Traditional Radio Stations Agree To Webcasting Rates; Internet Only Webcasters... Not So Much

from the battle-still-brewing dept

Wed, Feb 18th 2009 1:18am — Mike Masnick

While the big radio stations, represented by the NAB seem to have worked out a deadline deal on webcasting rates, it appears that internet-only webcasters have had their talks break down. This is bad news, of course. The whole situation is something of a farce. Rather than letting the market work the issue out directly, the Copyright Royalty Board (basically some internet-illiterate judges) basically gave the recording industry everything it wanted when it declared what the rates should be -- and made them quite high. Many online radio stations noted that the rates were so high that they would shut down. And, of course, the whole process would make RIAA-spinoff SoundExchange tons of money in administrative fees while separately benefiting the major labels that make up the RIAA by driving the smaller indie webcasters (who play less RIAA music) out of business. A win-win! And, of course, protesting by playing non-RIAA music wouldn't help. SoundExchange gets to collect for that music as well.

About the only reasonable thing was (despite the CRB's refusal to stay the ruling) that SoundExchange agreed to hold off new royalties while the parties negotiated. Time to work out a deal was supposed to end last fall, and despite SoundExchange and many webcasters asking for more time, the NAB lobbied hard to deny that extra time. Luckily they got it anyway, but even the extended period of time has ended. NAB and its big radio stations are fine with their deal, but internet-only webcasters still don't see anything reasonable. On top of that, SoundExchange made a separate offer to "small" webcasters, but most have found that to be way too onerous as well -- especially the part where if they ever get acquired by a larger player, they'll have to go back later and pay the higher rates even for the time when they were small and independent.

And, no one has yet explained why webcasters should need to pay so much money for helping to promote new acts in the first place. Radio, streaming online or over the air, is a great way for people to learn about new acts, giving them reasons to go out and buy products and merchandise or see those acts live. By forcing the very people who want to promote the music to pay ridiculous fees, all the industry is doing is shooting itself in the foot. Again.

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Filed Under: copyright royalty board, radio, royalties, webcasting
Companies: nab, soundexchange

28 Comments

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tim, 18 Feb 2009 @ 2:25am

yet again
just one more reason why i dont buy music at all anymore, unless it is local artists i know, direct from their independant sites. what we really need is for people to boycott the riaa and their labels until they realise how royally they have screwed themselves over.
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Free Content, 18 Feb 2009 @ 2:34am

I cannot understand, why RIAA is so dumb. For them radios is like free advertising channels - radios play the products record companies want to sell. Will people buy album of unknown artist before hearing his music on radio or TV first? I do not think so. So yes, instead of taking a new look into today's digital world and finding a new ways to sell their music, RIAA simply tries to ban everything new and work with old methods.
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Bob, 18 Feb 2009 @ 2:57am

It's time
To listen to web radio from outside the USA.
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PaulT (profile), 18 Feb 2009 @ 3:09am

I don't think this is quite as dumb as people think it is - in the short terms, at least. The RIAA already have major players on board - read: ClearChannel affiliates, people who will play and almost 100% major label content - and that's all they really want.

The smaller radio stations would almost certainly be playing independent music. Why do you think the loophole was introduced in the first place? Entirely so that radio stations couldn't avoid paying the RIAA by playing indy music. It's a travesty that this was allowed, so it's not surprising.

So, the RIAA honestly don't care if these smaller players shut down. It means less advertising for non-RIAA music, and increases the homogenisation of music by limiting competition. The RIAA don't want to be creative with music, they just want their new production-line product to sell.

Of course, this will backfire in the long term. People will continue to look to other channels - legal or otherwise - for new music. As the smaller players are shut down, mainstream audiences will further tire of the mainstream product and stop buying music altogether. Meanwhile, innovative musicians will continue to find new avenues by which to spread their music to those who want to listen, be it by using P2P to give music away for free or some other method.

This will inevitably reduce the major labels' ability both to sell their own music and to acquire new up-and-coming bands. But, as they constantly show, they only care about next week's profits, not next year's. They will sabotage their future to get a windfall now, just as they have over and over again for the last decade.
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yankie muisc, 18 Feb 2009 @ 3:17am

what
RIAA, ASCAP, BMI, and all the other letters from A-Z that are to "help" are really just a pain in the ARSS ... the artist get maybe $.0000001 from the song from all these different agents anyway the rest of the money pays there hourly and yearly income ... they (the groups from A-Z) are a big JOKE
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Nobody, 18 Feb 2009 @ 4:16am

Once upon a time I used to buy a handful to new music CD's every week.

I have not spent a dime on any music from traditional sources for the last 12 years due to the insane practices of the RIAA and others of their ilk.

The only music I have added to my collection in all this time has come through direct purchases with the band, usually local groups just getting started.

