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Save Internet Radio

Monday, April 23, 2007 SaveNetRadio - By Ian Rogers from Yahoo! Music

By now you've likely heard the news about the Copyright Board's ruling regarding net radio. Simply put, it approximately triples the amount paid to record labels via SoundExchange for streaming Internet radio over the next three years, changes the way the payments are computed (from what is called an "Aggregate Tuning Hour" basis to a straight "per play"), adds a confusing and onerous "per station minimum" fee with no maximum, and extends the new rates back to the beginning of 2006. Many small Webcasters won't be able to afford this, and you can bet large Webcasters like us are all taking a hard look at the Internet radio business and our products to decide if it's really worth the cost. Big companies might have more money, but they can't stay in businesses where they don't make any profit, a pretty simple business fact.

Compare the implications of this decision to terrestrial radio which pays NOTHING to SoundExchange, or even satellite radio which pays only 3-7% of their revenue to SoundExchange, and it's hard not to be left scratching your head. The irony of all this, of course, is that this ruling will keep LAUNCHcast, Pandora, and the like out of your living room and push you toward FM, where the labels are paid zero. This decision cuts off a genuine future revenue stream before it has had a chance to grow.

It's not just the Webcasters that will suffer. Higher costs, fewer Internet broadcasters and stations means less diversity overall, and less opportunity for the unlimited spectrum of Internet radio to become a discovery tool for curious listeners and a launching platform for smaller artists. Internet radio features thousands of channels in the narrowest of genres as well as personalized services (LAUNCHcast) and recommendation systems (Pandora), while FM radio (where it still plays music) plays the same songs over and over and the total number of satellite channels is less than five hundred. I am a satellite radio subscriber and can honestly say it doesn't even come close to representing the diversity I get from my personal LAUNCHcast station. Listeners and artists ultimately lose if this infinite spectrum of music choice evaporates or even shrinks to just a few players. The implications for innovation in the space are catastrophic.

Which is why we are asking you to take action RIGHT NOW. We are supporting DIMA (a trade organization representing Yahoo!, AOL, MTV, Pandora, Real, Live365, and many others) and the SAVE NET RADIO campaign on this issue. Please take five minutes right now to visit SaveNetRadio.org, let your representatives know how you feel about this issue, send this post and these links to a friend, and put a link to SaveNetRadio.org on your blog, MySpace page, or site. We are on a very tight timetable to get our voices heard in Washington and legislation introduced before May 15th when the first payment is due under this new ruling. We need your help in making sure Congress is paying attention to this issue.

Thanks for your understanding and support,
Ian C Rogers - Yahoo! Music
posted by savenetradio  # 7:17 AM

  Comments: "It's not just the Webcasters that will suffer. Higher costs, fewer Internet broadcasters and stations means less diversity overall, and less opportunity for the unlimited spectrum of Internet radio to become a discovery tool for curious listeners and a launching platform for smaller artists."

This is far from being true!!! The current radio stations that this will affect are just money machines for the owners and of coarse their upset. But they do not help smaller artists at all as far as I've ever seen or heard of, they broadcast popular music that can be found everywhere, and this will just help the larger stations by driving the little one's out and the traffic will simply go to the remaining stations, making them larger and more powerful. It will also allow more of an income for the hand full of popular artists.

This may sound bad, but it's not, it's a very good thing for listeners. It will mean that the new station growth trend will go independent. Indy stations do not need to pay licensing fees, they do not need to go by the stupid DMCA play rules either, meaning that interactive broadcasting is legal for them.

Indy station are diverse by nature, popular music stations that have to go by the DMCA rules are NOT!!!! They're not allowed to be, by law!

Don't bye into this hype!!!
# posted by brad : April 23, 2007 8:14 AM  Let the emperor have what's his!!!

Simply go indy and you no longer need to pay any fees or go by their stupid play rules.

If you have a good station that the artists and listeners believe in, you can get the artists or their reps to sign waivers so you don't have to pay fees or go by the DMCA play rules.

I know, this is harder than just buying a CD, ripping it, and airing it. You have to request it, and the artist has to approve of what your doing before they'll allow you to represent them, it's better for everybody that way!

You can then directly promote the artists and play what the listeners truly want to hear, when they want to hear it.

GO INDY!!! Down with licensing fees!!!
# posted by brad : April 23, 2007 9:01 AM  This message is mainly for Brad.

