream their content too, as long as they do not have a conflicting legal obligation, such as having previously joined one of the many royalty collection societies around the world. You can ask for permission to stream when website visitors upload their own music files to you via a HTML form, much as the likes of SoundCloud do. Or you can collect files licensed under an appropriate Creative Commons (http://www.creativecommons.org) or other free content licence.
Explicit permission to stream on your particular server is always going to be the ideal, so think about your own terms and conditions before you accept files from third parties for streaming. How, for example, would you know if someone uploaded a file to your online radio station that unknown to you, had been ripped from a commercially released CD? That's the kind of thing that could get you in trouble with the licensing authorities and copyright holders.