03/07 Editorial: A GUN TO THE HEAD OF INTERNET RADIO

[Anderton]

(Every month, a new editorial is posted in Sound, Studio, and Stage. Your comments and feedback are encouraged!)

 

A GUN TO THE HEAD OF INTERNET RADIO

 

By Craig Anderton

 

In another wrong-headed attempt to circumvent piracy by penalizing legitimate outlets for music and offering incentives for illegal ones to stay illegal, the Library of Congress Copyright Royalty Board has decided to raise royalty rates paid by Internet Radio providers. The rates are retroactive to 2006, and start at a rate of $0.0008 to stream one song to one listener. This escalates to $0.0019 to stream one song to one listener in 2010.

 

Doesn

[MikeRivers]

 

In another wrong-headed attempt to circumvent piracy by penalizing legitimate outlets for music and offering incentives for illegal ones to stay illegal, the Library of Congress Copyright Royalty Board has decided to raise royalty rates paid by Internet Radio providers.

Yeah, I think I just heard that on Marketplace yesterday. Didn't they do that once, a few years back? Or maybe what they did was implement a royalty (also a few year retroactive) where there was none previously. I recall that one of the community broadcast stations that also streamed on the Internet killed their stream for several months until they figured out how to cover the royalty payments.

 

I would hate to see this happen again. I get a lot of my "while I'm doing something else" entertainment from community and college stations that I listen to over the Internet. Yes, I'm mad as hell and I won't take it an more!

The argument in favor of raising rates is that software capable of recording streams represents lost revenue. And maybe it does. And I

[larryguitar]

You know, I'm feeling stupider and stupider for actually buying all my music. There's a fine line between fair compensation and thuggish behavior, and with the tab wars I think the RIAA and others crossed it.

 

 

Larry

[Magpel]

Ugh is all I can say. What a petty, nefarious and desperate little power grab with implications all the way down the line to me. The college station on which I've been producing and engineering a radio theater show for 15 years stropped streaming a number of years ago because of a hike in the royalty rate, then started again (which has been great for us) and now will probably stop again.

 

Which is another way of saying: in their vigilant attempts to protect the royalties of Fall Out Boy, they are effectively removing a lot of non-music, nichey, and regional content (like me!) from the Web as well.

[Jon Hiller]

 

You know, I'm feeling stupider and stupider for actually buying all my music. There's a fine line between fair compensation and thuggish behavior, and with the tab wars I think the RIAA and others crossed it. Larry

 

 

I think your opinion on the RIAA and others is correct, but joining the thugs doesn't help the problem any. There surely must be a better way, though.

[steveg]

I am actually surprised by the reaction to this by most music types. Don't you want to be paid for your music? Is it right for the broadcast radio to pay to play your music but no one who plays it on the Internet pays you for it?

 

I don't want free music, I pay for the music I listen to. If someone gives me a copy of a CD and I listen to it more than once, I go buy it.

 

I have two friends, each is in a major national rock band. I know their families, been to their hourse, know their kids. Everytime someone takes one of their CD's without paying for it, they lose a couple of bucks. Add that up over tens or hundreds or thousands of copies and my friends are out hundreds of thousands of dollar.

 

My only concern is that it forces the Internet radio to raise money to survive and you re-create the commerical radio scenario. Granted, this is not a good situation, but NOT paying artists isn't the answer....

[Lee Flier]

Umm, I don't think anybody is suggesting not paying artists. Internet radio stations are already paying royalties. Now the rates are being raised to a point where many stations will simply not be able to stay in business. And as Craig said, it's not likely that much of the excess will end up in artists' pockets anyway.

 

It's nothing more than a power grab to attempt to kill competition, as others have said. But competition will not be killed, people will simply operate pirate radio stations and the artists won't get paid at all. Nice going.

[jabney]

 

I am actually surprised by the reaction to this by most music types. ... My only concern is that it forces the Internet radio to raise money to survive and you re-create the commerical radio scenario. Granted, this is not a good situation, but NOT paying artists isn't the answer....

 

 

But that's just it - you don't re-create the commercial radio scenario. Commercial radio pays a far lower rate than do internet broadcasters. It's already an un-level playing field, and these changes make it worse (or much better for those who would prefer to drastically restrict playlists - whatever their motivation for doing so).

 

I co-write songs and the first band I've been writing for is starting to get booked. Internet exposure via MySpace and the band's website was a major factor in getting the process started. Sure, drawing good, enthusiastic crowds helps keep the process going (God bless the fans!). But moving from weeknights to weekends - for original music - takes wider exposure. And internet broadcasting would have been an ideal way for helping the guys move up a step.

 

best,

 

john

[steveg]

Can you guys educate me here- I thought this was referring to collecting artists royalties from Internet Radio. Isn't that was royalties are for? I realize the administrative companies (publisher, record company, ASCAP, BMI, etc.) get most of it, but isn't this the money that ultimately the artist gets a percentage of?

 

Also, is this a higher rate than broadcast radio pays? I thought this was just to bring Internet up to the broadcast level....?