We are an indie only broadcaster and members of the SaveNetRadio coalition. This ruling will ultimately hurt indies. People still want to listen to the oldies, the mainstream and the familiar songs they've come to know and love. There is nothing wrong with that! So services like AccuRadio and Pandora have great business models. These services play a lot of indie music. And the indie music is being mixed in with more familiar classics. That gives the artist a much larger audience. Frankly, your average Joe is not interested in hunting down new music. There is a fairly large and growing population of indie music seekers, but nothing to compare with the mainstream listening audience.

If only we can get this mainstream audience to hear some of this great indie music, new favorites will be established.

We encourage all of our indie artists to get airplay on as many radio stations as possible. It's good for them. Our listening audience is growing, slowly and steadily, but it's nothing like the audience of stations like Pandora, AccuRadio etc.

We also depend on radio advertisement for revenue. We can't think of a better way to support our business while giving the artists the great rates we offer on distribution. We couldn't offer the great consignment rates without an advertisement revenue model. So, the argument that all indie radios are commercial-free is unfounded. These radios must get their revenue from somewhere. They're either taking it from the artists they promote, the customers listening or from advertisers.

As for the ruling, I have more than one opinion of why that is wrong. First, I think the concept of even requiring license for internet broadcast is wrong. Terrestrial radios don't pay this. It was determined years ago that no such license would be required because the broadcast is PROMOTION of the music. It should be the same for the internet, but about 5 years ago, the RIAA lobbied to get this license enacted.

Now that there is a license, they want to raise this rate to a level that NO ONE can afford. Even the big internet radios will be sunk by this UNLESS THEY HAVE A SWEETHEART DEAL with the Majors. And that, Brad, is their plan. Already, Slackers radio has a sweetheart agreement with the majors so they don't have to pay the license for broadcasting major label music. Slackers doesn't play much indie music either.

And that's just how the majors want it. They will make sweetheart deals with radios who will broadcast their music exclusively, or almost exclusively.

And the majority of listeners still want to hear the old familiar songs.

If there must be a license, then the payment should be based on station revenue. This would be fair for all concerned, if there must be a license at all. Again, broadcast of one's music is promotion for that product, so I think the license is unnecessary.

At OutboundMusic, we have come up with a model to compensate our artists, and it is based on radio revenue. But most of our artists are just happy to have the promotion. It exposes their music and then they start seeing sales. It's advertising for them.
# posted by OutboundMusic : April 23, 2007 10:06 AM  I completely agree with outbound. Even ridiculous music junkies--like myself--enjoy the classics rubbed up against new and interesting stuff. It's what we're trying to do at Brooklynradio.net. With the SoundExchange agreement, though, it's going to make it almost impossible. I don't have the money to negotiate with the majors. I believe that royalty rates should be based on revenue. That's what FM gets away with. Why shouldn't we? Oh, yeah, I forgot. We're not owned by Clear Channel.
# posted by dan : April 23, 2007 5:47 PM  I received this email from Sen. Sherrod Brown of Ohio after sending the form letter from the SaveNetRadio coalition:

"Dear Mr. Terry:

Thank you for contacting me regarding the possible rise in copyright rates for internet webcasting. The recent decision of the Copyright Royalty Board (CRB) to set rates for Internet radio is one component of the larger issue of how music is paid for in the Digital Age.

The CRB’s decision changed the royalty scheme for small commercial Internet radio providers from a percentage of revenue to a per-song fee. In addition, the CRB determined that Internet radio providers must pay an annual minimum fee of $500 per channel. Noncommercial webcasters would be subject to a new rate structure that includes per-performance rates for webcasters that provide above a specified amount of digital music available per month.

Webcasters are understandably concerned that the decision would increase their royalty payments, and they requested a rehearing by the CRB of its rate decision. The motion to rehear the decision was denied. However, parties also have the option of appealing the decision to the United States Court of Appeals for the District of Columbia Circuit, within 30 days of publication of the new rates.
I will continue to closely follow the ongoing proceedings and will consider it in the larger context of music availability in the Digital Age. Should legislation be introduced that would alter the CRB's decision, I will certainly keep your concerns in mind."

Sincerely,
Sherrod Brown

What do you guys make of this?
# posted by Evan : April 24, 2007 6:55 AM  I'm not a music fanatic. I'm an amateur musician, but I do not have the time or the inclination to hunt down precisely the station or CDs I want. I spend all my time doing that on beers and bars; that's my job and my true love. So when I found AccuRadio, I dumped my XM subscription. Not because XM cost money and Accuradio was free, but because Accuradio gave me real variety, and a much deeper playlist. I went out and bought real PC speakers with a sub-woofer for the first time in my life, just to listen to internet radio.

