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Small Webcasters get Powerful New Ally 362

An anonymous reader writes "On, Sunday, October 20, 2002, the RIAA's subsidiary, SoundExchange, was set to introduce draconian new fees on small internet webcasters - fees that were designed to drive those webcasters out of business and preserve the RIAA's monopoly on the distribution of music in North America. One of those small webcasters is the Triangle's classical music station, WCPE - quite possibly the finest classical music station in the world. Now it turns out that WCPE has an 800 lb gorilla in their corner, and he's set his sights on the RIAA."
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Small Webcasters get Powerful New Ally

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  • by xdfgf ( 460453 ) on Monday October 21, 2002 @01:43PM (#4497171) Homepage Journal
    Helms Blocks Web Radio Royalty Deal in Senate
    Fri Oct 18, 8:02 PM ET

    By Peter Kaplan

    WASHINGTON (Reuters) - A senior Republican senator has held up passage of a bill that would have lowered the royalty fees that small Webcasters pay to stream music over the Internet.

    Only days before Webcasters are due to begin making royalty payments, Sen. Jesse Helms, a North Carolina Republican, on Thursday night blocked legislation designed to ease the financial impact on small Webcasters.

    The bill already had support of industry players and approval of the House of Representatives. But an aide to Helms said Webcasters in North Carolina complained that the terms were still too onerous.

    "The small Webcasters that we heard form in North Carolina did not feel like they had been part of discussions," said Joe Lanier, Helms's aide. "They were concerned that even under this bill they would not be able to survive."

    With the legislation on hold, Webcasters will have to start making the higher, retroactive royalty payments by Oct. 20 to musicians and record labels.

    But late on Friday, small Webcasters got a temporary break from the higher fees from SoundExchange, a division of the Recording Industry Association of America (news - web sites) that collects royalties for recording copyright owners.

    Eligible small Webcasters can avoid a per-performance fee and instead may pay a $500 annual fee, starting Oct. 21, for each year or part of a year they have been in operation since 1998, SoundExchange said in a statement.

    That arrangement will stand until Congress acts on the pending legislation, SoundExchange said.

    Among the objectors to the bill were two prominent religious broadcasters and a classical music station, Lanier said. They told Helms that the long-term precedent that would be set by the agreement was worse than having to pay higher royalty rates in the short term, Lanier said.

    The Senate recessed on Thursday night and is not scheduled to reconvene until Nov. 12.

    Helms was hoping to get the two sides to negotiate better terms for Webcasters by the time the Senate returns, Lanier said.

    "We certainly hope that some sort of fair arrangement can be worked out," Lanier said.

    The legislation would have allowed small operators to pay a percentage of their revenues or expenses, rather than a flat per-song royalty rate set by the Library of Congress (news - web sites) in June.

    Smaller Webcasters had protested that the flat rate of .07 cents per listener per song -- due to take effect on Sunday -- could drive many of them out of business, because their royalty bills would exceed revenues from advertising or other sources.

    But the hold-up provoked a terse reaction from one of the bill's key backers, Sen. Patrick Leahy, a Vermont Democrat.

    "I share the disappointment of Webcasters and many content providers that an anonymous hold prevented the Senate from passing this bill before the Oct. 20 deadline," Leahy said in a statement.

    Leahy said the royalty issue had become "difficult in the extreme," but he urged both sides to continue negotiating.

    The industry-brokered deal had won approval from the House of Representatives last week.

    Under the terms of the deal, small Webcasters would pay a percentage of their revenues for broadcasts between 1998 and the end of 2002, increasing to 10 percent over the next two years, or 12 percent if the station's revenues exceeded $250,000.

    Alternatively, Webcasters would pay 5 percent of their expenses for the 1998-2002 period and 7 percent over the next two years, if that amount was greater.

    The deal only applies to Webcasters who will have taken in less than $1 million in total from 1998 until the end of this year. The revenue cap increases to $500,000 in 2003 and $1.25 million in 2004.

