Net Radio Appeal On Royalties Rejected

Station writes "The Copyright Royalty Board has rejected a request to reconsider its March decision to impose an onerous royalty schedule on Internet radio broadcasters. '"None of the moving parties have [sic] made a sufficient showing of new evidence or clear error or manifest injustice that would warrant rehearing," wrote the CRB in its decision.' The recording industry and its royalty collection organization SoundExchange are jubilant over the ruling. '"Our artists and labels look forward to working with the Internet radio industry — large and small, commercial and noncommercial — so that together we can ensure it succeeds as a place where great music is available to music lovers of all genres," said SoundExchange head Simson in a statement. Noble words, but after today's ruling — which will take effect on May 15 unless the US Court of Appeals for the District of Columbia Circuit agrees to hear an appeal — there probably won't be much of an Internet radio industry left for SoundExchange to work with.'"

Dammit!

And Internet radio was the only radio left that didn't suck.

Re:

i'm wondering, why not just dump all the artists that are dump enough to let somebody like that govern their work ?
no sane artist would ever try to limit public appearance of his works, if he wants to promote them. getting tracks on the radio, any radio, i

Re:Dammit!

Because the royalties don't just go to the composer, they also go to the performers. There will be copyright on the recording of the performance, and the holder of that copyright will profit from royalties.

Given the enormous expense of producing classical music verses popular music, that's not so bad. The vast majority of the expenses associated with popular music are tied up in promotion. Full orchestral pieces need a huge soundstage, require you to pay a large number of highly trained people, need extensive rehearsal beforehand, etc. A record by Ms Spears just requires her to squawk into a mic in a quiet room for a bit and the geek with the autotuner to put in an all-nighter. I have no arguments with paying the relatively modest premiums for a superior product.

I find this ruling a shame though. The comments by the industry body that they are excited to be enabling the internet radio industry are such bullshit. They are secretly peeing their pants with glee that they managed to kill off a source of virtually free, high quality digital music, because without it, listeners will obviously be more inclined to spend some money.

Look on the bright side

With internet radio gone, VOIP gone, just think of all that bandwidth that will now be available for WoW!

Re:Look on the bright side

it will be consumed by spam first.

The whole point is to kill internet radio.

The whole point of this ruling *IS* to kill internet radio which poses the greatest threat to the vertically-integrated, homogeneous pop music environment that is the lifeblood of the RIAA. Without alternative venues for independent artists, the major label combine gets to pick the winners in the market. (Nevermind the detriment to the market itself - this is about controlling the whole pie, not the size of the pie.)

Sometimes I find myself wishing the RIAA got everything they ever wanted, if only to see how their market collapses. Then I realize it's already happening.

-Isaac

Don McLean

So, bye, bye, Miss American pie...

Re:

You *can* both be an artist and not a studio pawn. So it's still possible to have music on Internet radio, just not RIAA music.

I imagine many independents would jump at the chance to stand out now.

Tom

Re:The whole point is to kill internet radio.

So it's still possible to have music on Internet radio, just not RIAA music.

No. It's possible to have music on internet radio IF you as a webcaster have negotiated directly with the copyright owner for every piece of music you play. Otherwise, you're paying a license to SoundExchange, period. They administer the statutory license.

Creative commons is about all that's left, since negotiating with individual artists (and songwriters) for every track is likely to be cost prohibitive. A nice guy might try to undercut SoundExchange by striking deals with indie labels and artists and then brokering these licenses to indie webcasters, but that would require a pretty enormous up-front investment for uncertain return - especially since you could rely on the RIAA and SoundExchange pulling out all the stops to shut you down.

-Isaac

Re:The whole point is to kill internet radio.

What happens when Apple decides to be that broker? They've already positioned themselves to be the next media goliath, and they're going to continue to get bigger (just like Google). And somehow I don't think Mr. Jobs is going to have a problem putting an investment up to do the same as SoundExchange, since at this point it would just be people and code (the rest is already built out a la iTunes).