 

Info appreciated.....

[Anderton]

As I said, I'm all in favor of collecting my royalties. But if the rates are so high that internet radio stations will stop broadcasting, then it's a bit of a pyhrric victory, isn't it?

 

I'd rather get lots of royalties at a low rate than no royalties at all from a high rate.

 

Correct me if I'm wrong, but I also understand that commercial radio pays a lower rate than internet broadcasters, as the latter is considered a "performance" (yeah, right...when I'm listening to "State of Trance" on AOL XM, Armin Van Buuren is sitting here in the studio with me...of course!).

 

The way this looks to me is a pure power grab to get rid of competition, and have it sanctioned by law, under the guise of "helping the artist." Right.

[steveg]

OK, I see now. If the Internet broadcaster have to pay more than the radio broadcasters to play the same music, then this is wrong and serving some parties agenda.

 

I thought that they were equalizing broadcast with Internet, to make one type of broadcaster pay more is just wrong!!

[MikeRivers]

 

I am actually surprised by the reaction to this by most music types. Don't you want to be paid for your music? Is it right for the broadcast radio to pay to play your music but no one who plays it on the Internet pays you for it?

Maybe this is another model that needs a makeover. The classic model of radio airplay was that it was a trade. The record company gave the radio station music to play so people would listen to the radio and the station could sell commerical time. The listeners would hear the music on the radio and go out and buy the records. So the record companies were getting publicity that they weren't paying for (and now they even get paid for getting publicity).

 

Of course since nobody buys music after hearing it on the radio any more, that model no longer works like it used to. So the record companies figure that since they're not selling music to the listeners directly, they'll sell it to the providers (the radio station).

[philbo]

 

I am actually surprised by the reaction to this by most music types. Don't you want to be paid for your music? Is it right for the broadcast radio to pay to play your music but no one who plays it on the Internet pays you for it? I don't want free music, I pay for the music I listen to. If someone gives me a copy of a CD and I listen to it more than once, I go buy it. I have two friends, each is in a major national rock band. I know their families, been to their hourse, know their kids. Everytime someone takes one of their CD's without paying for it, they lose a couple of bucks. Add that up over tens or hundreds or thousands of copies and my friends are out hundreds of thousands of dollar. My only concern is that it forces the Internet radio to raise money to survive and you re-create the commerical radio scenario. Granted, this is not a good situation, but NOT paying artists isn't the answer....

 

 

 

It is just a way to keep the cash running into the trough of the fattest pigs.

 

You think I'm ever going to get paid for my music being streamed? What a dreamer.

 

The only people who make money from streaming, or even from Label CDs themselves, are corporations - - advertising agencies, corporate record labels, and the five and ten percenter leaches in cheap suits who sit between the two. IMHO.

 

Musicians make money by (#1) playing live and (#2) selling their own CDs at gigs. Sometimes they even make enough to cover the cost of gas to get there, on a good night.

 

Anyway, that has been my experience. Maybe things are more lucrative for musicians where you live? If so, let me know, I might just move after this winter weather....

[franknputer]

Commercial radio gets hit by this too. Most stations these days stream their broadcasts as well, and actually pay more in the end because they pay royalties for both over-the-air & internet broadcasts. Not to mention that it's often given as an added-value incentive, rather than a separate revenue stream, so it's not necessarily profitable in and of itself, but only enhances the value of the broadcast commercial - due in part to the fact that the mechanics of administering it all separately are not really financially practical.

 

There are a lot of people in Radio unhappy about this, who may end up pulling their streams as well. I fail to see how this line of thinking is good for anyone.

[Anderton]

 

There are a lot of people in Radio unhappy about this, who may end up pulling their streams as well. I fail to see how this line of thinking is good for anyone.

 

 

But the radio people still have an option. The internet-only stations don't.

[BLAblablah]

This is just insane! I learned about it this weekend from Pandora's founder in this email:

 

Hi, It's Tim Westergren from Pandora,

 

I'm writing today to ask for your much-needed support. The Copyright

Royalty Board has just dramatically increased the fees internet radio

sites must pay to the record labels. Left unchanged, this will kill

all internet radio sites, including Pandora. There is a congressional hearing on this matter taking place tomorrow afternoon in Washington, DC. Please help save internet radio by calling your Congressperson's office:

 

Congressperson's Name: Cliff Stearns

Phone number: 202-225-5744

 

** If you decide to call, please leave a message, and be sure to tell them your name and home town, and mention Cliff Stearns's name. We suggest telling

them how much you enjoy listening to internet radio and that, left

unchanged, the fees passed by the Copyright Royalty Board will kill

internet radio. Please ask them to act to reverse this decision.

 

Some more details:

 

The RIAA has convinced the Copyright Royalty Board federal committee

to pass rates that will kill internet radio. For now, we are continuing to operate Pandora in the belief that rationality will return. Online radio has brought millions of music-lovers back into music radio, and has opened up a world of opportunity and promotion for thousands of musicians - both obscure and well known. Pandora is already paying millions of dollars annually in licensing fees (fees not paid by traditional radio stations), and while we are striving hard to build a sustainable business, we have yet to make a profit--even at the old rates.

