Why Should Webcasters Pay 25% Of Revenue To Promote Musicians?
from the how-is-this-possibly-good? dept
After years of back and forth negotiating (and more than a couple public spats), it appears that SoundExchange and music webcasters like Pandora have finally worked out an agreement on webcasting rates. If you don't recall, the Copyright Royalty Board assigned absolutely ridiculous royalty rates a few years ago, which seemed to have no bearing on reality (random aside: no one has yet explained why we feel it's okay for a small group of judges to determine what is a "fair rate"). The original rates would almost certainly put most webcasting operations completely out of business. But before delivering that death sentence, SoundExchange, the RIAA-spinoff that gets to collect the money (and has a long history of hanging onto it for longer than necessary and having trouble "finding" the artists it owes money to), thankfully agreed to hold off enforcing the new rates while everyone negotiated.Since then, there has been a wide variety of back and forth details until the official agreement was put in place today... and even though many of the news stories present this as SoundExchange somehow backing down and "Pandora" winning, the details, frankly, seem so out of touch with reality it's difficult to see how it makes any sense at all. The main issue is performance rights, which radio stations already don't have to pay because radio is helping to promote artists. The idea that webcasters/broadcasters should need to pay artists for the right to promote them to fans just seems bizarre and borderline incomprehensible in the first place.
Also worth noting is that the royalty rates that traditional broadcasters do pay (to composers/songwriters/publishers) averages out between 3 and 4% of revenue. So, if you really had to come up with a reasonable rate to pay performers as well, you might think that it would start around that same 3 or 4%. Even that would be a pure bonus for performers who are used to getting nothing as a royalty (tax) from radio. But... no. The agreement is an astounding 25% of revenue as a bare minimum, with a requirement to kick-in $25,000 just to be a webcaster at all.
Pandora claims they're happy about this because it keeps Pandora in business (and settles a big legal dispute, which hopefully allows them to go raise some money to stay in business). But it's a stunningly large percentage of revenue that will make things prohibitively expensive for most webcasters to really stay in business. You now have to have huge margins to get anywhere in a notoriously competitive business.
Who loses? Well, just about everyone outside of SoundExchange/RIAA. Already, despite being happy about this deal, Pandora has announced that it's sharply curtailing its free service, and if you listen to more than 40 hours per month, you'll need to start paying. Most webcasters now have a huge expense that will make it difficult for many of them to remain in business at all. Musicians are severely harmed as well. While a few top musicians might get a new royalty check from SoundExchange (when and if it gets around to "finding" those artists), most musicians will now get less exposure, making it that much more difficult for them to put in place the successful modern business models needed to succeed today. This basically just rewards the RIAA/SoundExchange and a few large artists who will get an extra royalty check. Everyone else is worse off.
Some might say the NAB and traditional radio stations also make out nicely, in that since these rates may harm webcasters, it takes away some competition, but even if the radio stations are happy in the short-run, it's a bad deal. These rates, certainly, will likely influence any eventual "performance right" that's added to terrestrial radio, and could significantly jack up the cost of running a regular radio station as well.
We're living in an era of amazing technological progress, where it's easy for anyone to go out and promote musicians to others and help get those musicians and a larger audience, and all the RIAA has done, time and time again, is work as diligently as possible to prevent anyone but itself from promoting artists. What a shame. This "deal" does nothing to help up-and-coming artists and will significantly limit their ability to get their music noticed.
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Filed Under: performance rates, promotion, royalty rates, webcast
Companies: pandora, riaa, soundexchange
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Payolla
Why is it fair to mandate that money flows in one direction and not the other?
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Re: Payolla
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I am no econ expert ... but
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However what most of them strongly object to is an organizations charging people to play their music - even if they don't want this organization to - and then charging them to join this organization in order to get "their" money. To them (and to me) THAT is REAL copyright infringement.
Unfortunately, the RIAA has the financial means to pay politicians to make this "legal" and most of the musicians who oppose this sort of heavy handed treatment don't have the financial means to fit the major labels....at least not yet.
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Re:
If an artist wants to take music that they have written and give it away for free to radio stations on the Internet or elsewhere, or license it for free, what is stopping them from doing so again?
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Re: Re:
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I'm sorry, in your opinion, who is getting scammed, and how?