You hear me Mr. Jobs? Keep up the good work.

Re:

Creative commons is about all that's left ...

Except of course for the fact that the rest of the world is connected to the internet too. All this means is that internet radio stations move out of the US. It doesn't mean you won't be able to listen to in

An Alternative Scheme

So what's needed is a *different* agency, to collectively negotiate rights for non-SoundExchange artists.

It occurs to me that an outfit like CDBaby, already set up to pay artists for CDs sold, might serve quite well as a royalties broker for independent artists and songwriters (remember there are two parts to that side of the equation).

Once the base rate has been set (and it could be instantly defined as "just like it was before the new rules") it would be a matter of getting the word out, letting artists trickle in on their own, and creating a central database of music covered by the new "indie royalties agreement". The new royalties agency would take a cut (doubtless much smaller than what the current regime takes -- is it 80%?? anyone know for sure?), and distribute the artists' portions in the same way as they currently distribute artists' portions of CDs sold.

In fact, this could extend to any outfit that's set up for it -- the only hard requirement is that everyone must use the same central database, so all the internet radio stations can know positively, in one step and without having to chase anyone around, what music is covered by the indie-royalties-agreement and therefore free of the usorious new cartel rates.

I did find it interesting that even Clear Channel is on our side -- they're probably the ONLY radio voice loud enough to be heard in Congress. Goes to show that even as entrenched in realspace radio as they are, even Clear Channel recognises that the internet is the future of radio broadcasting -- particularly as station equipment ages out and they find it vastly cheaper to replace transmitters and towers with MP3s and bandwidth.

Re:An Alternative Scheme

This is a great idea.

It seems to me, however, that the entire premise behind flat-rate royalties is slowly disintegrating. The original idea was that it's too difficult for each station to contract with each rights-holder. So, a flat rate was set which, while not perfect, at least allowed those transactions to go through. The songs that are played are sampled, and then the royalties are divided among the rights holders according to the sample.

But, on the Internet, why can't you just have a big database tracking every song? The head-end software looks at how many listeners there are, looks up the song in the database and reports to the station "If you want to play this song right now, it will cost you $$$$"? Then, when it gets played, it tracks exactly who is supposed to get what royalties.

This model has a number of benefits: first, it's more accurate: each rights holder gets paid when their music is played. Even the guy whose song is only played to twelve people will get compensated, whereas he never would have made that 'sample' before. And, second, it allows each individual artist to set the rates for their own music -- if you want to give your music out for free, do it. And, third, it would allow low-cost Internet radio to thrive.

Re:

I imagine many independents would jump at the chance to stand out now.

i imagine that these [podshow.com] guys [garageband.com] are going to do something to provide that chance!

You know what?

having used internet radio as my sole source of mp3s since the early days of Kazaa, I think I might just subscribe to the stations. They're good people running good stations with good music. They deserve my money.

If you don't want to have your radio invaded by ads - subscribe today.

Pandora

They clearly have no idea how much Pandora [pandora.com] has done to sell me their product. I have actually purchased CDs I would never have known existed were it not for internet radio. They're killing the goose that lays golden eggs.

Re:Pandora

They clearly have no idea how much Pandora has done to sell me their product. I have actually purchased CDs I would never have known existed were it not for internet radio. They're killing the goose that lays golden eggs.

They aren't trying to sell YOU their product. They are trying to sell their product to people with no true music taste. They want to sell them *whatever* they put out regardless of its quality. The only way to do this is to 100% control the delivery method so that they can control every aspect of the market from the beginning (ala American Idol).

People that are looking to self-determine the path that their music tastes follow aren't likely to participate in a culture created entirely for them and that doesn't help the RIAA's mission at all.

