If you listen to online radio – Yahoo! Launchcast, Pandora, Live365, streaming radio stations, smaller webcasters – be prepared for a Day of Silence on June 26, when thousands of webcasts will go dead as a dramatic illustration of the likely effect of royalty rate increases scheduled to take effect on July 15.

The industry-controlled Copyright Royalty Board has set royalties for online broadcasts that require payments at higher rates than other types of broadcasts – e.g. conventional radio and satellite radio – and has backdated the increase so the online broadcasters will be required to make a huge lump sum payment of “retroactive royalties.” If the rates are left unchanged, virtually all independent webcasters will be bankrupted and most larger parent companies will likely shut down their Internet radio divisions.

The big players are fighting in the usual channels and it’s possible that legislation or court action will change the situation in the next month. Don’t be surprised if a compromise emerges that spares the big companies with broadcasts – AOL, Yahoo, and the like – but leaves small, independent webcasters hanging.