Slashdot Log In
New Royalty Rates Could Kill Internet Radio
Posted by
Zonk
on Sun Mar 04, 2007 05:45 AM
from the one-of-my-favorite-things-about-the-internet dept.
from the one-of-my-favorite-things-about-the-internet dept.
FlatCatInASlatVat writes "Kurt Hanson's Radio Internet Newsletter has an analysis of the new royalty rates for Internet Radio announced by the US Copyright Office. The decision is likely to put most internet radio stations out of business by making the cost of broadcasting much higher than revenues. From the article: 'The Copyright Royalty Board is rejecting all of the arguments made by Webcasters and instead adopting the "per play" rate proposal put forth by SoundExchange (a digital music fee collection body created by the RIAA)...[The] math suggests that the royalty rate decision — for the performance alone, not even including composers' royalties! — is in the in the ballpark of 100% or more of total revenues.'"
Related Stories
[+]
Study Says $2.3B in Net Radio Royalties by '08 102 comments
An anonymous reader writes "According to a newly published report, the music industry will have a nice pile of cash to collect from net radio owners in 2008 — a staggering $2.3 billion to be exact. The report is based on current performance royalties paid by terrestrial radio vs. internet radio, and taking into account projected growth in listenership. Meanwhile, the corporate Clear Channels pay just $550 Million for broadcasting the same songs we've all heard before. Hardly a fair deal."
[+]
NPR Takes First Step To Fight Internet Royalties 135 comments
jmcharry sent in an article that opens, "After the Copyright Royalty Board (CRB) decided to drastically increase the royalties paid to musicians and record labels for streaming songs online, National Public Radio (NPR) will begin fighting the decision on Friday, March 16 by filing a petition for reconsideration with the CRB panel."
[+]
Internet Radio In Danger of Extinction in United States 229 comments
An anonymous reader passed us a link to a Forbes article discussing dire news for fans of Internet radio. Yesterday afternoon saw online broadcasters, everyone from giants like Clear Channel and National Public Radio to small-fry internet concerns, arguing their case before the Copyright Royalty Board (CRB). The CRB's March 2nd decision to increase the fees associated with online music broadcasting will have harsh repercussions for those who engage in the activity, the panel was told. "Under a previous arrangement, which expired at the end of 2005, broadcasters and online companies such as Yahoo Inc. and Time Warner Inc.'s AOL unit could pay royalties based on estimates of how many songs were played over a given period of time, or a 'tuning hour,' as opposed to counting every single song ... [They] also asked the judges to clarify a $500 annual fee per broadcasting channel, saying that with some online companies offering many thousands of listening options, counting each one as a separate channel could lead to huge fees for online broadcasters." There was also a previous provision for smaller companies that allowed them to pay less, something the March 2 decision did away with; in the view of the royalty holders, advertising more than pays for these fees, and they're ready for higher payments.
[+]
Small Webcasters Offered a Rate Break, Reject It 123 comments
Pontifex minimus writes "Music royalty collection group SoundExchange has offered an olive branch to small webcasters. They are willing to delay the exorbitant new rates set by the Copyright Royalty Board until 2010 for small webcasters in hopes that they can keep Congress from passing the Internet Radio Equality Act. Larger outfits, like Live365 and Pandora would not be affected and would have to pay the new rates. '"Although the rates revised by the CRB are fair and based on the value of music in the marketplace, there's a sense in the music community and in Congress that small webcasters need more time to develop their businesses," said John Simson, executive director of SoundExchange.' SaveNetRadio rejected SoundExchange's offer, saying that it 'throws large webcasters under the bus.'"
[+]
Day of Silence On the Internet 276 comments
A number of readers sent in stories about Net radio going dark for a day. Not all of it, but according to the Globe and Mail at least 45 stations representing thousands of channels. The stations are protesting a ruling establishing royalty rates that will put most of them out of business on July 15. "The ruling... is expected to cost large webcasters such as Yahoo and Real Networks millions of dollars, drive smaller websites like Pandora.com and Live365.com out of business and leave a large chunk of the 72 million Net radio listeners in the dark." SaveNetRadio has a page where US residents can locate their senators and representatives to call them today.
This discussion has been archived.
No new comments can be posted.
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
Full
Abbreviated
Hidden
Loading... please wait.
surprised??? never... (Score:5, Insightful)
Re:surprised??? never... (Score:4, Insightful)
The only reason the RIAA keeps getting away with this shit is because nobody is willing to stand up to them. If the radio stations banded together for one day of action to draw attention to the issue, maybe something will change, but it's gotta be done very soon, as I believe they only have two weeks to appeal.