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Hi, it’s Tim -
I hope this email finds you enjoying a great summer filled with music from Pandora.
I’m writing with some important news. Please forgive the lengthy email; it requires some explaining.
First, I want to let you know that we’ve reached a resolution to the calamitous Internet radio royalty ruling of 2007. After more than two precarious years, we are finally on safe ground with a long-term agreement for survivable royalty rates – thanks to the extraordinary efforts of our listeners who voiced an absolute avalanche of support for us on Capitol Hill. We are deeply thankful.
While we did the best we could to lower the rates, we are going to have to make an adjustment that will affect about 10% of our users who are our heaviest listeners. Specifically, we are going to begin limiting listening to 40 hours per month on the web. Because we have to pay royalty fees per song and per listener, it makes very heavy listeners hard to support on advertising alone. Most listeners will never hit this cap, but it seems that you might.
We hate the idea of capping anyone's usage, so we've been working to devise an alternative for listeners like you. We've come up with two solutions and we hope that one of them will work for you:
*
Your first option is to continue listening just as you have been and, if and when you reach the 40 hour limit in a given month, to pay $0.99 for an unlimited number of hours for the rest of that month. This isn't a subscription. We'll charge your credit card for just that one month and you'll be able to keep listening as much as you'd like for the remainder of the month. We hope this is relatively painless and affordable - the same price as a single song download.
*
Your second option is to upgrade to our premium version called Pandora One. Pandora One costs $36 per year. In addition to unlimited monthly listening and no advertising, Pandora One offers very high quality 192 Kbps streams, an elegant desktop application that eliminates the need for a browser, personalized skins for the Pandora player, and a number of other features: http://www.pandora.com/pandora_one.
If neither of these options works for you, I hope you'll keep listening to the free version - 40 hours each month will go a long way, especially if you're really careful about hitting pause when you’re not listening. We’ll be sure to let you know if you start getting close to the limit, and we’ve created a counter you can access to see how many hours you’ve already used each month.
We’ll be implementing this change starting this month (July), I’d welcome your feedback and suggestions. The combination of our usage patterns and the "per song per listener" royalty cost creates a financial reality that we can't ignore...but we very much want you to continue listening for years to come.
Please don't hesitate to email me back with your thoughts.
Sincerely,
tim_signature.jpg
Tim
Founder
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No ads, and the RIAA doesn't get a dime!
BOYCOTT RIAA until they don't exist!
RIAA supported radio is dead, but music is still alive!
Note to musicians: Sign under the RIAA radar and be boycotted too, or , do like many others are doing and be rewarded with the respect of your fans!
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It isn't about the royalties
The $25K entry fee guarantees that there won't be little indi stations setting up; there will only be a few big players and it is easier to control.
The most significant thing is that it is basically impossible for little guys to come in and play just music that is in the public domain, or which bands want played for free. The industry's fear is that these little players will be promoting music that they don't control. People might discover that some of it is much better than the autotuned pablum that the industry likes to crank out.
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Re: It isn't about the royalties
Wait, what? How's that exactly? Where does it say that if I want to stream public domain songs and songs I have licensed that I have to pay a fee to anybody?
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Re: Re: It isn't about the royalties
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Re: Re: Re: It isn't about the royalties
I have read the other stories, but I think there are a number of things getting conflated here.
When "fogbugzd" says:
The most significant thing is that it is basically impossible for little guys to come in and play just music that is in the public domain, or which bands want played for free.
I want to know what makes it "basically impossible" for someone to come in and play music that is 1) in the public domain and 2) which bands just want played for free.
I believe these statements are false (in the case of (1)) and misleading (in the case of (2)).
In the case of public domain recordings, there is no copyright, so there is no compulsory license, and SoundExchange need not be consulted.
In the case of recordings "which bands just want played for free" it depends on who controls the copyright. If the band assigned their copyright to someone else and don't retain the right to negotiate other licenses for it, then tough noogies, they can go renegotiate with whoever they sold their copyrights to.
If the band retains the copyright, and releases the work under license, I am fairly certain that they can waive their compulsory licensing fee. From the U.S. Copyright Office:
Does the Intended User Have to Use a Compulsory License?
No. The person wishing to make and distribute phonorecords
of a nondramatic musical work can negotiate directly with
the copyright owner or his or her agent.
