Mesh Magazine

On Friday, The Copyright Royalty Board voted to increase the rates that Internet radio stations must pay to stream songs, making the increased rates retroactive to the beginning of 2006. The new rates are $.0008 per song per listener for 2006, $.0011 in 2007; $.0014 for 2008; $.0018 for 2009; and $.0019 for 2010. So, for example, in 2006 if you played Gnarls Barkley’s song “Crazy” and you had 500 listeners, you would owe 40 cents. Let’s say you play 15 songs an hour, with just 500 listeners, you would owe $144 every single day, $4,320 per month and $51,480 per year. In 2010, you will owe $342 per day, $10,260 per month and $123,120 per year. Seeing as most Internet radio stations make little or no money (or operate at a loss) this will effectively mean the end of most stations.

What can you do to save Internet radio? Contact your congressperson! EFF has a handy guide to finding and contacting your congress person here.

Ted Leibowitz of Bagel Radio was kind enough to let us repost his write-up on the matter:

It’s Hollywood vs. The VCR All Over Again…

…only this time the fox is guarding the henhouse.

Keep in mind that legal internet broadcasters presently pay sizeable annual fees to ASCAP, BMI, SESAC, and SoundExchange. The fee structure already in place makes it so difficult to stay afloat that last year even WOXY.com, one of the most popular and most respected internet radio stations ever, was forced into financial ruin and had to cease operations (until being bailed out by the kind folks at LaLa.com).

The Copyright Royalty Board just substantially increased the fees internet radio sites must pay to record labels — fees not paid by traditional radio stations — a move that will kill off every last independent online radio station and websites like Pandora. Once these new rates kick in the wealth of programming available during what will be remembered as the Golden Age of Internet Radio will disappear almost overnight. All that will remain will be the stations and sites funded by the biggest of the big money corporations. You know, the nice folks who currently filter out all of the good music and play the same 40 songs by major label artists over and over again.

SoundExchange, arguing for the rate increase, says that internet radio provides no promotional benefit to arists. SoundExchange is made up of record label executives.

If internet radio provides no promotional benefit to artists, why do record labels, radio promo companies (hired by record labels), and bands send 30-50 CDs a week for airplay consideration on BAGeL Radio?

One industry hand clearly doesn’t know what the other is doing, and despite this obvious inconsistency, a government entity called the Copyright Royalty Board adopted the rates and payment structure recommended by SoundExchange…almost to the letter.

Some of you will remember that industry has tried to kill/regulate new technology in the past: the music industry freaked out about CD-burning computers in the 1990s, the film & television industries freaked out about VCRs in the 1980s, the music industry freaked out about cassette recording in the 1970s…well, here we go again, only this time the medium is so new and far-reaching, the industry remains Mr. Magoo-like in it’s inability to see the big picture, and the government is so comfortably seated deep in the warm, lush pockets of big business, that the music industry is getting it’s short-sighted, ultimately self-defeating way.

Independent internet radio will die if this decision is not reversed.

Please ask your Congressperson to reverse the misguided decision of the Copyright Royalty Board. Tell them that internet radio is how you find out about new music. Tell them that when you hear music on internet radio you sometimes click over to the iTunes Music Store or Amazon or wherever to buy it (and while you are at it tell them the last time you did that thanks to hearing something on traditional radio). Tell them that if adopted, the Copyright Royalty Board rates will kill off webcasting — the most vital and interesting outlet for hearing new music available today. Tell them that the music industry is being very short-sighted and is effectively shooting itself in the head by crushing in its infancy this new, exciting and wide-reaching promotional outlet that it should be embracing.

Sign the petition.

Read more here.

Thanks.

Ted Leibowitz, BAGeL Radio
CMJ Specialty Music Director of the Year
SF Bay Guardian Best DJs of the Bay

Addendum (3/7/06): SoundExchange Executive Director John Simson said of the last time royalty rates were decided, “we had the same exact response: that this is terrible, it’s going to put everybody out of business. But the industry grew.”

What Simson conveniently left out is that (a) the initial response to the 2002 rates was a vast contraction of the number of internet radio stations; (b) the now-expired Small Webcaster Settlement Act of 2002, enacted by Congress, is what enabled the industry to grow. There are no small webcaster stipulations in the SoundExchange-penned new royalty rates.

The industry argument is that copyright holders should make more money from their songs being played on internet radio. Why not terrestrial radio as well? Oh, right, because terrestrial radio, with it’s two decade-long slow fade into oblivion, provides promotional benefit to copyright holders, whereas internet radio does not.

Did you know that 1 in 5 U.S. consumers 12 and over listen to internet radio?

The new semi-annual study from Bridge Ratings & Research indicates the number of monthly Internet radio* listeners nationwide has jumped 26% over last year and has increased to 72 million monthly listeners from 45 million at the end of 2005.

Do you think any ClearChannel money/muscle might be involved in this push to eliminate independent broadcasters?

Since the industry can’t control internet radio (and refuses to try to conquer it in a fair fight), it is trying to suck it dry. Failing that, it will pay some clueless goverment entity (that probably thinks the internet is a literal set of tubes) to legislate it out of existence.

Please don’t let this happen. Sign the petition, contact your Congresspeople, and help spread the word about this to every music lover and fan of the First Amendment that you know.

Here Bill Goldsmith of Radio Paradise lays out the scenario more eloquently and reasonably than I ever could.

This entry was posted on Friday, March 9th, 2007 at 11:51 am and is filed under Music, Politics, Local News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.