    Larger Webcasters, such as America Online and Clear Channel Communications were not included in the agreement and will pay the previously set rate starting on Oct. 20.
  • Why or Why not (Score:3, Informative)

    by hobbitsage ( 178961 ) on Monday October 21, 2002 @01:48PM (#4497234)
    Really when it comes down to brass tacks ... when the rubber meets the road ... Does it truly mater why he did it? Politics makes strange bedfellows. This is evident. You don't have to like them to have them help your cause. US and Soviet Union in WW2 had the same enemy and worked together. Just need to watch people that you ally with in on situation in case they swig opposite on others that you are for.
  • by Viewsonic ( 584922 ) on Monday October 21, 2002 @01:48PM (#4497244)
    It says he stopped it because smaller webcasters said the new 'lower' rates would be worse than the 'higher' ones after a certain amount of time and would drive them out of business. Even the new 'lower' rates were too high for some of them.. So im guessing it'll go from .07 per listener to maybe .01 which would still be too much IMO.. RIAA doesn't deserve squat for free advertising. RIAA should be paying webcasters to play the music.
  • For crying out loud (Score:3, Informative)

    by Anonymous Coward on Monday October 21, 2002 @01:50PM (#4497265)
    "In case it gets slashdotted?" The article is hosted on Yahoo News. You can't slashdot yahoo. Yahoo slashdots you.

    The last time someone managed to make a network of hacked computers big enough that they could DDOS yahoo to a crawl, it made the national news. Slashdot isn't going to come near to that.
  • Re:Huh? (Score:5, Informative)

    by Yobgod Ababua ( 68687 ) on Monday October 21, 2002 @01:51PM (#4497276)
    I believe that was the infamous legislation which had a last minute 26 page addendum tacked on that changed it from being designed to ease finanical impact on small Webcasters into something deisgned to save a mere handful of the largest small webcasters and leave the others to hang.

    It snuck through the house before people realized it had changed. So blocking it in the Senate actually was acting on the side of the small webcasters.

    Check out the previous news on the subject for more details.
  • by buck09 ( 212016 ) on Monday October 21, 2002 @01:55PM (#4497338) Homepage

    It's the cities of Raleigh, Durham and Chapel Hill, and the Research Triangle Park, which is the home of RedHat

    The 7,000-acre Research Triangle Park is the largest research park in the United States, and is home to over 140 organizations. RTP has around 42,000 full- time employees entering the Park each day. Recognized internationally as a center for cutting- edge research and development, the Park is owned and developed by the private, not-for-profit Research Triangle Foundation. The Research Triangle itself is named for the Triangle formed by the three universities: Duke University at Durham, the University of North Carolina at Chapel Hill, and North Carolina State University in Raleigh.
  • by sakeneko ( 447402 ) on Monday October 21, 2002 @01:59PM (#4497374) Homepage Journal

    I'd call Senator Jesse Helms [] at least a 2 ton gorilla myself.... ;>

    It is nice to see that Jesse Helms isn't taking a vacation in his last few months in office. (He's a short-timer -- he retires at teh end of the year.)

  • by Anonymous Coward on Monday October 21, 2002 @02:07PM (#4497465)

    his term expires in january, he is not soliciting any contributions
  • by peter_gzowski ( 465076 ) on Monday October 21, 2002 @02:07PM (#4497466) Homepage
    Jesse Helms blocked the legislation because the lower rates were still too high for many webcasters. However, these lower rates were not worse for the webcasters than the higher ones. The legislation was to change the rate from 0.07 per listener to some percentage of the webcasters' profits. For most webcasters, about 10%, for more profitable channels, 12%. However good intentioned Mr. Helms' blocking was, it will force webcasters to start paying (retroactively) fees based on the old system. They don't have to start ponying up all the dough quite yet, though, as this Salon article [] details.

    You are right that the RIAA should be paying the webcasters, just as they do with the regular radio station promoters (that's a whole other problem, though).
  • Re:Double WOW (Score:1, Informative)

    by Anonymous Coward on Monday October 21, 2002 @02:08PM (#4497478)

    I didn't think he was an 800lb gorilla so I went to google to find an image of him. I found some [], but when I went to the first site [] it was taken down by "Vast Right Wing Conspiracy".

    I guess he is an 800 lb gorilla.
  • Do the math (Score:5, Informative)

    by martissimo ( 515886 ) on Monday October 21, 2002 @02:10PM (#4497499)
    the difference between that "reduced flat rate" and the 70 cents per 1000 listeners per song can really be quite huge (even to very small stations).

    lets say a station reaches 100 people on average and at 4 minutes per track averages 15 songs an hour. that's 360 songs a day, or 131,400 a year... at the other rate of 7 cents per 100 listeners it works out to a fee of $9,198 a year. to someone like this a flat rate of $500 seems like a pretty huge difference... heck this flat rate would come to almost half as much even if you only averaged 10 listeners (500 vs 918).

    too bad the flat rate is only good till congress acts on the pending legislation, because this deal would probably actually be fairly viable for quite a few webcasters
  • by fireproof ( 6438 ) on Monday October 21, 2002 @02:10PM (#4497501) Homepage
    They won't have the opportunity to do so. He's retiring at the end of this term, and is about to be replaced in a few months . . .
  • by Brian_Ellenberger ( 308720 ) on Monday October 21, 2002 @02:10PM (#4497505)
    Someone mentioned this before, but he got modded to 0 for some reason. Sen Helms is not running for reelection. His term is up in January. There is no "shakedown".