If the copyright owner (the artist who retained their copyright) wants to license it with CC0 or one of the Creative Commons licenses, it's unlikely that SoundExchange could legally collect anything from you on that recording.
Can SoundExchange collect compulsory royalties on music that they do not have license to or do not represent? Yes, because they are the de-facto representative for compulsory licensing royalties. But I believe they cannot collect compulsory licensing royalties on songs that 1) are not copyrighted and 2) are licensed to the players/streamers by the copyright owners. If this is not the case, I'm willing to be enlightened.
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Re: Re: Re: Re: It isn't about the royalties
FTA:
All stations will be required to pay an annual minimum fee of $25,000, which they can apply to their royalty payments.
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Re: Re: Re: Re: Re: It isn't about the royalties
So, playing just one song could cost you $25,000.
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I think people forget...
With webcasting the situation is reversed, and the only way you'll pry the RIAA's hands from around the throats of their revenue streams is when those hands are cold and dead.
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When they lose their last signed musician!
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Re:
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any of the good companies (like google and hulu) willing to start a pro-piracy campaign?
since its clear that the anti-piracy are lier`s and corrupt http://techdirt.com/articles/20090707/1120525474.shtml
free currently helps!!!!
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Re:
Pro-piracy is bullshit. The answer isn't to give them fuel for their anti-piracy campaign. It's to show them that legitimate customers are no longer interested in their bullshit. If you're a pirate then they don't care what you think. If you're a pirate then no one who makes laws cares what you think because to them you're a two bit criminal. Real change takes time and work. If you're not up to it then fuck off.
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Re: Re: Re: It isn't about the royalties
Soundexchange is charged with collecting all royalties on Internet Radio. The assumption is that someone owns the copyright on everything, and therefore Soundexchange collects royalties.
I realize this is hard to believe because it flies in the face of common sense and a basic sense of right and wrong. But the recording industry doesn't care much about things like that.
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Re: Re: Re: Re: It isn't about the royalties
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Re: Re: Re: Re: It isn't about the royalties
Neither, apparently, does the government.
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25%
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Re: 25%
This is incorrect. From the article that you linked to: "Small sites with less than $1.25 million in revenue, like AccuRadio, Digitally Imported, and RadioIO, will pay 12 to 14 percent of it in royalties. All stations will be required to pay an annual minimum fee of $25,000, which they can apply to their royalty payments."
The bare minimum is the annual $25,000, not the 25% of revenue. The 25% will apply to very few webcasters. (The article mentions only Pandora and Slacker) Most will pay around HALF of the only percentage that you included in your post, and in the headline nonetheless. Also, although this is probably an extension of the "bare minimum" inaccuracy, the $25,000 is not in addition to the percentage of revenue, which is what I initially interpreted your above quote to mean. Don't start this shit.
However, I still wholeheartedly disagree with this outcome. The descrepancy between 4% and 12% is pretty astounding. ([Citation Needed] for the traditional broadcasters royalty rates) SoundExchange is simply trying to squeeze as much money as possible out of webcasters. They DO NOT have the artist's best interests in mind, which is who the purported non-profit organization supposedly represents.
Note to parent: The article did not mention the 7% of expenses or the 30 day period for webcasters. Do you have a link?
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disappointing
I'll pray someone makes their own station, does it for free, violates copyright, gets a lawyer, and fights back, I guess.
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Maybe good for Pandora
My guess is this deal kills off the majority of streaming sites and leaves a few big boys like Pandora and last.fm, as stated above. These few sites will receive the influx of listeners that have nowhere else to go and revenues will increase enough to support a 25% raping. They may even make money off the deal if the entire industry isn't killed off.
I, for one, am all the more grateful for torrents, as they may soon be the only cost-effective way of discovering new music.
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Non-US Stations?
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What a racket
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Re: What a racket
No suppose about it. The law requires the covered stations to keep logs.
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Webcasters (and Radio stations) Should Pay for the Rights! (Though 25% is too much)
Consider TV broadcasters. They often buy TV shows from film studios. You could argue that by playing those TV shows, they're helping to promote more sales of DVDs, and thus broadcasters should be able to play any TV shows the like without paying for the rights.