It is a shame too, because there are hundereds of CD's I would like to buy, but I simply can't support the industry anymore.
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Anonymous Coward, 18 Feb 2009 @ 4:17am

RIAA plan to prevent independent Artists?
It seems pretty clear that the RIAA is mainly in it for the RIAA. The RIAA's client class doesn't seem to benefit from their actions. Thousands of independent artists are just a headache for them.
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R. Miles, 18 Feb 2009 @ 4:37am

Re:
They will sabotage their future to get a windfall now, just as they have over and over again for the last decade.
Decade. Which means, as long as people continue to support next week's profits, we're looking at another decade of this crap.

While the RIAA continues shooting itself in the foot, it can still move, and this is creating problems for everyone. If every possible avenue is being shut down by RIAA, new musicians, who don't want to sign with a label, are going to find it much more difficult to distribute their music.

I'm tired of RIAA shooting themselves in the foot. I'd rather someone take aim for the head, and take down RIAA for good.

Until then, expect more problems to arise rather than get solved.

For indie musicians, I wish you luck in the future. You're going to need it.
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Anonymous Coward, 18 Feb 2009 @ 4:40am

"The day the music died"

Thanks RIAA,

Dumb arses!
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PaulT (profile), 18 Feb 2009 @ 4:41am

Re:
Double-check who publishes the music you're interested in. Not every CD belongs to the RIAA camp - riaaradar.com is a good place to start if you're not sure. Also check independent music retailers like eMusic, Jamendo and AmieStreet, who have independent-only catalogues for the most part.
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Jesse, 18 Feb 2009 @ 6:17am

Is it copyright infringement if I get a song stuck in my head? Is it a performance if I then hum the tune?
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hegemon13, 18 Feb 2009 @ 6:39am

Ugh
This just boggles my mind. How is that a company with which you have no contract can step in and collect money for another company, with whom they have no business relationship? What if you had a contract directly with an indie label to stream their music? How does a non-involved party get to insert themselves in the middle and take a cut of the money. That is beyond ridiculous. It is downright criminal. Can this possibly hold up in court? It goes against all precedent and common sense concerning contract laws.
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Peter Rojas, 18 Feb 2009 @ 7:02am

I think it's pretty obvious why the RIAA is taking this approach. Major labels generally don't participate in revenue streams from an artist's live performances, merchandise sales, etc. Historically they've pretty much only made money from sales of recorded music. Now that CD sales are collapsing and digital sales aren't growing fast enough to close the gap, the major labels are looking to streaming services (whether on-demand services like imeem or online radio services like Pandora and other webcasters) as a major new source of revenue. Which is why they're obsessed with increasing the amount of revenue they can derive from those sources, regardless of whether or not those businesses can become sustainable (yes, it's short-sighted). The reason we have this fight between the labels and webcasters is that there is a fundamental gap between what the labels want to get paid for their content and what the market (in the form of advertising) says that it's worth. From the label's perspective the amount of revenue they would make if they licensed streaming services at a reasonable rate (the kind that let people actually build sustainable businesses) is tiny compared with the golden years of the CD and they don't want to adjust.

So since they're relying on an increase in revenue from these sources (which they see as being in some respects subsitutional for music purchases, which isn't unreasonable since music sales are in fact falling) they need to make as much as they can from them, they can't view them as being primarily promotional.

Ultimately the problem is that the interests of the labels and the interest of their artists have diverged. Artists signed to major labels benefit from all the promotion and marketing their label does for them, and can make money from touring and merch even if they don't sell many CDs (and again, the labels don't participate in those revenue streams unless they have a 360 deal with the artist). So while it's in the artist's best interest to have as many people as possible hear their music, even if they don't actually make any money from it (since it results in greater attendance at shows and more sales of t-shirts, licensing deals, etc), this isn't the case for a major label. This is why the majors have been pushing 360 deals, but from an artist's perspective there's no real incentive to cut them in on those revenue streams -- and less and less reason for an artist to sign their life away to a label in the first place since they're no longer needed for distribution and marketing.

I don't think things are going to get better until we have a whole generation of artists that have grown up outside the label system, and don't expect sales of recorded music to be their primary source of revenue. We're slowly getting there, but it's going to take a while.
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Anonymous Coward, 18 Feb 2009 @ 7:13am

Well i have to admit that i have bought many cd's and music downloads over the past couple of years, i listen to online radio at work, i just enjoy music. NOW I AM DONE with the that maulk, i will not be buying any music except where i know those IDtenT arse holes will not get a dime, Thanks RIAA for pushing me to look for alternative methods to get the music, so basically you are pushing your customers customers farther and farther way, which will be your downfall at some point...
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Liam, 18 Feb 2009 @ 7:22am

how?
How did the judges ever pass having to pay royalties on music the RIAA doesn't even have copyright on? How can they say we want you to give us money because you played this song, owned by this little label, who we don't represent, but want your money anyways.
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Luci, 18 Feb 2009 @ 7:36am