The only stations I listen to are independent and have no RIAA music, but I really don't want to see the option go away. If it does, what are we left with? Your local Clear Channel owned station, and other "genre of the week" stations that satisfy nobody.
Parent
Re:surprised??? never... (Score:5, Interesting)
A person is more likely to listen more than 30 seconds of the important message if there is some payoff (more music) and a station is more willing to do something like that than lose all or most of their audience to a competitor who isn't doing the blackout thing.
Parent
Re:surprised??? never... (Score:5, Insightful)
Parent
Re:surprised??? never... (Score:5, Insightful)
Dred,
you have hit on the ultimate solution to all idiotic intellectual property laws. In some years, it will have been a good thing that the Internet caused the end of IP as we know it. Stories like this one, showing how little the "gatekeepers" of recorded music really understand about how people use their product, are starting to pop up at such an alarming rate that the crash must be near.
Parent
Re:surprised??? never... (Score:5, Interesting)
The first problem with the current setup is that it's put under industry administration (whose interests are vastly divergent with both most musicians and the public, witness the current example), when in fact it's a tax and should be under government administration. That way it'd be subject to the same constraints as other taxation forms; is it reasonably equitably collected, do we get our money's worth from the spending (ie, does it finance as many artists and creators as possible for the money we're willing to spend?), is this a reasonable level of expenditure? What's more, we could actually measure the number of new works and how they change depending on the level of spending so we could finally get real data rather than imaginary numbers made up to support organized con men.
The second problem is that the RIAA corps are excluded. If we need an incentive for creative endeavors, _any_ revenue generating activity using 'copyrighted' material should be subject to the same taxation, wether plays on the radio, sales over the internet or the printing of CD's. Remove the 'copy' aspect of 'copyright' and replace it with a generalized non-transferrable 'incentiveright'. Allow free copying, printing and distribution of materials, let anyone from your local supermarket to online shops freely copy the material, as long as they pay a percentage of any revenue as 'incentive tax'/'royalty', and make sure the incentive actually goes to the creators. And make sure it goes to them in appropriate portions to maximise creativity.
Imagine the possibilities; you could go to the local supermarket and print a CD with whatever tracks you want on it. You could buy an USB disk of the nights music at a club. You could get a complete recording of the show when you exit a concert. Without copyright but with a simple levy on the revenue, whole hosts of new business and value opportunities would open up, while still maintaining a (more measurable) incentive for creativity.
Parent
Re:surprised??? never... (Score:4, Insightful)
Parent
Re:surprised??? never... (Score:5, Insightful)
Whatever you think is the answer is irrelevant, because the point is that a huge number of people will disagree with you. Whatever answer is legislated, a lot of people are going to be upset when, in their opinion, they're spending money incentivising the wrong thing. And what if I don't listen to music? Am I exempt, or is funding the pleasures of others a reasonable thing to be required of me?
I don't know why having some sort of committee deciding what artists should be paid seems appealing, and that is what it would ultimately come down to. The free market _can_ work here, it just doesn't because we have stupid copyright laws, and a cartel that no one seems willing to take on. That doesn't make a nonsensical socialist program the answer.
Parent
Clear Channel loses big, too (Score:5, Interesting)
Have you considered who will be paying the most? This year, every Clear Channel station in the top 100 markets will be simulcast streaming. That's on the order of 1,300 stations, +/- 100 or so. Since I've already done the math, I'll clue you in.
Using an average of one song per four minutes, each station will be playing 131,400 songs per year. That's $144.54 per station per listener. TFA quotes 500 listeners as average; that works out to:
100 listeners: $14,454 --- 500 listeners: $72,270 --- 1,000 listeners: $144,540
At 1,300 stations or so, that means this ruling will cost Clear Channel:
100/station: $18.8m --- 500/station: $94m --- 1,000/station: $188m
I can tell you firsthand they are not making that kind of revenue on their streaming side. Clear Channel stands to lose on the order of $100m this year. Ad revenue might help offset it next year, but we're still looking in the range of $100m or so for 2008 as well. CC most definately did not sign up to lose $150-300m in the next two years; it's really not a good time.