Also, consider that many other countries have systems that require radio stations to pay for the rights. Australia, for instance, requires them to pay roughly 3% of gross revenues (it varies depending on the station's revenue).
So not only do I agree that webcasters should pay for the rights, radio stations should too.
However, I will admit that I think being required to pay 25% is grossly disproportionate, and that they should fight for a much fairer rate, somewhere around 3%.
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Re: Webcasters (and Radio stations) Should Pay for the Rights! (Though 25% is too much)
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Re: Webcasters (and Radio stations) Should Pay for the Rights! (Though 25% is too much)
The record industry is fighting to change that.
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licensing
That is, not every webcaster has to pay the rates, do they? Is it just the ones who are simulating radio?
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For example, Billy-Bob's Down Home Country Hour...or Hanging on the Telephone with Punky Phil...or The Black Metal Witchfest with Magnus Slaughterstrom
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Re:
Simple: They have to pay up.
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Re: Re:
Too bad, there were a couple I enjoyed listening to...
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Selling Dirt
I get that the RIAA is bone-headed with how they've handled DRM (it doesn't work) and their sue happy approach is repulsive. But on the other hand, if a company is making 19 million and is expecting to up that to 40 million this year, I think the artists who create the actual product (OK, it's a delivery system, that's the product) or at least a significant part of the product, should get a taste. It's not a remote connection--without musicians there is no Pandora.
A photographer took shots at a concert I did in Italy. He offered the low rez for free. Nice! I asked if I could get a few of the shots at a higher resolution for publication. I thought: think of the exposure you'll get, I can link to your website, you'll build a following....(sound of breaks screaching) NO! He asked for 20 Euro per shot. He wanted to get paid. Was he behind the times? Maybe.
But sometimes you should just get paid for your work.
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Catastrophic Collapse
A couple examples are....
> the internet bubble
> the housing bubble in the US
> Tulips mania, February 1637
What we are seeing with the movie and recording industry is a money grab. Their profits are falling and they dont want to and cant change.
They dont want to change....
The business model they have used for the past 60-80 years is monopolistic and Bureaucratic. With artists handing over all rights to labels. This leads to having people with a sense of entitlement, that cant think outside the box, in control. People who see any upstart as a threat needing to be bought outright, invested in with controls added, or legally squashed... this makes them slow to change and highly predictable .... good for us ... bad for them ... big ole GRIN ....
They cant change...
The Record industry is looking for a magic bullet business plan that they can implement across the board. In a chaordic system like the internet, where new ideas constantly crop up and are implemented, that isnt possible.
The movie industries they have time based contracts. First show this in the theater, then sell it on DVD, then on cable, then on TV. This make then Highly predictable ... big Ole Grin...
There are so many flaws in the way the recording industry is currently doing things. Alienating its customers, instilling fear, charging for what has always been free advertising for them, charging scout troups for the right to sing songs around the campfire, charging auto repair shops and stable owners for playing the radio in public, the list goes on. Everyone including the pope sees this as a problem.
Catastrophic Collapses - means the sudden and utter failure of overlying "strata" caused by removal of underlying materials...
anyone else see what is going to happen .....
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Catastrophic Collapse
A couple examples are....
> the internet bubble
> the housing bubble in the US
> Tulips mania, February 1637
What we are seeing with the movie and recording industry is a money grab. Their profits are falling and they dont want to and cant change.
They dont want to change....
The business model they have used for the past 60-80 years is monopolistic and Bureaucratic. With artists handing over all rights to labels. This leads to having people with a sense of entitlement, that cant think outside the box, in control. People who see any upstart as a threat needing to be bought outright, invested in with controls added, or legally squashed... this makes them slow to change and highly predictable .... good for us ... bad for them ... big ole GRIN ....
They cant change...
The Record industry is looking for a magic bullet business plan that they can implement across the board. In a chaordic system like the internet, where new ideas constantly crop up and are implemented, that isnt possible.
The movie industries they have time based contracts. First show this in the theater, then sell it on DVD, then on cable, then on TV. This make then Highly predictable ... big Ole Grin...
There are so many flaws in the way the recording industry is currently doing things. Alienating its customers, instilling fear, charging for what has always been free advertising for them, charging scout troups for the right to sing songs around the campfire, charging auto repair shops and stable owners for playing the radio in public, the list goes on. Everyone including the pope sees this as a problem.
