Comments on Internet Radio

you mean to make sure Yahoo, Google and Clear Channel don't have to pay musicians. Cool, go Jay! Screw artists! Clear Channel, AOL and Google need more money! We need to maintain the lowest royalty rates in the Western World so big media can make more money! What a misinformed twit.

Digital Age, Meinert.
Stop clinging to your record industry model.

Jay Inslee should be hugely commended for this effort. I love internet radio and don't know what I'd do without it.

This isn't about not paying people, these stations pay already. It's making sure the costs aren't so prohibitive that internet radio can't exist. As someone who hates commercials with a passion, I depend on it.

Plus, it's not about Clear Channel or AOL, it's about tiny, independently-run stations all over the country.

Josh, if you knew even a little of what you're talking about I'd care. But you don't. I like you, but really, you haven't a clue on this. So let's go have drinks at Dow's fundraiser and argue about it in a few hours.

This IS about the big guys. The whole campaign pushing Inslee is paid for by the lobbying group representing AOL, Google, etc. Their site is SaveNetRadio.com, and it's paid for by DiMA, the lobbying arm of the large webcasters.

Reality is that after years of negotiating, the independent Copyright Royalty Board set the rates and rules. Since that ruling, Soundexchange, the non-profit group that collects and pays out the royalties (just like BMI and ASCAP) has offered to give breaks to the little webcasters so their rates don't increase at all, and also to cap the amount any one webcaster has to pay if they have multiple channels.

I LOVE web radio. And the future of radio is at least partially online (though digital radio is going to offer a lot of greatness too). This won't kill web radio. Inslee bought into the campaign where the big mega corporations hid behind the cries of the small webcasters. In the end, the small webcasters will get shafted not by paying royalties to artists and labels who provide them content to draw listeners and sell ads, but by the large webcasters who will find ways to make sure they don't exist just as they have done with terrestrial radio.

The mega corporate media companies have found a way to divide and conquer small webcasters, indie labels and musicians. Inslee has bought into it. Of course, so has the Stranger. Bummer.

Josh, if you knew my business at all, you would know I am 100% indie. I don't rely on commercial radio, and I am on the side of the small guys. The small people who are going to lose out here are the musicians and indie labels. The same company backing Inslee's arguments (Clear Channel) is already trying to require local and indie bands to wave their royalties in order to receive any airplay. If Inslee (or you) was out there fighting the man, then you'd be screaming about this. But it's radio silence. You're more worried about the stations on AOl who want to play Fergie for free. Nice one.

Inclement weather???

@6,

I know. Weird.

But here's what Inslee's spokesperson sent me:

FYI: Due to inclement weather today, many members were not able to get back to Washington, D.C. and recorded votes have been cancelled for the evening. As such, the House will not be in session and the slated Internet radio debate on the floor has been rescheduled for Thursday evening.

Karma.

Josh - quick, explain what royalty we're talking about, and how much it is. This should be easy for you since you know so much about it.

Everyone else, I'm generall an Inslee fan, but this time he sold out to big media over musicians. Sad shit.

I work in DC and - yes - we truly had bad weather. It wasn't going to rain..in fact we just survived 3 straight days in the 95+ catagory --- however, the sky opened up at about 11 and it started pouring, with the worst lightening I've ever heard. Of course it all got better - right around the time votes were going to start.

Many of the Congressman couldn't make it in to Dulles or National becuase of it...Plus its set to begin again soon...

But on another note: Go Inslee !

Meinert, if this is so bad for small internet radio, then how come the station I listen to--an independent from San Francisco--has been asking its listeners to write to Congress encouraging them to support Inslee?

Meinert,

Throwing around big evil corp. names as the backers doesn't sway me. Microsoft and Amazon were behind Inslee in his righteous fight for Net Neutrality too. There are corporate behemoths on both sides. Usually are these days.

SoundExchange is an extortion racket.

Once again Meinert seems to be pushing misinformation to the benefit of the RIAA - (see here).

The issue really is about the hundreds (maybe thousands) of small webcasters who will be shut down due the unrealistic CRB rate increase.

The "deals" Soundcheck (i.e. RIAA and the Big 4) have offered small webcasters would force them to cap the number of listeners to (I think about) 500 listeners. Additionally the "deals" for a reduced rate for multiple channels would expire next year (2008).

What Soundcheck (i.e. RIAA and the Big 4) really want is to force all internet radio stations to be just like them: commercial-oriented and playing only top 40 artists which are the artists the Big 4 represent. It is the business model of internet radio (a subscriber-based, non-commercial format) that terrifies them because they can't control it. That's why they are fighting this. If the Internet Radio Equality Act is passed it will ultimately end the payola arrangement they have had over the regular (terrestrial) radio stations for the past 50 years.

See:
http://www.savenetradio.com

(and yes, SoundExchange is a racket, but that's for another post.)

Fair enough Josh, I won't argue against the boogeyman. But Inslee isn't arguing for the small webcasters, they're fine. He's arguing for lowering rates for AOL, etc. And I'll ignore the argument that I am taking the side of the RIAA. While both the RIAA and big media are the boogeymen here, and both are involved, the real effect of the proposed new rates will be on small webcasters and musicians, right? Well, sort of. So let's discuss them. First, keep in mind we're talking about recordings of music. Musicians' music. And we need to stick up for the musicians because they constantly get the shit stick. The royalty being paid out goes to musicians and labels, or just musicians if they own their own recordings, something happening more and more these days. It's sad you guys are taking the opposite side of 20,000 musicians who are members of Soundexchange, The Recording Aritsts Association, etc.

The deal the CRB is offering is far from perfect for sure. And thus Soundexchange has offered a deal to small webcasters that wouldn't raise their rates at all. AT ALL. Hear that?!?