Re:

My musical tastes have nothing to do with this discussion. Some people, in fact a lot of people, do genuinely like the music from the radio, MTV, and heaven forbid, American Idol. It's not your job to decide if their taste is worthwhile, and deriding it

Re:

Man, I'd just about kill to be able to find a link to this study I read, once.

The jist of it was this: the researchers divided people into two groups and gave each group the same set of songs. Each group was asked to rate the songs on some subjective sca

Re:Pandora

"Experimental study of inequality and unpredictability in an artificial cultural market" [columbia.edu]
Matthew J. Salganik, Peter S. Dodds, and Duncan J. Watts.
Science, 311:854-856, 2006.

Abstract: Hit songs, books, and movies are many times more successful
than average, suggesting that "the best" alternatives are qualitatively
different from "the rest"; yet experts routinely fail to predict which
products will succeed. We investigated this paradox experimentally, by
creating an artificial "music market" in which 14,341 participants
downloaded previously unknown songs either with or without knowledge of
previous participants' choices. Increasing the strength of social
influence increased both inequality and unpredictability of success.
Success was also only partly determined by quality: The best songs
rarely did poorly, and the worst rarely did well, but any other result
was possible.

Re:Pandora

3 things:
1.There is this belief among the RIAA that internet radio is a vehicle for piracy (i.e. people saving the songs and getting free copies)
2.Internet radio often plays non RIAA music too
and 3.The music that people listen to on internet radio and go and buy (even when its RIAA owned music) is not the music the RIAA wants you to buy.

Re:

We're talking about law here. Don't try to bring right and wrong into it, it'll only confuse the real issues. :-)

Re:Pandora

Just received, and followed, this e-mail today. I encourage everyone to do the same, as it will send e-mails out to your local representative(s) in the house and senate. I quote:


Hi, it's Tim from Pandora,

I'm writing today to ask for your help. The survival of Pandora and all of Internet radio is in jeopardy because of a recent decision by the Copyright Royalty Board in Washington, DC to almost triple the licensing fees for Internet radio sites like Pandora. The new royalty rates are irrationally high, more than four times what satellite radio pays and broadcast radio doesn't pay these at all. Left unchanged, these new royalties will kill every Internet radio site, including Pandora.

In response to these new and unfair fees, we have formed the SaveNetRadio Coalition, a group that includes listeners, artists, labels and webcasters. I hope that you will consider joining us.

Please sign our petition urging your Congressional representative to act to save Internet radio: http://capwiz.com/saveinternetradio/issues/alert/? alertid=9631541 [capwiz.com]

Please feel free to forward this link/email to your friends - the more petitioners we can get, the better.

Understand that we are fully supportive of paying royalties to the artists whose music we play, and have done so since our inception. As a former touring musician myself, I'm no stranger to the challenges facing working musicians. The issue we have with the recent ruling is that it puts the cost of streaming far out of the range of ANY webcaster's business potential.

I hope you'll take just a few minutes to sign our petition - it WILL make a difference. As a young industry, we do not have the lobbying power of the RIAA. You, our listeners, are by far our biggest and most influential allies.

As always, and now more than ever, thank you for your support.

Re:

Actually it is: http://blog.pandora.com/pandora/ [pandora.com]

I got the mail too, but all I had to find it on the website was click the "Blog" link at the bottom on the page.

boundaries

This will only work against people and companies inside the United States; I predict that internet radio will still thrive, and the rest of the world will drive America's music tastes.

Re:boundaries

This is exactly what irritates me about these stories. Why the panic?

Internet radio will just move off-shore, and continue unaffected. I see it said again and again on Slashdot, but it doesn't seem to sink in. The internet does exist outside the US. And there's links between the different countries!

Re:

And those links cross the borders of countries at a relatively limited number of internet exchanges / peering points. Don't think that the Corporate Reich of America could never implement a "Great Firewall of the USA". And, unlike China, the CRA might e

Re:boundaries

Community radio cannot move offshore.