Catastrophic Collapses - means the sudden and utter failure of overlying "strata" caused by removal of underlying materials...
anyone else see what is going to happen .....
[ link to this | view in chronology ]
Catastrophic Collapse
A couple examples are....
> the internet bubble
> the housing bubble in the US
> Tulips mania, February 1637
What we are seeing with the movie and recording industry is a money grab. Their profits are falling and they dont want to and cant change.
They dont want to change....
The business model they have used for the past 60-80 years is monopolistic and Bureaucratic. With artists handing over all rights to labels. This leads to having people with a sense of entitlement, that cant think outside the box, in control. People who see any upstart as a threat needing to be bought outright, invested in with controls added, or legally squashed... this makes them slow to change and highly predictable .... good for us ... bad for them ... big ole GRIN ....
They cant change...
The Record industry is looking for a magic bullet business plan that they can implement across the board. In a chaordic system like the internet, where new ideas constantly crop up and are implemented, that isnt possible.
The movie industries they have time based contracts. First show this in the theater, then sell it on DVD, then on cable, then on TV. This make then Highly predictable ... big Ole Grin...
There are so many flaws in the way the recording industry is currently doing things. Alienating its customers, instilling fear, charging for what has always been free advertising for them, charging scout troups for the right to sing songs around the campfire, charging auto repair shops and stable owners for playing the radio in public, the list goes on. Everyone including the pope sees this as a problem.
Catastrophic Collapses - means the sudden and utter failure of overlying "strata" caused by removal of underlying materials...
anyone else see what is going to happen .....
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sorry about the triple post .... wasnt logged in .... oops
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Not gonna fly...
This is clearly not going to fly in the long run. Looks to me like the dinosaur that is the RIAA is simply collapsing onto it's last remaining leg.
The rest of the world isn't going to jump on board with these types of ridiculous regulations.
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RIAA and the labels only recognize promotional value insofar as it promotes the current hits they want promoted. They had that sort of control over broadcast radio, and cable and satellite have few enough providers to allow for some degree of narrowing. But Internet radio provides diversity, discovery, and catering to niche tastes on a scale never before seen. And the record labels hate it because it's drawing too many consumers out the long tail where they're buying music from little-known artists, niche genres, and almost-forgotten oldies instead of the current releases.
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Re:
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Re:
Actually, I bet the big ones like it. It'll greatly reduce the competition, especially from uppity little start-ups.
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any % of 0 is 0. They just lost a listener and potential buyer of music so add in the previous amount of money 0 to the grand total of money I'm going to be spending on music I can't find anymore which is 0 and you get a whopping 0 dollars. Way to build a working business model!!
Thanks!!
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Re:
I'm not a current Pandora user and I doubt that I'll ever become one now.
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Apparently start and end times/duration are needed to calculate (1) the number of people who heard a given song (in order to match song play time with stream access during that time from your streaming logs) and (2) your station’s music Aggregate Tuning Hours (music ATH), which is the total hours of music streamed times the number of people listening at the time music was played.
For each song played on each stream, please provide the following data:
Song title
Featured artist/group/orchestra
Album title
Marketing label
Start time of song play
End time of play or duration of song
IP Address of requester ( they say to filter out non-US listeners)
Date/time of request
URL requested
Status of request
Duration
Big Bro SX wants data! What could one do with all this data? besides throw a few pennies at artists once in a while.
Also, can't play more than 3 songs from any one album, or 4 songs from any one artist with limits on how many consectutive plays from one CD or artist in a 3 hour period. Plus other rules that are just as bizzare. SX wants to try and block folks from assembling a collection of free music by streaming it :) hmmmmmm.....
another thought, since they are too cheap to install their own logging capability, (just get some iPhones and hold them up to the speakers RIAA) and are making all folks that streamm turn in the data, they really won't know who's playing what unless the 'loggers' are 100% honest? I know it will be years before artists see any money out of this.
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Re:
The record industry has been trying to get a rule like that for broadcast radio for *decades* (claiming that home taping amounted to "stealing", would kill the industry, etc.). The broadcasters, so far, have had enough lobbying pull in Congress to keep it from happening, but "the times, they are a changin'."
