Why The New Webcasting Rates Are A Death Sentence For Webcasters
from the plainly-ridiculous dept
When the announcement came out this week that webcasters had somehow "come to an agreement" with SoundExchange over webcasts, what was unbelievable was that many presented this as a "victory" for webcasters. Hell, even SoundExchange made public statements about how it was disappointed by the rates, but it was an "experiment." But when you looked at the actual numbers, this made no sense. The rates are ridiculously high when compared to royalty rates for traditional radio or satellite radio. Michael Robertson breaks down the numbers and explains away the myths of this deal. It will almost certainly bankrupt nearly every webcaster out there. Robertson focuses on the big webcasters, and points out that the 25% royalty rate promoted by the press isn't accurate at all, and for a company like Pandora the real rate will be north of 40% of revenue -- which is not even close to sustainable.Meanwhile, small webcasters don't get much of a break either. Live365 is pointing out that these rates will basically kill off every webcaster it hosts by requiring a $25,000 fee. As the company notes, the guy running the Armenian folk music station for $10/month isn't going to pay $25,000 and certainly isn't going to make enough revenue to pay up.
Make no mistake: these new rates are effectively going to kill off a significant portion of online webcasters. The recording industry, of course, doesn't find this problematic, because they don't like the fact that they can't control webcasters the way they can radio, so they are fine with taxing them out of business. But what a waste of what technology allows. These days, anyone can and should be able to effectively express their own musical views by webcasting what they like. And that's about to become prohibitively expensive for no reason other than that SoundExchange/RIAA have a gov't granted monopoly over any kind of broadcasting.
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Filed Under: copyright, royalties, webcasting
Companies: live365, pandora, soundexchange
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What will they do when their revenue stream dries up ?
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Re:
What will they do when their revenue stream dries up ?
Well, they don't see this as a major revenue stream, so they'd rather just kill it off.
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They know the Internet is probably just a fad.
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"the guy running the Armenian folk music station for $10/month isn't going to pay $25,000 and certainly isn't going to make enough revenue to pay up. "
Mike is all about workable business models. blog style home made radio stations (live365 style) isn't a workable business model. The rules of common sense aren't suspended just because we attached the "internet" tag to something.
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I'd like to know where you came to this conclusion, as I certainly do not see it. 'Most internet listeners' as I have observed certainly are willing to pay, just to remove commercials, personalize their streams, and limit/remove interruptions.
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Killing off any of these marketing streams that cost nothing for the artists to WIDELY PROMOTE themselves isn't a sound business move.
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It's workable provided these corporations don't lobby the government for laws that make them unworkable.
Also, they should only have to pay royalties to music that is owned by the RIAA. So why not regular Intenret users make songs, without record contracts, and release them to these Internet radio stations under their own terms? That way people can listen to online radio stations and the RIAA doesn't have to profit any.
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I could make a killing in the restaurant business if I didn't have to pay for food and staff
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I could make a killing *off* the restaurant business if I could charge them all a fee for every customer that walked in the door.
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And why not? Because of ridiculous liscencing fees. A minimum of $25,000 means it can't be done as a hobby the way most blogs are. even if fees were more akin to satelite, let alone terrestrial radio, it would be a much more viable endeavor, and it would be better for the artists and better for the public.
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Good
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Do they have to pay the $25K fee as well?
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Downright creepy.
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Re: Downright creepy.
Yes, but the purpose of this system is to make the musicians go through "the system" (i.e. RIAA/SoundExchange) to get that exposure. They obviously wouldn't want musicians to go independent and bypass them (which would be a real danger otherwise if there were a bunch of independent little Internet stations to provide that exposure). This way there will be far fewer stations and they will all be beholden to the record industry. Stations will really only be able to afford to play music from artists that the industry promotes by giving the stations kickbacks (i.e. payola) for playing. And the beauty of it is that that payola won't cost the record industry a cent because the money will come from the fees paid by the radio stations themselves!
But wait, it gets better. The record industry will even get to collect fees from the playing of independent artists. So that means that, if you are an independent artist, not only will the industry *not* promote you, but you will get to help finance the promotion of the industry's own artists instead! Sweet, huh?