Re:

I've been listening to a lot of icelandic radio lately. It's disappointingly american-based, but at least it's not the same 30 songs that every american radio outside of college stations is currently playing. With that said, I also listen to a lot of col

Re:

Radio Caroline [wikipedia.org] here we come!

The RIAA looks forward to...

Working with our wholly-owned subsidiaries, who are of course exempt from paying royalties. What wholly-owned subsidiaries, you ask? Why, the very ones that the sustenance of this ruling has made possible.

Fuck...

As a former musician, songwriter, and label owner, I relied on getting paid through performance, mechanical, synchronization, and transcription royalties. It was a regular, dependable revenue stream.

But I've gotten so dependent on internet audio streams like Soma-FM's [somafm.com] Indie Pop Rocks. Sometimes, it was the only thing keeping me going when I was working my dead end IT job. I'd have the shortcut to the 128kb stream on my desktop and it was the first thing I'd hit, even before checking my e-mail.

When I heard a song I really liked, I'd write down the name on a notepad, check the artist's site to see if an mp3 was available and if not I'd get it from iTMS. Just like radio, internet streams drive sales.

I had thought that ASCAP and BMI (the performing rights organizations that collect and disburse performance royalties) based royalty rates based on a radio or television station's potential audience, but it seems more complex than that, seeing as the Library of Congress is setting basic rates.

Tomorrow, I intend to research this issue and write my congressman (Rep. Delahunt) and senators (Sen. Kerry and Sen. Kennedy) and ask them to look into this issue. I urge everyone who is a constituent of a senator on the telecommunications subcommittee to do the same:

Conrad Burns, MT, Chairman
Ted Stevens, AK (don't mention those "tubes", okay?)
Trent Lott, MS
Kay Bailey Hutchison, TX
Olympia J. Snowe, ME
Sam Brownback, KS
Gordon Smith, OR
Peter G. Fitzgerald, IL
John Ensign, NV
George Allen, VA
John Sununu, NH
Ernest Hollings, SC, Ranking
Daniel K. Inouye, HI
John D. Rockefeller, WV
John F. Kerry, MA
John Breaux, LA
Byron Dorgan, ND
Ron Wyden, OR
Barbara Boxer, CA
Bill Nelson, FL
Maria Cantwell, WA

E-mail and faxes will probably be better received than snail mail, given the fact that mail to government offices gets delayed while it gets irradiated to ameliorate biological threats.

k.

Crap...

I guess the official Senate Telecommunications Subcommittee web site is out of date. It was only after I posted this that I realized that Sen. Burns (R-MT) lost to John Tester and George "Macaca" Allen (R-VA) lost to James Webb.

Pretty fucking Web 0.9 if y

Decision only sets compulsory rates

Copyright owners and webcasters can still negotiate rates (See 17 U.S.C. Sec. 114(f)(3) [cornell.edu]). The decision [loc.gov] that the Copyright Review Board refused to rehear merely establishes the terms and conditions that enable webcasters to license copyrighted works without seeking permission from the copyright owners. If Congress had not enabled the establishment of these compulsory license rates, then webcasters would not be able to broadcast any works without seeking permission from copyright owners because Congress had introduced a digital performance right in the Digital Performance Right in Sound Recordings Act of 1995.

Copyright owners presumably are interested in maximizing their revenues, while webcasters probably would like to minimize their costs. Thus, both groups still have a incentives to negotiate. The compulsory licensing rates will not kill internet radio: they simply provide terms and conditions of last resort for copyright owners and webcasters who cannot otherwise reach an agreement.

Re:

The compulsory licensing rates will not kill internet radio: they simply provide terms and conditions of last resort for copyright owners and webcasters who cannot otherwise reach an agreement.