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Re:
I could see that kind of information being subpoenaed and being used against someone to in court to malign their character.
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You guys are forgetting a VERY large group of somebodys......
As owner, you CAN give it away. You can sell the rights to your creation. You can also get paid when someone else uses your creation.
.... and that's what is at the heart of all these negotiations. The original creators of the material all of these stations are using (in the course of their business - i.e. they are making money) - SHOULD be compensated.... so when Pandora plays a tune, the writer should get paid, because Pandora is using that artist's material to make money (or attempting to make money, but that's another story.)
It's the same with terrestrial radio, XMradio, etc. College campuses pay a royalty - called a blanket license. That money is funneled back to the writer.
Remember, SoundExchange passes on those bucks to the writers (well, not ALL of it - but by law they are required to pass on MOST of it. I don't know the details). The trick is that the artist has to register - and there's even a list of artists who they are looking for on the site (as in they have $ for them but don't know where they are).
So do you want to continue having an embarrassment of riches, music wise? pay your artists. otherwise all you'll get is cookie-cutter crap.
---
..and that is my humble-but-accurate opinion!
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Re: You guys are forgetting a VERY large group of somebodys......
What about ALL creators? Shouldn't they all be treated the same? Just last weekend I was working with finishing some concrete for a small project I came to appreciate the artistic skill that many concrete workers display. Yet, I walk on it every day without paying royalties to the creators. It strikes me as terribly elitist to give some "artistes" special privileges and not others.
...so when Pandora plays a tune, the writer should get paid...
What's being done with Internet radio goes well beyond that.
It's the same with terrestrial radio...
No, terrestrial radio doesn't pay royalties to performers at all. So to say that it is the same is just not true. Why are so many copyright supporters also such big liars? Judging from the type of some of the characters that are coming out in support of it, I wonder if maybe copyright isn't doing society more harm than good.
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Amazing. This is the same kind of argument used by clubs, radio stations, etc. as an excuse to not compensate artists for their work. Any other profession is paid for what they do. But you're an artist? Then you should be glad we're playing your music. No matter that that music is the reason people are listening to the station which attracts big money adverstisers so the station can be profitable.
Entities like tech dirt constantly pretend to be standing up against the "big evil companies" that are trying to charge people for music and standing up for the artists (supposedly) as well. (And everyone jumps on the bandwagon attacking admittedly shady organizations like the RIAA. Some of the arguments are valid, but most of it is a red herring).
Nonsense. Tech dirt and other similar entities are intent on eliminating copyrights completely so that the big tech companies can have free content with which to fill their expensive tech toys that are making the tech companies filthy rich.
As an artist who has been playing hundreds of thousands of times on Pandora and received about $5 in royalties for that amount of play, and has had no significant sales because of that "airplay", I can say that such stations are
not the main way an artist gets exposure and makes a living. I think it's great that they exist, and I agree that if an artist wants to give his stuff away or have it played royalty free, that they should be able to do so.
But tech dirt isn't concerned with that in my opinion. Lobbyists for the tech industry want to eliminate copyrights (for the above stated reason).
Want to eliminate copyrights? Fine. Let's eliminate PATENTS too. How would the tech companies feel about that? Free iphones, free everything.
NO? Well, till then, copyrights for artists so their life's work can be protected.
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Big Surprise
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Radio promotes Record Sales? Think Again.
The second issue to consider is the claim that music publishers stand in a different position from sound recording owners and recording artists whose performances are embodied on sound recordings vis a vis radio play. If radio promotes record sales, publishers and songwriters also benefit, because they earn mechanical royalties on every record sold, just like recording artists do (except that publishers are not subject to recoupment of advances and recording costs as are recording artists.) So the argument doesn't hold: what's good for the publishers should be good for record companies and artists.
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live web cast
Iam just a video radio station on line and live
Iam just letting the world fall in love with them like i do
and if any band does not want me to broadcast them then I dont
But its never without there promission!!!!
You got a problem with this them me and a few of the bands that I broadcast will come down to what ever hole you live in and rip you a new ass hole
Where do you live.......lol Just wondering....lol
ASSHOLE!!!!!!!!!
Iam for real come to NYC and you wont leave this city ALIVE!!!!!!!!
Guy Ward
Owner of NYC Live Rock
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