Ah yes, the best government money can buy.
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Re: Re: Downright creepy.
Payola is completely legal for web stations, it seems. Maybe this is the reason Pandora sees this as a good deal: Because their business plan is to become an RIAA whore and jump on the payola gravy train. Their jubilation makes sense now.
I expect to see a lot of webcasters jump into the record industry's pockets now. Of course, they will deny it and nobody will be able to prove otherwise because the payola will be hidden from public view, but the record industry, not listener demand, will be calling the programming shots for any stations that want to stay in business.
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Where's the vision
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SoundExchange Monopoly
However, the 2009 SoundExchange rates are not as "ridiculously high" as Mr. Masnick suggests. Moreover, record companies are desperate to monetize digital uses, so if the rates put too many webcasters out of business, SoundExchange may be agreeable to a reduction.
In my view, the United States is long overdue to require master and video performance royalties, like the rest of the world before it.
Do you know that other countries worldwide refuse to pay US artists and record companies performance royalties solely due to the fact that we in the USA do not reciprocate?
Considering the international stardom of so many US artists, the US has forgone a significant stream of income for a long time. When the US begins paying out such master performance royalties to foreign entertainers, it stands to collect untold millions of dollars from foreign collection societies.
Music is valuable. If the webcaster business model doesn't account for that, then it needs to change. Owners and creators are entitled to their fair share of the revenue pie.
I just think all of this would work better if SoundExchange had competitors and artists could designate their own affiliations, including agents with lower rates.
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Re: SoundExchange Monopoly
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Re: SoundExchange Monopoly
How is 25% -- as a base -- not ridiculously high compared to other forms of royalties?
In my view, the United States is long overdue to require master and video performance royalties, like the rest of the world before it.
Right... pay us to help advertise us. I don't see how that makes sense at all.
If performance royalties are so important, how do you explain payola?
Music is valuable. If the webcaster business model doesn't account for that, then it needs to change. Owners and creators are entitled to their fair share of the revenue pie.
Promotion is valuable. Hence payola. Clearly the labels have long valued the promotion over the royalty. Why should that change now? And why should it change via gov't fiat?
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Re: SoundExchange Monopoly
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Re: SoundExchange Monopoly
Solely? I think that's a pretty good reason to not pay royalties; I think you're minimizing it by adding "solely."
Considering the international stardom of so many US artists ... untold millions of dollars from foreign collection societies.
Now I think you're mistaking which way things are flowing. US stars get more play in foreign lands because they domn't have to pay royalties on the music. If it was a level playing field, I think you'd see far fewer US artists getting "international stardom," passed over in favor of "local" artists. And THEN the US would see a loss of untold millions as the revenues from shows and merchandising tied to those stars would dry up. In grasping for one more straw you'd risk losing the whole load. better to have free promotion and then monetize the exposure.
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Armenian folk music
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SoundExchange Monopoly
On a more serious note, the imbalance between the US music royalties and other countries, as well as within between industry and artist, is one of the most egregious out there. The problem with these "collection societies" is they collect even if they dont represent you, and then they "have difficulty" in "finding" you to pay you the share they illegally collected on your behalf. It's a massive rip off and the artists and consumers suffer for it. The execs at these companies suffer not at all.
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The Day That Music Died
Or maybe listening to music from countries that are not owned by the RIAA is the way to go.
Wait.... Can we even listen to music from another country or is that wrong to? Can we whistle or hum, tap the desk with a pencil that may sound like a drum solo that is copyright protected?
Yeah none of what I said really makes sense. Goes along with what they are doing.
I support unsigned artists. Simple. I have for awhile now. Most of them offer their music for free, or a small charge to buy it (which is a good way to show them you like it and supporting them) and best of all unsigned or artists that are not know from small labels, they don't care if you play there music online. It gets more people to listen to them, free publicity at no cost to them. Soundclick will be the future. Until the RIAA tells politicians to pass laws that say music that is almost like their copyrighted music, maybe a few notes difference and different lyrics, means they get paid. What about tribute bands? Have they come down on them yet? If not it is only a matter of time.