I listen to independent artists, I listen to old blues and boogie-woogie recordings, I'm listening to techno and Celtic and cabaret music. I'm hearing those artists because of internet radio. I do not want to see it go away. Independent radio's a fine thing, but there are never enough stations in an area to give me the choices I have on the Web.

I'm a writer, and I hate to see my words going out and being read without my being paid for it... but I have to admit that when my stuff gets on the New York Times site, editors take me more seriously and I make sales I wouldn't have made. Internet radio works for listeners and artists. It doesn't work for traditional radio stations, but it works for the people that make the music scene work. What's more important?
# posted by Lew Bryson : April 24, 2007 7:09 AM  I ran a hybrid station also, paying licensing fees for the indy groups like you are and going by the DMCA play rules. I wised up and went all indy, and you need to do the same if you care about the listeners and the musicians.

The large stations will not go under!!!! They will just get bigger as the little one's are forced out!!!

Indy is in it's infancy. This will allow it to grow.
# posted by brad : April 24, 2007 7:31 AM  Indy does not mean just new bands. Our station is atleast 50% established bands that our listeners grew up with. Not all established groups are corporate owned. We have much depth to our playlist! I find no need to listen to anything else, all bases are covered.
# posted by brad : April 24, 2007 7:39 AM  Hi!

I've just found Pandora and wouldn't want to loose it straight away.

I can't send the form letter from the SaveNetRadio coalition to anyone since I live on the other side of the Atlantic Ocean, but I wish you good luck to your fight!
# posted by Kanerva : April 24, 2007 7:43 AM  Boycott Licensed Music!!!

GO INDY!!!!
# posted by brad : April 24, 2007 7:53 AM  Pandora is in no danger!!!!

It will just get bigger and more commercial. GO INDY!!!!
# posted by brad : April 24, 2007 7:55 AM  yall are all worried about the fees when I'd gladly pay their stupid fees if I could play what I wanted when I wanted too. It's the play rules that don't make sense. Just don't pay their fees and don't play music from musicians that can't sign a fee waiver. Then the licensing crap will disappear and this won't be a problem!

GO INDY!!!!
# posted by brad : April 24, 2007 8:06 AM  To musicians that think they should get paid every time they are aired...

You will be put on any station that pays fees, weather they suck or not and many do suck, trust me on that!!! Foul mouth DJ's, deviate behavior and so forth and so on. Plus they will just play your popular songs or the ones the station manager likes.

If you sign a fee waiver with a station that you like and approve of, your being promoted to the audience you choose plus they will promote you more and allow you more air time and help you make special promotions because their not harnessed by the stupid play rules.
So what happens is you get more fans, and sell more CD's.
# posted by brad : April 24, 2007 8:43 AM  Wow, quite a job for artists to go through every station that asks for the fee waiver. And a huge job for the stations too. There's a lot of nations in the world you know.. and even more bands.
# posted by Kanerva : April 24, 2007 8:54 AM  I received the following email from Senator Dianne Feinstein in response to the letter we are all sending. It sounds like the same corporate line to me:

Thank you for writing to me with your concerns about the Copyright Royalty Board's recent decision on the statutory rate for music webcasting. I understand your concerns and appreciate the opportunity to respond.

Under the Copyright Royalty and Distribution Reform Act of 2004, Congress - at the behest of webcasters - created the Copyright Royalty Board which consists of three judges. By law, the judges are a venue of last resort and are required to periodically set rates for various statutory copyright licenses in the event that webcasters and copyright owners are unable to reach voluntary agreements. In the absence of an agreement, the judges set a rate designed to approximate the fair-market value that webcasters should pay to artists and performers for streaming their music for the years 2006-2010. The new rate that was established is less than a 5 percent increase of the rate in effect from 1998-2005.

Although a few webcasters have recently claimed that the process was unfair, it was not arbitrary and allowed representatives from all sides to make their cases. The judges began the proceedings in 2005, and heard testimony from dozens of witnesses and conducted a comprehensive review of tens of thousands of pages of evidence submitted by all interested parties over an 18-month period.

While some webcasters may choose to pay this rate, independent negotiations between the parties are still possible and this new statutory rate would serve as the ceiling. Additionally, if it appears that the new rate will reduce the overall amount of webcasting - as well as the overall income from this stream of revenue - the copyright owners may still have an incentive to offer webcasters a rate less than the statutory rate.