 

If you'd like to learn more, you can click here for a summary by an

attorney familiar with the situation:

http://dbm.pandora.com/t?ctl=1689550:02EDD13B0409FA9E86263C897AFBAEDD050542759970026E

 

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

 

-Tim Westergren (Pandora founder)

 

 

I was off line a couple of days and didn't see it until the weekend (too late for the congressional hearing)...but I'm doing everything I can. I can't imagine no Pandora...that's where I find out about much of the music I DO want to buy.

Barry

[John Sayers]

I agree Barry - most of the music I purchase I've found either on Pandora or Myspace.

 

It's getting to the point that recordings are actually commercials when played on any form of radio - take it away and music sales, and resultant royalties, will diminish accordingly.

[Anderton]

Exactly, John.

[BEAD]

 

By Craig Anderton   snip   Doesn

[Anderton]

Yes, the big companies will have a shot at withstanding this...maybe. But the cool little Soca internet station out of Miami run by some college kid won't have a prayer. And that's what matters to me.

[Anderton]

BTW I'm old enough to remember the days of pirate radio in England, when little broadcasters challenged the BBC for the public's attention. They injected excitement into a music scene. Here we have people doing the same thing, with the potential to do more, and the immediate response is to SQUASH THEM.

 

Between that and the proposals for multi-tiered net access where the rich get the fast pipes and everyone else gets the dirt road, I'm disgusted that so few people seem willing to fight for keeping the public airwaves, and media in general, the property of the people.

 

Socialism? Far from it. During the height of the cold war, and a most fervent anti-socialistic period in this country's history, TV stations had to prove that they served the public in some way in order to get their licenses renewed.

 

Things don't have to be the way they are now: They weren't. And if anything, radio and TV were far more vital media than they are today. Think there's a connection? I do.

[WaterBong]

 

BTW I'm old enough to remember the days of pirate radio in England, when little broadcasters challenged the BBC for the public's attention. They injected excitement into a music scene. Here we have people doing the same thing, with the potential to do more, and the immediate response is to SQUASH THEM. Between that and the proposals for multi-tiered net access where the rich get the fast pipes and everyone else gets the dirt road, I'm disgusted that so few people seem willing to fight for keeping the public airwaves, and media in general, the property of the people. Socialism? Far from it. During the height of the cold war, and a most fervent anti-socialistic period in this country's history, TV stations had to prove that they served the public in some way in order to get their licenses renewed. Things don't have to be the way they are now: They weren't. And if anything, radio and TV were far more vital media than they are today. Think there's a connection? I do.

 

 

Well said Craig. I think what has happened in The US, and in Europe in the last five to eight years is, all the special interests groups finally have enough money to buy out their respective governments. There's no other explanation that makes sense.

 

In almost every business, music industry included, there's now a battle between The people, and the corporations and

 

Talk about teh need for MODERATION. Historically it used to be the function of THE GOVERNMENT to keep companies from forming monopolies and SCREWING OVER THE P....E......O.....P....L....E! and that occasionally worked......but that is obviously a thing of the past. Now it seems we just have to take whatever {censored} they spew out in The Banking Industry, Insurance Industry, Utilities Industry, Music Industry......whatever. We're just becoming serfs in a modified feudal system.

 

Sometime soon, somewhere.....we are all going to have to make a stand, and say very softly, yet very definitively, to all these companies that now think they run the world. No you can't do that, and you can't do that because there's a billion of us, and only a 100,00 of you, so you will do what we say.

 

I'm ranting I know, but, I hate The Music Industry and what it's done to musicians, and the way it's pushed it's agenda of hit records at the expense of real music. IMO, The Music Industry should be run by musicians, period end of sentence. Everyone would be better off if that happened.

 

Thank you, and have a nice day, and please vote WaterBong for City Council.

[the stranger]

I'm disgusted that so few people seem willing to fight for keeping the public airwaves, and media in general, the property of the people.

 

 

I'm truly reaching a point where I don't think mankind is capable of reason on a collective scale. It's been bred out of most people. Good old fashioned propaganda and brainwashing. The 97% gene. Intelligence is facing extinction.

 

The whole deal will just infuriate me and result in nothing constructive. I'll just rant and roll and add nothing even close to relevant.

 

I do wish people would learn to come together, though. Kudos to that {censored}!

[the stranger]

 

Umm, I don't think anybody is suggesting not paying artists. Internet radio stations are already paying royalties. Now the rates are being raised to a point where many stations will simply not be able to stay in business. And as Craig said, it's not likely that much of the excess will end up in artists' pockets anyway. It's nothing more than a power grab to attempt to kill competition, as others have said. But competition will not be killed, people will simply operate pirate radio stations and the artists won't get paid at all. Nice going.

 

 

This is obviously the result they are trying to accomplish. They aren't stupid. Something is missing here. There's always a bigger picture. Why is the music industry committing blatant suicide?

[the stranger]

I signed the petition and added some comments.