Copyright Royalty Board Keeps Download Rates The Same; iTunes 'Saved'

from the compulsory-mess dept

Fri, Oct 3rd 2008 12:51am — Mike Masnick

I tend to think the whole concept of compulsory license rates in the music space is rather backwards. There are a bunch of different rates for all different participants, and it's basically the opposite of letting a market work. It's the government setting a handout rate for many different groups who don't want to create their own business model. The whole process serves to significantly hold back a number of new and innovative business models by letting many to rely on the government to effectively set their revenue for them. That said, one of the worst things is that a single decision by whoever sets the royalties can completely change how an industry works with a single vote. Earlier this week, we noted that Apple was threatening to shutter iTunes if the Copyright Royalty Board raised the rates for publishers on downloads. The threat was probably pretty baseless, but apparently it worked. The CRB has kept rates the same, which is going to upset many songwriters and publishers.

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Filed Under: compulsory licensing, copyright, downloads, itunes, music, publishers, royalties, songwriters
Companies: apple

17 Comments

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MadJo (profile), 3 Oct 2008 @ 1:16am

now if only that tactic worked for webradio
But sadly it probably wouldn't.
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Brian Hayes, 3 Oct 2008 @ 1:38am

Traffic Lights
Mike, you can turn a phrase perhaps like no other.

"It's the government setting a handout rate for many different groups who don't want to create their own business model."

I think I'll sleep on that and dream about the thousand million gazillion times we hope that's true, or not true, er, well, er...
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SteveD, 3 Oct 2008 @ 2:04am

More deregulation?
I get your argument Mike, but doesn't the evidence seem to support the other side? All we've seen of royalty rates lately is that only groups with as much power as Apple stand any real chance in facing the power of the RIAA and other media cartels.

How could you trust these groups to set rates that would encourage innovative businesses without government intervention? They seem much more interested in keeping rates high to keep the number of media services low and under control.
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Jeffry Houser (profile), 3 Oct 2008 @ 4:30am

I don't get it...
Most professional recording contracts do not use such licensing rates; artists are paid by a percentage of sales. As such, I have a hard time understanding how this would affect iTunes directly.
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Brian Hayes, 3 Oct 2008 @ 4:52am

Power Too Far
Y'know, power is rude because it's taken. I wonder if we understand much.

...the power of the RIAA and other media cartels.

It wasn't two or three that took Motown down. There's a dozen the same. At RIAA's beginning, there were faces. I worry RIAA has become big enough to hide them. I resent the way it was done and that's enough to annoy me.

Please lift the towel and wet these guys. Keep them wet. Nude wet until we learn RIAA enough to see it and decide and desert what's wrong and grow what's right.

These are not power unless we're not. :-|
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SteveD, 3 Oct 2008 @ 6:33am

Re: I don't get it...
My knowledge of music royalties isn't fantastic, but in this case I think Apple gives a standard cut of its sales to the label, and then a percentage of that goes to the artist. It isn't just a percentage of the sale itself.

If that cut was hiked Apple would either have to absorb the cost or pass it on to its customers. Its anyones guess how tight iTunes margins are, or if they make any significant profit from it.
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Anonymous Coward, 3 Oct 2008 @ 6:36am

Re: Traffic Lights
What?
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comboman, 3 Oct 2008 @ 6:45am

Re: I don't get it...
I'm confused as well. I thought compulsory licenses were for things like radio where it would be impractical for each radio station to negotiate a royalty fee with each artist/songwriter/record label every time they play one of their songs. iTunes is a retailer, not a broadcaster.
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Jeffry Houser (profile), 3 Oct 2008 @ 6:59am

Re: Re: I don't get it...
For other avenues of sale, such as retail CD sales, the artist usually gets a percentage of wholesale not a fixed fee. I can't understand why it would be different for digital sales.
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Bob, 3 Oct 2008 @ 7:00am

Mike's right on this one
There is more then enough case precedence that clearly states a government entity cannot set into law or set any punitive damages in the law, that are clearly different from what others are experiencing. For example, the government can't say, people who have Italian Ethnic Backgrounds must pay 3x's the amount of Income Tax over those that who are White.

The same thing is going on here, as you have different rates for TerraRadio's, then INet Radios, Satellite Radios, and finally downloading sites. This is completely wrong, and someone should bother to make that point in court. Or course, if they do, then the CRB would just say, "FINE, everyone pays the exact same rate." Which would then close down many of the non-terra radios/downloads.

We'll see if Congress has a little more backbone to deal with this issue after the November Elections.
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Politcal Skeptic, 3 Oct 2008 @ 7:23am

Slightly wrong...
>We'll see if Congress has a little more backbone to deal with this issue after the November Elections.

Don't you mean... we'll see if the lobbying groups don't pay off the right people after the November Elections...
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Ppitstop, 3 Oct 2008 @ 7:40am

Lobbyists + politicians
The problem as I see it is the lobbyists pushing a non event into a crisis and then getting legislation protecting their interests from something that won't even happen.
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Scott Lithgow, 3 Oct 2008 @ 7:41am

Too old to understand
Do they ever wonder if people had access to legal fairly priced drm free downloaded music what would happen.

I guess they would get increased sales and more profit.
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SteveD, 3 Oct 2008 @ 8:18am

Re: Re: I don't get it...
Right, but don't forget digital radio stations work under different rules to terrestrial ones (hence Pandora's troubles).

Its not that surprising that digital retailers get different rules to highstreet retailers.
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Rob, 3 Oct 2008 @ 9:27am

This is what I heard
From what I heard on the radio, with every 99c iTunes sale, the artist gets 7c, the record labels/recording companies gets 70c and iTunes gets the rest. The Royalty Board wanted to raise what the artist got to a mere 12c, but the record label didn't want to take a cut and iTunes didn't want to raise their prices (far enough).
If there's anyone to get upset about with the whole deal is the recording companies for not taking a cut and letting the artists have more.
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SeawayOutset, 3 Oct 2008 @ 10:46am

Re: This is what I heard
Actually, the record companies get 70 cents, and out of that 70 cents, the artists get 9.1. The remaining 29 cents goes to apple.
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Rob, 3 Oct 2008 @ 11:00am

Re: Re: This is what I heard
Ahh.. Thanks for the clarification.
But either way - it's still the record companies, that are supposed to be looking after their artists - that refuse to take a lesser cut of a percentage.
And it should be their responsiblity to take a profit cut if there was going to be one. It's not fair to make iTunes to take the cut, nor the customer to pay more, since it's their agent (ie. the artist) that should be paid more.
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