Compulsory licenses are meant to create efficiencies in the m

From TFA:

One thing that really surprised me after reading these comments first and then the article, is that stations can't just move to independent music. From TFA:

5. Well... independent music is cool. Why not just play independent music?

This is very important to understand, as lots of people see this as a solution. The statutory webcast license covers ANY copyright music, from the biggest labels, down to the smallest, and even independently-released music. Again, the license covers ANY copyright music. The copyright owner need NOT be part of SoundExchange or the RIAA. The ONLY exceptions to this are (A) direct deals with each and every sound recording copyright owner, (B) copyright owners that are willing to make a blanket "waive" of fees, or (C) non-copyright, public domain music.

I guess that means that this is about more than just the RIAA controlling the industry - its about putting them out of business. Of course, me being an Australian, I understand that they can't really do that because there are many other countries where it costs a bit more to buy yourself a politician.

And just for the record, one of my favorite stations [lounge-radio.com] is located in Switzerland anyway.

That's fair

I've come to the conclusion that there is little I can do to stop the overwhelming tide of corporate interests or otherwise greedy minded individuals who control the world. That is, until even the sheeple of the world get annoyed. I figure that'll be about the time they interfere with american idol in some way or another. Or Grey's Anatomy. Until then, those of us with good intent are going to be continued to get kicked to the curb any time a large corporation with deep pockets want something.

They say real life is nothing like school. They are wrong on one point: The bully still wins. Standing up to the bully gets you little more than a bloody nose and some sympathy.

Enter Pirate Radio 2.0

Another generation, born from fire.

UNRIAA?

I hear a lot of comments along the lines of A) use creative commons B) go off shore c) direct negotiations with artists.

I run a radio program. Both (depending on how many artists you'd like to feature or how often you'd like to update that) are unrealistic.

Assuming independent artist *do* want to be heard (and I'd contend that they do) I think all that's missing to make this a powerful vehicle is any real organization behind it.

Want to bad mouth the RIAA? Create something fucking better. I'd bet with enough exposure a lot of small/mid-sized artists and record labels would love to provide cohesive, clear (protective) rights for some kind of limited/promotional broadcasting.

When I started my radio program I immediately began contacting artists, managers and labels directly. They didn't want to provide carte blanche permission. This is an industry and artists/(managers)/labels get taken advantage of. But they were more then eager to provide limited broadcast rights with proper guidelines that could easily be generalized pretty much across the board.

If we like being lead by the balls by an organization we don't feel is treating us with respect, perfect that's *exactly* what we've got. But if you're fucking tired of this? Show them or stop whining.

Couldn't Indie Labels Save Indie Radio?

Given internet radio can still function if stations negotiate directly
with the copyright holders (which of course is a whole lot of micro-negotiating) -- a better
solution might be for independent record labels to just include in THEIR contracts with
royalties companies that Internet Radio is "OK by them", and state that they don't want
to collect the same royalties from stations under a certain size.

It seems to me that Indie labels could (and should) give a big thumbs up to Internet radio
and craft their own royalties exceptions.

SomaFM's stations are actually vital to their respective scenes. Its up to the small labels
and artists to stand up and take action now. If Internet radio fails, it will be the artists
fault too.

Digitally Imported

I listen to www.di.fm all the time, I love their radio, and I am actually afraid what will happen now.
It's so nice getting to listen to the music you like without having to bother about downloading / converting music etc, and I've been a premium member at di.fm for quite some time.

My initial thought is though, can't they move the internet radio servers out of the US, to countries with a bit more sensible laws?

This isn't pirating (you may technically be able to save the streams but it's not trivial and most non-technical people wouldn't bother), this isn't stealing revenue, this isn't hurting anyone... if anything, it should be helping the sale of music. There must be more people than me who have listened to a tune on internet radio and then went and bought it because it was really good.

For all you people in the US, go to DI.FM [www.di.fm] and do what it says there... help internet radio!!

Rates

For commercial and for larger non-commercial webcasters the judges set a pay-per-play rate of:

$.0008 per play for 2006
$.0011 per play for 2007
$.0014 per play for 2008
$.0018 per play for 2009
$.0019 per play for 2010

Per Play means the following:
Any time ONE listener hears ONE song (or any portion of a song), that's a "performance." If ONE listener hears ten songs, that's TEN performances. If 1000 listeners hear ten songs, that's 10,000 performances.