On a side note: If you want to hear something new on a Clear Channel station, call in or email the PD (production director). Tell him or her you want to hear it. Ask them to check CCADS ('seecads'). If it's not available, tell them to request it from Bobby Leach. Offer to lend them your cd, if it's safe for radio play. Call in or email your favorite jock; tell them to bug their PD about getting the track. Get your friends to request it. If you know people in other major cities, ask them to do the same. If you're not asking the impossible, they will listen and your favorite track will get played. As a bonus, if it gets into the system, anyone can request it in any city and they won't have as much hassle.
Parent
Re:surprised??? never... (Score:5, Interesting)
I am a shoutcast fiend. I scan the top stations every day or two. Hardly any of the stations (even the popular ones) play RIAA music.
Why would it make any difference what they charge if it doesn't get played? They should be paying people to get their shit out there to get it on the air. If they don't (and they won't) then something else will be.
I would say that I welcome the coming revolution, except that it's so far underway that I'd be missing the boat. Their content is shit, and everyone except the marketing guys recognize it...
Parent
Shouldn't the title be.... (Score:4, Insightful)
Video killed the radio star (Score:4, Funny)
Pandora's marketing data alone is worth millions (Score:4, Interesting)
If they cannot find a way to monitize the living daylights out of that, then they need to hire some better mathematicians...
Opportunity (Score:5, Interesting)
When will they learn....? (Score:5, Insightful)
-Robert Heinlein "Lifeline"
OK...That's solved by not playing RIAA music. (Score:5, Insightful)
Streaming audio isn't a crime.
What's really wrong with this (Score:5, Insightful)
Genuine solution is actually really easy (Score:5, Interesting)
What needs to happen is for Internet radio stations to turn to independent labels. Consumers will buy the music they hear. If Internet radio stations commit to changing the majority of their playlist to artists on non-RIAA labels then the majority of profits will be diverted from the RIAA - they don't get per play royalties and they don't get royalties on purchases. It's a double-whammy. If you look at something like eMusic today, which doesn't carry the RIAA labels, you will quickly find that a little digging turns up more great music than you might actually expect. And it's not just Internet stations that should make the change - everyone can benefit from getting out of this monopoly stranglehold. The RIAA might eventually have to propose competitive terms to survive, artists will be better compensated, and labels which are smaller today will be able to grow faster not only because they will see a greater percentage of royalties, but because the best artists will be less drawn to the RIAA labels in the first place.
Perhaps, though, the RIAA is already starting to feel some bite, and this is why their proposed fees are so high. If you're paying 100% of your revenues to the RIAA, you aren't paying anything to the indie's.
Re:Genuine solution is actually really easy (Score:5, Interesting)
One of the other arguments that is often offered in the case for independent labels is that the music is more authentic, creative, and less 'manufactured'. However, to truly displace the RIAA we should realize that it is necessary to cater to the mass markets that they currently serve. It is difficult to instantly change the listening habits and genre preference of millions of people, therefor an effective program would rely on enough mainstream pop, rap, hip-hop, etc. music to be produced by independents and marketed in a way which reaches younger generations and begins to draw their attention from traditional RIAA artists.
Never in our history have we been so prepared and capable to tackle this problem. Modern music technology and tools in combination with the Internet helps to level the playing field, at least somewhat, such that professional sound is in reach of the amateur through virtual instruments and production software that can be purchased for only hundreds of dollars, while co-ordinated marketing across popular sites contributing to the cause could compete with major budgeting spends by big labels.
If there were enough contributors to undertake such a concerted movement it might be interesting to set up something akin to sourceforge, e.g. a "musicforge", where independent artists collaborated to produce substitutes for mainstream media and served them to Internet radio stations, at least as a beginning, to help drive the change. If mainstream music is really as formulaic as we often claim it to be, in theory reproducing it to a reasonable standard should not be impossible or even very difficult.
Just some thoughts
Parent
My email to the RIAA (Score:5, Insightful)
Greed is going to kill the RIAA (Score:4, Interesting)
Why is this a bad thing? (Score:4, Interesting)
I've been thinking about the impact a lot since reading it, and it seems to me that there are two groups of radio stations to consider:
1. Online pirate stations who are broadcasting the music illegally. While I don't think they should be pirating the music, the fact is that if they are pirating it now, making the royalty rates higher are not going to stop them from pirating the music and playing it. To misquote Terry Pratchett, "they're PIRATES - they don't care about the law." So, no real impact there.
2. Online stations that are playing the music legitimately. This will have quite an impact on them, and most likely a positive one all round. Well, I should say, for everybody except the labels represented by the RIAA, who just got themselves priced out of the market.