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Are you sure this is bad news for Pandora?
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Re: Are you sure this is bad news for Pandora?
They're rejoicing because:
(a) they were out of money and they needed this deal to close so they could close their round (note, the round for $35 million closed two days after this deal came through)
(b) it gives them more time to now go and complain via congress and hope to get the rates changed.
They were between a rock and a hard place. This gives them a little more breathing room. Without this deal they were dead next week. Now they have maybe a year to figure things out.
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Death Sentence For Webcasters
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Re: Death Sentence For Webcasters
Yes. They have a monopoly on all webcasters.
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Yes. Because of the way performance liscencing works. SoundExchange collects all royalties for all artists, whether those artists want them to or not.
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Re: Re: Re: Re: Death Sentence For Webcasters
Think of it this way. Soundexchange collects royalties based on the copyright status of a song. Copyright is opt out and if you don't opt out your song has a "default" copyright status that permits Soundexchange to collect on your behalf. If you're "signed" the copyright status of the song could still be the default one but it may simple be transferred over to those you signed with. Signed could just mean someone else owns it without changing the copyright status of the song itself. However, if you own the copyright on a song you are able to change the status and you can license it under a copyleft license such that soundexhcange is not permitted to collect on your behalf.
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Re: Re: Death Sentence For Webcasters
(hypothetically speaking) My neighbor pays for a bandwidth to host stuff on the Internet, including his webcasting site. I make a song. I give it to my neighbor to host on his webcasting station and I don't charge him anything. I'm unsigned (and lets assume a bunch of his neighbors also give him songs and they don't charge anything and they are unsigned. So he only hosts songs by unsigned neighbors that he knows who won't charge him anything). What law says that either I or my neighbor or anyone must pay Soundexchange or any third party for hosting my song? Where is this law? We need to be specific about what laws need to be eliminated. So please cite the law.
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Re: Re: Re: Death Sentence For Webcasters
As I understand it, if a station *only* plays unsigned artists then they are not required to pay fees to SoundExchange. If, however, they play even one other song then then they must pay fees for *all* songs, whether by unsigned artists or not. So your neighbor would not have to pay.
Where is this law?
SoundExchange is designated by the Librarian of Congress as the sole organization authorized to collect royalties paid by services making ephemeral phonorecords or digital audio transmissions of sound recordings, or both, under the statutory licenses set forth in 17 U.S.C. § 112 and 17 U.S.C. § 114.
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Re: Re: Re: Re: Death Sentence For Webcasters
I just don't see the law that imposes this. You point to the United States Code sections 112 and 114 but your links don't work. Here is one.
http://www.bitlaw.com/source/17usc/112.html
and the other
http://www.bitlaw.com/source/17usc/114.html
I just don't see where it says that they would have to pay soundexchange for ALL music played if just one song from a signed artist is played. Perhaps the law is somewhere else?
Also note this
"License agreements voluntarily negotiated at any time between 1 or more copyright owners of sound recordings and 1 or more transmitting organizations entitled to obtain a statutory license under this subsection shall be given effect in lieu of any decision by the Librarian of Congress or determination by the Copyright Royalty Judges. "
17 USC 112
The United States Code is supposed to override/supersede anything that the Library of Congress decides (does this always work?).
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Those links work for other people, so I'd say you've got some other problem.
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Disgusted
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What if?
I seriously doubt SE could get every ISP to block access even if they could we could just route around them.
Just a thought
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I don't know what makes you think everyone else pays (significant) taxes. Some of the wealth actually pay very little taxes, so that would make SE no different.
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By everyone else I meant hard working people, not freeloaders like SoundExchange.
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Pandola? Copyleft?
Maybe Creative Commons or EFF could help out unsigned artists in the way SoundExchange works for the labels? I don't know enough about the ecosystem or specifics, but it would be in the interest of webcasters and independent artists to eliminate this monopoly (perhaps by releasing their works under copyleft licenses).
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Re: Pandola? Copyleft?