So what will the internet radio stations have to pay?
Here's a calculation:

$0.0008 X 10,000 listeners X 16 songs/hr. = $128. It'll cost our imaginary webcaster $128 to play one hour of music for 10,000 people.
At the end of the day, that's $3,072 ($128 X 24 hrs./day) -- for just a single day! After a week goes by, it's $21,504 ($3,072 X 7 days/wk.).
And for all of 2006, this webcaster with a steady average audience of 10,000 listeners would owe $1,121,280!! (the $3,072 X 365 days/yr.)

That takes care of 2006. For 2007, the rate increases 37.5%! So, with no audience growth, the cost of streaming music for the year would increase to $1,541,760.
And the royalty rate goes up another 28% in 2008, and another 28% in 2009, topping out at a $.0019 per performance rate in 2010 (resulting in a royalty obligation of $2,663,040 for that same audience averaging 10,000 listeners) for that year.

Information taken from www.savethestreams.org.

Re:

I believe the question is "Why does Internet Radio have to pay out the ass when normal radio only has to pay 'reasonable' royalties?" (Reasonable is of course up to interpretation)

Re:The real question

So, why should there be no royalties for Internet radio when both play the same music?

Good job knowing what you're talking about. Internet radio stations already had to pay royalties. This new ruling means they will pay far more expensive royalties. So expensive that it would cost more than terrestrial radio without nearly the same audience or revenue.

Re:The real question

If the objective is to have broadcasting over the Internet, then there is no effective difference and the royalties should be identical.

Great point! You should really mention it to the Copyright Royalty Board, as they have now rejected that line of reasoning twice when it came from the Internet radio stations.

In case you haven't been keeping up with the story, here's the quick summary: Internet radio has to pay two sets of royalties, while traditional radio only pays one. Thanks to the recent ruling by the CRB, that extra royalty that Internet radio pays will skyrocket over the next few years, dealing Internet radio a mortal blow.

And yes, you're right, it makes no sense.

Re:Royalty

You're mistaken. Internet radio is transmitting highly compressed copies that usually sound only marginally better than a cassette tape. It is digital in format, but that does not mean that it is of superior quality. There is a reason why the digital format on a CD is about 40 MB per song and an MP3 of the same exact song is about 4 MB. The quality is lower. If they were streaming some lossless format then maybe it would be a concern. The bandwidth costs alone would drive all but the largest webcasters out of business. A cassette tape recorded off of a strong FM station probably sounds better than most internet streams. This is not about digging money out of a new business. This is about shutting down a new business that threatens the vertical integration of the old business. If people have un-restricted access to new artists and music it becomes more difficult for the labels to force-feed their crap down our throats. This will drive everyone out of webcasting...except for ClearChannel and maybe AOL. Their precious business model secure until someone figures out how to bit-torrent radio streams. (Actually Octoshape is already doing that more or less)

Re:Royalty

http://www.peercast.org/features.php [peercast.org]
Anonymous broadcasting - clients do not tell each other if they are the source or just listening

Re:Royalty

That specific royalty is only because "HD Radio" isn't a generic standard that anyone can use, but is instead a proprietary format that iBiquity licenses out to people. There are other digital radio formats [wikipedia.org] that don't have to pay this fee.

Re:

I'll second that. I run a synthpop and darkwave radio station [mirrorshades.org] (plug!) myself, and I have had people tell me they've never heard this or that artist before, and then go check out their albums. One even went to the VNV Nation concert here in Atlanta after

Re:

Well, since English doesn't have polypersonal agreement and the subject of the sentence is "none," the verb should be singular. "None of you has taken out the trash" would be the proper construction of that sentence, and not "none...have." This is the sa