It seems to me that online radio isn't going to disappear, but will do something else - the broadcasters will vote with their feet. SoundExchange and the RIAA will have a very difficult time proving that retroactive royalties are due in any court of law, and the larger stations should be large enough to defend themselves, so I doubt that the RIAA will press too hard on that one (after all, if the RIAA tried to collect from AOL, you'd have a battle royale that would take years to sort out, and my money would be on AOL). But, with the royalty rates so high, no radio station will be able to play music from an RIAA label, and the broadcasters will be very hungry for new material.
So where do they find this new material? Independent artists. With the online broadcasters desperate for material, it will be a seller's market for independent recording artists, in the process giving that section of the market just the sort of boost it needs. This will raise the profile of the independent music scene, while at the same time allowing the independent artists to negotiate a reasonable royalty situation with the broadcasters. So, the listeners who get exposed to new (and less corporate) material win, the independent artists win, and the broadcasters get out from under the RIAA thumb, so they win.
Come to think of it, the only people who lose are the RIAA, who just got shot in the foot and lost a market...
Re:Well, (Score:4, Insightful)
With copyrights lasting 50 years after an author's death (in the US) it makes no difference to those who are in the grave. And for those who are still alive, they have no incentive to create new works, which was the original intent of copyright law.
Parent
Re:Well, (Score:5, Insightful)
And in any event, the purpose of copyright law is to serve the public interest, where the public interest is tripartite, and consists of 1) wanting more original works created and published; 2) wanting more derivative works created and published, and; 3) wanting no or minimal (in scope and length) copyright laws.
Which brings us to the life+70 term (which is what it actually is in the US, at least for some works). For the vast, vast majority of creative works, they'll never make money at all. For the tiny minority of works that will ever make money at all, the vast, vast majority of them will make virtually all of the money they'll ever make within a year or two of release in a given medium. For example, let's take movies: When a movie comes out the opening weekend is absolutely critical. It'll make a lot of money that weekend, less the following week, even less the week after that. After a few weeks, it'll be gone from first-run theaters. After a couple of months, it'll be gone from pretty much all theaters. Whatever money it made from the box office during that period is basically all it will ever get in the theatrical medium. Then it comes out on pay-per-view. I have no idea who actually uses ppv, but apparently someone does, and again, when it first comes out, that's when it makes most of the money it will make from ppv. As the weeks drag on, it pulls in less and less. Eventually it drops off of ppv. Then come the sales to movie rental shops and the public, in the form of DVDs. The first week that the DVD is out is when most of the people who have been wanting to buy a copy of the movie will get it; people who have wanted to rent it (rather than use ppv) will get it then too, resulting in most of the rental store orders to have been placed early. But again, as the weeks drag on, sales drop off. A little bit more money can be squeezed from licensing the movie to the cable movie channels, and after that, to regular tv channels. And you can go through the same cycle in the foreign markets. But then, that's basically it. You have gotten 99.44% of all the money you will ever make from this movie. Most of that (box office, ppv, dvd sales) took place in the first three months or so. (Newspapers and some tv shows have the shortest periods, while books probably have the longest, but even for books, it's a couple of years)
So the issue is, if all that the remaining years are worth is the paltry 0.56% remaining money to be wrung out of it, which is true for the vast, vast majority of movies that ever make any money at all, since so very few ever have the lasting popularity to keep making a significant amount of money over the long run, is it important that the copyright lasts so much longer?
If Alice will paint Bob's house when Bob offers to pay her a million dollars, then that certainly has an incentivizing effect, but it is rather costly. If Alice will paint Bob's house when Bob offers to pay a thousand dollars, then that has incentivized her just as much, but in a much more cost-effective manner!
Well, for creative works, we need to provide the least amount of incentive we can in order to get the most works we can -- basically we're looking for how to get the most bang for our buck. If a five year copyright would get nearly as many movies made as a 95 year copyright (the term length most commonly applicable in the US for movies), then surely the five year term is a better bargain. Adding more incentives -- by lengthening the term -- might get a handful of extra films made, but are they worth the cost to the public of having to endure such long copyrights? Probably not. So don't just look at the incentivizing effect, look also at whether or not it is worth it, and just how much of an effect there actually is.
Parent
Re:Why not donate instead? (Score:4, Insightful)
You get what you pay for.
By the way "Utopian Socialist", I have an outdoor structure I need built. Come on over and build it and I will give you some writing in exchange.
Parent