I am a strong believer in intellectual property rights and believe that artists and performers have earned the right to be fairly compensated for the broadcast of their works by webcasters who benefit - financially and otherwise - from their talents. Without fair compensation, these artists would not create their works.

Once again, thank you for writing. Should legislation addressing this new rate or the rate-setting process come before the Senate, I will be sure to keep your concerns in mind.

Sincerely yours,
Dianne Feinstein
United States Senator
# posted by Precipitous Media : April 24, 2007 8:59 AM  Brad, what is your station called? Where can I listen to it?

All of my stations are listed at OutboundMusic.com. We don't pay licensing fee because we work with only indies. But I'm still against this rate increase. It WILL hurt artists. Sit back and watch or fight it now, while we still have a chance.
# posted by OutboundMusic : April 24, 2007 11:30 AM  This post has been removed by the author.
# posted by Reactor4 : April 24, 2007 11:56 AM  What bothers me the most about all of this is the lack of recognition by the artist/labels towards broadcasters as source of advertising. As broadcasters, paid or not, we are advertising for these bands. We play their music and, in most cases, ask for nothing in return. None of this seems to matter. In a lot of markets, people are paid to advertise for a product, however in our market, music radio, we are told we have to pay to play. How is that right? They want their music played to they gain fans and record sales, yet they demand payment for the play? Isn't that really just extortion?

To be fair, my show is all "Indie", non RIAA, off the chart music so I don't have to deal with this, but I still get angry at the situation.

Color it whatever they want, it's pure and simple greed.
# posted by Reactor4 : April 24, 2007 11:59 AM  I am all for this campaign. I live in a rural area where the radio choices are quite limited, and I really enjoy internet radio.

But my question is: what are the chances of changing this now? What can our legislators actually do? Is anyone introducing a bill? Are you working with any specific lawmakers on one?

I will write to my rep, but I'd like to have something concrete to suggest, beyond just saying I'm unhappy with the Board's decision.
# posted by Andrew Schamess : April 24, 2007 2:15 PM  Having been involved in various copyright struggles since 1998, I have officially lost all hope. We never win these things. Copyright holders will so much power, and the political system is so much in their favor, that it is near impossible to win any kind of battle against them. They grease all the right palms, and the people in power have so little understanding of the technology in question they are all too happy to cow to whatever demands the big industries make. I have become so disillusioned by our copyright laws and the people that make them that it just angers and depresses me everytime a fight like this becomes necessary. We never win, we get pushed farther back against the wall, and technology stagnates right where it is, which seems to be what Congress and the entertainment industry want. Good luck, but I think this is just another lost cause.
# posted by Joseph : April 25, 2007 2:51 AM  I've got a question. This law is it going to have effect only on US territory? If so, why don't internet radios set themselves up on another country where they don't have to pay these fees? I ask this because a lot of friends said to me that if this bill is passed, internet radios will stream from outside US territory and there will be no problem. Could that be a solution to this problem?
# posted by Leandro : April 25, 2007 4:48 AM  I really like to sign the petition, but since this is a global thing, maybe the address form could be adjusted?
# posted by Sijmen : April 25, 2007 5:44 AM  If this new law ever comes into force, it will only apply to Internet radios based in USA. Therefore, if you want to run an Internet radio and don't want to follow that law, you can set up your radio on a server in a country where the law is softer.
# posted by Komuro.info : April 25, 2007 5:50 AM  Brad said

"This may sound bad, but it's not, it's a very good thing for listeners. It will mean that the new station growth trend will go independent. Indy stations do not need to pay licensing fees, they do not need to go by the stupid DMCA play rules either, meaning that interactive broadcasting is legal for them."

Huh? Do you work for the RIAA?

How does limiting the number of options help the listener? How does limiting the number of options help the artist? Saying that this will only affect the big money radio stations is completely opposite from the truth. There won't really be any stations left for the Independents. As an artist, I would want my music to compete and be played from many outlets. I actually do want to make a living with my music. What you're proposing is that either I have to be part of the "corporate" elite or I have to sign away all my rights. How does allowing corporations to have exclusive license on mainstream music help the struggling artists or the listening public?

Artists should be compensated, pirating music IS wrong. Creating 2 classes of the powerful haves and the sign-away your rights have-nots doesn't seem very smart either. This is a power grab by the media companies to have a lock on where you listen to your music, where you buy your music. After net neutrality is gone, the independent radio stations won't even be able to stream at all and the corporations will have complete control over content AND delivery mechanism.
# posted by Andre : April 25, 2007 7:58 AM  Post a Comment

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