  • er, no.... (Score:3, Informative)

    by slothdog ( 3329 ) < minus language> on Monday October 21, 2002 @02:11PM (#4497510) Homepage
    say what? Helms blocked the bill which would have *lowered* fees for small webcasters. (Read the article!) The only reason the webcasters got a reprieve is that SoundExchange (the company that collects the royalties) decided to not collect payments until the legislation is passed.
  • Re:Wow (Score:3, Informative)

    by Rakarra ( 112805 ) on Monday October 21, 2002 @02:18PM (#4497592)
    Jesse Helms? I never would have thought a High Ranking Republican would get involved like this- and on the side of the smaller guy.

    The Republicans are generally not friends with Holleywood and the music industry. The Democrats are traditionally those industries' allies. So while it's just a -tad- bit surprising, it shouldn't come as a complete shock. I never thought I'd see the day though when Jesse Helms would actually fight on the right side of an issue and be anything other than an embarassment of a senator.

  • by WEFUNK ( 471506 ) on Monday October 21, 2002 @02:19PM (#4497607) Homepage
    If I am an independent musician, can't I just make a deal with a local webcaster at a rate that we negotiate?

    IANAWYNTBTKTFS (I am not a whatever you need to be to know this for sure), but I think you're always free to do this as an independent, or even through your label. The issue here is the mandatory licensing terms which allow broadcasters (and webcasters) to play songs without explicit permission as long as they pay the royalty fees set out in the law. Otherwise, stations would have to negiotiate individually with each and every copyright holder in order to buy permission to play songs. Now I might be somewhat wrong in that stations may need to pay the RIAA no matter what (even if they only play independent music) just because it was the easiest way to set this up in the olden days.

    Similar mechanisms have been proposed to allow anyone to manufacture life saving drugs or use old software patents as long as they pay a set royalty rate. The rates would presumably be higher than what you might be able to get if you negiotiated your own terms and higher than what the original company would normally charge.
  • Re:er, no.... (Score:2, Informative)

    by PhoenixFlare ( 319467 ) on Monday October 21, 2002 @02:20PM (#4497617) Journal
    Better read the article again yourself, buddy.

    This bill was blocked because, in the long run, fees would be HIGHER.

    "Among the objectors to the bill were two prominent religious broadcasters and a classical music station, Lanier said. They told Helms that the long-term precedent that would be set by the agreement was worse than having to pay higher royalty rates in the short term, Lanier said. "

    Someone did the math above, and it's almost 10x more per year using the "lowered" plan on average.
  • by Anonymous Coward on Monday October 21, 2002 @02:20PM (#4497622)
    he is very very responsive to his constituents. Every story I've ever heard about people contacting him for help (not necessarily positions on issues, but help) has had results.

    I only hope that the senator who replaces him will be so responsive, and not just pretend to be from North Carolina...
  • by Moridineas ( 213502 ) on Monday October 21, 2002 @02:59PM (#4497981) Journal
    The Triangle is in North Carolina, consisting of Durham, Raleigh, and Chapel Hill. The Univerisities: Duke, NC State, and UNC-CH. Otherwise known as the Research Park, such companies as RedHat are based here, IBM, Cisco, Nortel and others haev large offices here as well.
  • by mcubed ( 556032 ) on Monday October 21, 2002 @02:59PM (#4497983) Homepage
    A question that I still haven't been able to get answered, is do all these fees apply for streaming your own content - like you talking, your friends garage band music, etc?

    No. Why would it? If you create the content, you are the copyright holder. It would apply to your friend's garage band music only if your friend's garage band is represented by RIAA or ASCAP or similar. Likewise, the fees don't apply to any sound recordings in the public domain, provided the songs recorded are also in the public domain.

  • Then don't pay (Score:3, Informative)

    by anthony_dipierro ( 543308 ) on Monday October 21, 2002 @03:04PM (#4498016) Journal

    I have a stream that plays a three hour loop of the Best of my radio show, so I own the copyright on that and it's all that's on the stream... Why should I pay the RIAA for this?