Unless you make specific deals with each and every artist you play, you have to pay SoundExchange these insane royalty-fees.
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Re: Re: Pandola? Copyleft?
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Webcasters flocking to Sweden...
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That revenue is now completely gone, because they can't afford to pay the licensing fees to whatever bullshit organization wants to charge them. I'm just glad I got my new laptop paid off before they canceled!
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Haven for Talk Radio
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Say goodbye to the little guy
How is it fair to put the interests of a single organization so far above the interests of the masses?
I would like to feel outrage, but after watching this same old corporate story my whole life I am getting pretty numb. One thing I have decided is that the corporatization and consolidation of American Business was pushed through on a highway of lies.
I remember the rhetoric when I was a kid and there were still a huge amount of family businesses around. Corporations billed themselves as providing better quality, superior services, and great employment. Twenty years I see now that is was just a lip-service so they could grab as much cash as possible and destroy forever choice as we knew it.
Tell me how we are better off nowadays with a McDonald's and Walmart on every corner? We have less choice than ever before, crap-ass pay, and products that can only be described as inferior. The money no longer stays in our communities and is instead shipped to banks in other states.
American Business is now a sad precession of people's time and energy into the abyss of big business backed by government regulation and corporate law. IP law is just another tool in the box of corporate tricks to force the little guy to roll over. The describes clearly what is now the Web Casters fate.
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Thats fine with me, I'll just torrent my music now instead thanks Mr RIAA
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Hooah !!! go SoundExchange
This is a good thing !!! Yet another nail in the coffin.
Please make sure that radio stations are charged for all songs played also...
... big ole GRIN
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A creative commons license just for the RIAA
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Re: A creative commons license just for the RIAA
Anyone is free to listen to or redistribute my music provided that they do not restrict others from freely redistributing my music or in any way try to charge for the redistribution of my music by others. Any attempt to do so could lead to a lawsuit where you will owe the license holder of this song up to $10,000 as permitted by law. This music may also be freely played on the radio (including, but not limited to, terrestrial radio, XM radio, and Internet radio) and in restaurants and anyone who attempts to collect money for playing this music on my behalf will be subject to $10,000 fines. This license must be redistributed with my music and anyone is free to make derivatives of my music but those derivatives must be released under the same license.
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Re: Re: A creative commons license just for the RIAA
Specifically, the license I would like should impose a $10,000,000 fine on SoundExchange in case it attempts to collect royalties on my behalf paid by services making ephemeral phonorecords or digital audio transmissions of sound recordings, or both, under the statutory licenses set forth in 17 U.S.C. 112 and 17 U.S.C. 114 or if it attempts to distribute the collected royalties to me pursuant to 17 U.S.C. 114(g)(2).
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The sound of silence...
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I will keep up my financial support for Soma.FM
And if anyone of those labels start crying about "Think of the poor artists." I'd suggest they do the same, and sell off their cars and second and third houses, and give that money to those 'poor' artists.
BTW, MTV Cribs is really a nail in the coffin of that argument. "Poor" artists indeed.
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we have 0 chances of being legit as we're not addressed in these new rates or hell even in soundexchange's policies; we're considered that same as big inet radio (live365, pandora) when we're not 'big' or don't earn anything nor charge a fee.
the whole thing is stupid and lame beyond madness.
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http://twit.tv/twil25
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backfire...
BTW, I'm curious... if they have to pay per track, do they still have to follow radio playlist rules?
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Hold on everyone
Ironically, I had to go SoundExchange's own site to find this tidbit, which I didn't see in any of the blog posts on this:
"Are all pureplay webcasters required to sign?
While this offer is available to all qualified commercial pureplay webcasters, they can opt not sign, and instead pay the prevailing CRB-set rates. Rates for 2011-2015 will be set in a pending proceeding."
In other words, this particular deal - the $25,000 fee with the percentage royalty structure - seems to be an opt in sort of deal designed specifically for Pandora and other large companies that cannot, because of their huge volume, afford the traditional rate structure. It may not, therefore, be the end of the line for indie stations if I am understanding this correctly.
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