The new rate the big media co's would be paying is just $0.0011, which is $0.0001 higher than the rate in the UK where web radio is thriving. This increases marginally as web-radio grows, which is based on web radio's own argument that they should pay less than terrestrial radio because they have fewer listeners. The flip side of their argument of course is that as they grow, they pay more, and that's how the CRB set up the rates.

Inslee now seems to be making the argument that not raising the rate on small webcasters will force them to shut down doesn't even make sense. Have you guys read Soundexchange's offer to small webcasters? IT leaves in place a % of revenue model based on the SWSA of 2003, which means small services pay just 10% of their income. For reference, the current largest of the small webcasters has about a $400,000 income (well below the $1.25 million income that defines a small webcaster). Of course this station, Accuradio isn't playing indie music, it's playing The Beatles, Celine Dion, Goo Goo Dolls, etc. This is where the DiMA arguments sort of falter, but that's for another time.

So look, the CRB ruled that there should be a new higher rate. Small webcasters argued they should just have to pay a % of income, Soundexchange offered this. But Inslee is arguing the whole rate be lowered, which means he wants the rate lowered for the Mega Media groups.

No they didn't.

What Soundcheck/RIAA offered was if you only have a couple people listening to your station then you can keep paying the same rates as before, but if you get more than 500 listeners (I think it's 500), then you have to pay the full new rate, which will put you out of business.

I don't see how shutting down thousands of internet radio stations - which are the only stations playing many artists - will help the artists, do you? If you are an artist who is only getting some internet radio airplay on some stations, and you go to getting no airplay on any stations, how does that help you?

And these stations are already paying royalties to Soundcheck for the music they play. But if they are shut down by the unreasonable CRB rates, then how do these artists get any royalty payments?

Not sure where you get your info. The deal offered to small webcasters is this - any webcaster with an income less than $1.2 million per year has to only pay 10% of the first $250,000, then 12% above that. This is what was negotiated in 2003, and what small webcasters have been thriving under.

check out http://www.soundexchange.com/news/documents/SWSA%20Extension%20Release.pdf

Dave -

Why should internet radio be subject to higher fees than either satellite radio (XM, etc.) or regular (terrestrial) radio?

The answer is: because the RIAA wants to snuff out small webcasters because the RIAA (and the Big 4 record companies) can't control their content.

"The previous rate of 10% of the first $250,000 of revenue and 12% of revenues in excess of $250,000 is designed to hinder growth. As revenues increase, royalties should decrease, just like any other quantity discount. We think the rate should start at 10% for revenues under $2 million, 9% for revenues between $2-5 million, and 8% for revenues over $5 million. These rates are in line with the rates currently paid by satellite radio."

and

"The RIAA defines small commercial webcasters as entities with less than $1.25 million in annual revenues. Exceeding this amount in a calendar year would disquality a webcaster for paying based on a percentage of revenues, and force them to pay on a per song, per listener basis which would be multiple times their annual revenue. This cap needs to be raised if the webcasting industry is to be allowed to grow. Revenue caps this low will force small webcasters to constrain their growth or else face debilitating royalty liabilities. We think this cap should be raised to $10 million.

The US Small Business Administration "Table of Small Business Size Standards" defines a small traditional radio broadcasting network as a company with less than $6.5 million in annual revenue (and no limit to the number of employees). An internet broadcasting service is considered a small business if they have less than 500 employees and no revenue limits."

Why should internet radio be singled out for a different standard?

Read more on a reasonable rate for internet radio here: http://somafm.com/news/pr071107.html

SS - you're being ridiculous! The over 20,000 musician members of Soundsxchange, and all the others artist groups, don't want to kill web radio. We love web radio. We just want to be paid fairly for our art and hard work. See, radio gets to use our work without licensing it like film and TV. Radio pay a 'compulsory royalty" instead of a license. This royalty being asked for from small webcasters is far below market value. That's because we DO value web radio and don't want to see it shut down. But if you run a web radio station and have millions in income a year, you should be able to pay market value for your content. That's called business. And no, there's no silly 'quantity discount'. Find me an example in the music world where you are taking this from. It doesn't exist. That's just big webcasters not wanting to pay for their content.

It's no argument to say webcasters shouldn't pay a royalty terrestrial and satellite radio don't have to pay, when at the same time musicians and labels (not just the big four, but ALL lables), are trying to get this royalty paid and have been for decades. It now might happen. Keep in mind, the US is the only western nation that doesn't pay a performance royalty. Soon we'll be treating artists like the other progressive western countries like Canada, Britain, France, Sweden, etc, and not have the royalty standards of (literally) Afghanistan.

I guess we'll find out Sunday when many small webcasters shut down.

If no one is playing your music, then no one will be paying you royalties.

If you are someone who wants to save net radio, call your congressional representative now:
http://www3.capwiz.com/saveinternetradio/alert_9738601.html"

from savenetradio.org:

"Like Summer - Rock/Alternative/Indie

I am the Bass player for the indie rock band, Like Summer. Like Summer has received internet radio play which has helped us to reach a wider audience. This legislation would cause most of the stations in which we've been played to go out of business. Please reverse this legislation!"

http://www.myspace.com/likesummer

from http://somafm.com/blogs/rusty
about one quarter down the page:

"As it stands now, the only fiscally prudent path now for webcasters is direct licensing, which reduces sound recording performance royalty payments legally by cutting out the artist's 50% share of the royalties. Labels can offer broadcasters discounted, direct-license deals at up to a 50% discount over crb rates and still make the same amount of money. Or by offering just a 40% discount, webcasters would pay the same as they've paid in the past, and RIAA labels would earn a 10% premium by bypassing the revenue share with artists. It's just a simple money-grab from the artists by the big labels."