    You shouldn't. What makes you think you should?

  • by martissimo ( 515886 ) on Monday October 21, 2002 @03:05PM (#4498034)
    the bill he helped stop was not the 500 dollar fee, the 500 dollar fee is what SoundForge decided to allow until the bill currently blocked in the Senate's situation is resolved.

    The blocked bill which did pass in the House underwent some very radical last minute changes due to negotiations with a small group of webcasters and the RIAA. A bit more info about what actually happened here
  • Welcome to the Real World, where nothing is black or white, no one is evil or good and nothing is _ever_ as simple as it seems.

    Nah, that's the "ironic pseduo-post-modern world."

    The real world has quite its share of things that are simple and black/white good/evil. They're just not EVERYTHING, and everything has good parts and evil parts.

    Cases in point: Hitler & The "Tarot Card Sniper" opposed to Mother Theresa or the United Way. (Heck, the UW is a great example--they're a good thing with bad people at some of their hearts.)

    "Those who call the world a thousand shades of grey forget about black and white far too often."
  • by floppy ears ( 470810 ) on Monday October 21, 2002 @05:00PM (#4498997) Homepage
    Mother Theresa: According to this book by Christopher Hitchens [], Mother Theresa is "a religious fundamentalist, a political operative, a primitive sermonizer and an accomplice of worldly powers." The business that she created in India has made well over $50 million, exploiting what amounts to slave labor. Perhaps her main worldly goal was to become a saint. Sure, she helped dying people, but should that blind us to what else was going on?

    United Way: In 1995, former United Way President William Aramony was convicted for conspiracy, fraud, and tax crimes related to his stealing from the United Way. See, e.g. this site []. Great use of your charity dollars, right? Or a precursor to our corporate accounting scandals of today?

    Now I'm not saying that this is the definitive story on your examples. But is it black and white?
  • Re:classical music? (Score:2, Informative)

    by rustman ( 143533 ) on Monday October 21, 2002 @05:11PM (#4499105) Homepage
    Most copyrights of the SOUND RECORDINGS of classical music are held by RIAA member labels or their affiliates.

    Remember folks, we're not talking about the composers. We're talking about who owns the sound recordings, made by the conductor and the musicians who played on that recording.

    Classical music is not an RIAA alternative, unless you are buying some of those Costco CDs released by eastern eurpoean orchestras (which are also copyrighted).
  • by Ronin SpoilSpot ( 86591 ) on Monday October 21, 2002 @05:16PM (#4499149)
    Now if she
    profits $50M per year and keeps it for herself...well, God's dealing with that little bit right now, I'm sure.

    Then she has certainly found a loophole in the Big Law, the one that says that you cannot take it with you. She died in 1997. /RS
  • by tsm_sf ( 545316 ) on Monday October 21, 2002 @05:27PM (#4499257) Journal

    Good point, but let's take a look at a small station's total yearly costs. SomaFM actually breaks this down for you on their donations page.

    Here is a breakdown of our costs:

    Monthly Internet connectivity between the studio and the servers - $850/month (although we need to increase this to handle the additional channels, we're maxing out our bandwidth now)
    T1s to the studio, server colocation, internet fees - $1500-2000 a month
    Software and hardware coss - $600 a month (It costs about $800-900 in hardware and software for each new channel we add)
    Rent: $0
    Salaries: $0
    ASCAP and BMI fees - $700 a year and rising (the more listeners we have the more we have to pay)
    SomaFM DJs spend hundreds of dollars a month out of their own pockets on new music for the station.

    Other things SomaFM needs:

    Bandwidth! - We can always use more bandwidth. If you are an ISP or Web Host with a minimum of a T3 fractional connection and can commit to giving SomaFM 2-5mb/sec of bandwidth, and have a machine that can run the Shoutcast server software (Linux, BSD, Solaris versions are available) then you have what it takes. (The CPU load added by shoutcast is negligible). Contact Rusty Hodge for the details

    Noncommercial station too... while $500/year donation from generous listeners like you (ok, I've been listening to NPR go through it's beg cycle) is nothing to sneeze at, it's hardly the whole picture.

  • by Doug Neal ( 195160 ) on Monday October 21, 2002 @05:45PM (#4499374)
    Perhaps it's worth mentioning that Digitally Imported [] hit a record high of about 11,000 concurrent listeners tonight... this is great as on friday they didn't even know if they'd still be broadcasting after the weekend.

Love may laugh at locksmiths, but he has a profound respect for money bags. -- Sidney Paternoster, "The Folly of the Wise"