Re:
Only if you walk through a room of telepaths who then pick up the tune, thus making you a distributor.
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Anonymous Coward, 18 Feb 2009 @ 7:42am

Re: yet again
You could also buy used CDs
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Kirk, 18 Feb 2009 @ 8:22am

Very Smart.
Collecting at their rates for even non-RIAA music is essential to the RIAA�s reign of tyrannical greed. Watch this Larry Lessig Video, in which he talks about ASCAP and BMI in the 30's and 40's. It seems the RIAA has the ability to learn from some of their mistakes:
ASCAP said, "Pay us all your money. More. More!"
Broadcasters said, "We'll just use public domain music."
ASCAP said, "Yeah! Like that's going to work! The people demand the best."
It worked. The public domain music, even if inferior (I don't know if it was) was good enough for the stations to turn their backs on ASCAP. ASCAP was broken, and agreed to reasonable licensing rates.
By making sure they can charge for almost any music, they are ensuring that history is not repeated. I guess as long as we have copyright, no market mechanisms should be allowed to influence the industry. NOT.

http://www.youtube.com/watch?v=7Q25-S7jzgs

"COMPETITION BAD!"
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Kirk, 18 Feb 2009 @ 8:26am

ASCAP
For those whon don't want to view the entire video (you should, though) He starts talking about ASCAP at around 5:20 in the video.

http://www.youtube.com/watch?v=7Q25-S7jzgs
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Todd, 18 Feb 2009 @ 9:23am

Free Pass
The RIAA represents the labels which represent the musicians. Therefore: RIAA actions == musicians actions.

I don't understand why so many give a free pass to the musicians when they are ultimately responsible.
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Paul Brinker, 18 Feb 2009 @ 9:37am

Someone Point out
The law, or federal case law, that allows SoundExchange to collect money for people it dosent have a contract with. I mean if its a stupid admin rule, or circular logic, courts will toss it out as really fucking stupid. The best case for this would be a indy, or even in house artist for a webcaster playing there own music and giving the finger to SoundExchange.

Since SoundExchange is based on fear and has almost no common sence they would have to sue this guy whos getting away with not playing with there system or be exposed for the fruad they are.

And, Since lawsuits cost money, we get right back to the RIAA campain of suing everyone in the world for the good of the stockholders.
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lulz, 18 Feb 2009 @ 11:47am

Re: Free Pass
No, the RIAA is out for the RIAA, not the musicians. They don't represent the musician's interests, they represent their own interests. They are just a greedy giant that wants to drink the marrow from the bones of the internet radio stations.

The musicians don't have a say unless they refrain to sign on to an RIAA record label.
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Anonymous Coward, 18 Feb 2009 @ 11:55am

No Surprise
The over-the-air broadcast stations are getting a sweetheart deal that lets them pay much lower internet rates than internet only stations. The over-the-air part is still completely exempt from these new fees.

Tell me again why this is fair?
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hank mitchell, 18 Feb 2009 @ 3:16pm

indie music popularity cuts into RIAA sales
RIAA is just trying to control the playlists, like they do with FM radio. Since web casters are more likely to play indie music, it dilutes the public's tastes, and that's bad for business. By making it near impossible to run a internet only radio station, you ensure that only big RIAA companies artists are the ones that people hear. Here's an idea: Artists should not claim copyright on their recorded music, nor claim publishing rights on their sheet music, then they could enjoy free promotion free from payments, and, as Mike likes to say, make the real money on the scarce goods.
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otty, 19 Feb 2009 @ 1:53am

You forget...
...there is a long precedent for these types of indiscrminate fees. Blank tapes and cds have always included a fee that whent to some sort of RIAA type organization. I remember finding illegal blank cds for 1/10 of the normal price and couldn't figure out why until I realized they were not paying those fees somehow.
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musicman, 19 Feb 2009 @ 3:30am

Re:
Very similar to my story. I would stop by my local record shops 2-3 times a week because they were on the way to/from work. almost invariably i would buy something on one of those stops. 2-4 CDs/week.

Fast forward: I now make maybe 2 music urchases a year of no more than about 6 CDs per purchase. To be honest, I haven't bought anything yet this past year because I fear it won't play on my gear. Buying music has become a huge hassle and that is sad because I love it so.
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rgb, 20 Feb 2009 @ 8:32am

idiots
The RIAA and its ilk like SoundExchange keep wondering why piracy continues to skyrocket ... Meanwhile they're busy killing off every possible avenue of music distribution and suing 14 year olds, arguing for 100-year copyright extensions, and figuring out new ways to put tollbooths on people's ears.

Sure are a bunch of smart folks, those RIAA/SoundExchange guys, lemme tell you.
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Anonymous Coward, 23 Apr 2009 @ 10:02am

Internet radio
There are plenty of indie labels and artists out there producing quality music offering free downloads to internet radio stations to spin, They appreciate the promotional opportunities and many wave airplay royalties,wake up,you don't need the RIAA at all.
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