From a technological point of view creating an online radio is not too difficult. Times when it was necessary to set up a streaming server in your own basement are gone; nowadays there exist online streaming services that provide, in exchange for a monthly fee (which depends on the number of listeners, on the stream quality etc), a streaming server, in some cases even with auto-dj features. You just pay the monthly fee, upload the music to the server, press "start", and the server transmits a random selection of your uploaded music to any listener who tunes in on the radio's homepage.
But this technological ease is very misleading and most online streaming service providers are essentially honeypot organizations. Any transmission of music requires the owner of the radio station to obtain various types of broadcasting right coverages and follow strict transmission rules to render the transmission legal and the details get quite complicated quite quickly. It is important to understand that, with the exception of some circumstances (such as unwillingness to act in a timely manner upon receiving a DMCA notice) the aforementioned streaming server providers enjoy immunity from a copyright lawsuit: it is the owner of the radio station, and not the streaming service provider, who bears the legal responsibility.
Since the entire business model of said streaming providers depends on large number of unconcerned enthusiasts unwittingly signing up for their services, they tend to be quite quiet about these legal "issues". To get absolved of responsibility they mention in the fine print of their terms of service that the owner of the radio station is solely responsible for royalties and other broadcasting legal costs, and they maybe have a small link on the bottom of their page half-heartedly explaining the situation, but otherwise they tend to hide this fact from their users. Not surprisingly: were users aware of their legal responsibilities and the complications involved, most of them would not sign up for the service in the first place. The streaming providers can always waive their hand and say that their service was intended to serve pure talk radios (only talking heads, no music whatsoever), which is about the only case in which royalty payments are not necessary. Some of the providers follow even more disgusting practices: they offer monthly packages that cover for some of the necessary broadcasting rights but they fail to make it explicit to their users that these coverages in themselves are not sufficient for maintaining legal standing, creating the false appearance that the user, by paying for such monthly package, need not worry about other legal aspects of radio operation.
You may shrug shoulders and choose to not worry about copyright but I suggest you to think twice. Any radio owner who is running an unlicensed radio risks exorbitant penalties and costly lawsuits. To quote from the 2017 guidelines of the FCC:
The Commission considers unauthorized broadcast operation to be a serious matter. Presently, the maximum penalty for operating an unlicensed or "pirate" broadcast station [...] is set at $10,000 for a single violation or a single day of operation [...] Adjustments may be made upwards or downwards depending on the circumstances involved. [...] There are also criminal penalties (fine and/or imprisonment) for "willfully and knowingly" operating a radio station without a license.
Needless to say it is technologically quite easy for a licensing body to employ listening bots that tune into any online radio stream and save the transmission for later inspection, which may occur years after the fact. (I've just read in the Federal Register that the Copyright Royalty Board served a "Notice of Intent To Audit" in January 2017 for the operation year 2013 of several online radio operators. We don't yet know what is going to be the end result of their investigation, but it does not seem to be wise to me to run the risk of operating a non-fully covered online radio.) Again, the technological ease with which one can create an online radio is quite misleading; the same technological ease also applies to monitoring the copyright compliance of these online radios.***
Below I'll call attention to some of the difficulties arising for online radio operators in a question-answer form. I should stress that this is a non-exhaustive list and none of what I'm writing here should be construed as legal advice. I spend a large chunk of time getting informed and up-to-date about the changing legal environment, and I have consulted experts in the past regarding my own radio operation, but if you plan to open an online radio, please find your own lawyer for doing so. Be warned however that changes are implemented every year and one needs to stay up-to-date to conform to the law.
(1) Do I need to pay for licensing bodies for playing music? Oh boy, yes you do.
How much and to whom depends on the jurisdiction that applies to the online radio as well as on the countries in which the radio can be listened from (whose listeners are not prevented by geofencing from tuning in to the online stream). There are also multiple aspects of copyright and broadcasting rights which need coverage. Separate royalties are due to composers of the music, to the original artists who performed the music, if the actual recording is a cover then to the cover artist, to the record labels, in some cases to the organization who transferred the music (say, from an original shellac to mp3), etc. This is not a joke.
In most countries "fortunately" one does not need to contact all the authors individually but there are rights organizations which collect the fees on their behalf. Typically there are two or three such organizations one needs to be in touch with. For instance (to the best of my knowledge) for a radio operating from the U.K. (and transmitting to the limited set of countries with which PPL has cross-licensing agreement) an online radio needs to pay royalties to at least two organizations, the PRS and the PPL. The PRS fee is flat but the PPL fee scales with the number of song transmissions the radio makes. The PPL fee might seem to be deceptively small but with a large number of listeners and songs played it adds up quickly: had my radio been licensed under the U.K. scheme and had it had the same number of listeners through a year as it had in January 2017 the PPL fee alone would come out to be around 17,000 EUR. (Apropos costs: please consider becoming our patron: https://www.patreon.com/bePatron?u=2583256 Thanks!)
(2) Can I simply play a random selection of music? No, at least not in case your stream can be listened to in major Western countries. Different countries have different regulations, but many of them have several rules that apply to musical programming. For instance according to US regulations online radios that can be accessed in the US
- can transmit no more than 4 musical pieces by the same featured artist to the same listener within a 3 hours period (and can transmit no more than 3 by the same featured artist consecutively within a 3 hours period),
- can transmit no more than 3 musical pieces from the same album to the same listener within a 3 hours period (and can transmit no more than 2 of those musical pieces consecutively within a 3 hours period),
To talk home to the tango community, these transmission rules also forbid playing a typical "tanda" of four consecutive songs from the same tango orchestra. (There are some workarounds, but one needs to be careful.) It should also be clear that if the average length of a song is 2.5 minutes then a music-only online radio essentially needs to play music from at least 18 different orchestras every 45 minutes! Everyone who is familiar with the danceable tango repertoire will recognize that obeying this rule - while providing a balanced selection of music without overplaying certain songs from orchestras that produced relatively few good songs - poses challenges. Those tango radios that try to maintain legality and follow these transmission rules are automatically at a quality disadvantage compared with those tango radios that ignore them.
(3) Are we done? Or is there something else? Unfortunately there are many other difficulties as well. One example is that an online radio is supposed to employ reasonable technological measures against unlicensed use of its services, such as downloading individual songs from its stream or streaming to territories for which it doesn't have coverage for broadcasting and neighboring rights. What counts as a "reasonable technological measure" changes with time; in the past crossfading of songs and geofencing seems to have been sufficient, but recently there are new requirements i.e. about confuscating stream metadata to disallow automated taggers. An online radio owner needs to keep an eye out for these developments on the appropriate forums and diligently implement them, and it's frankly somewhat time consuming to do so.***
So, nice online tango radio - but is it legal? I took a quick look at the streams and at the streaming solutions of some of the better known and/or newest online tango radios. I don't want to point direct fingers so let me just refer to them as the Hungarian, the French, the German, the Greek, and the Polish tango radios. According to my best knowledge and judgement (and I may be wrong and am willing to change this post immediately upon receipt of convincing evidence to the contrary) as of April 2017 I find that, among the three legal requirement mentioned above, only the Hungarian and the French tango radio satisfies all (1), (2), and (3). I believe that the German tango radio does satisfy (1) and probably also (3) but not (2). I also believe that the Greek and the Polish tango radios essentially fell into the aforementioned honeypot of streaming service providers and they don't satisfy any of (1), (2) or (3). I may be wrong, but given the legal risks mentioned before I'd advise their owners to get more informed about the legal situation in jurisdictions that apply to them.