Rep. Nadler Proposes The RIAA Bailout Act Of 2012
from the riaa-bailout dept
Ah, the whole fight over licensing and royalty rates for internet radio had been quiet for a little while, but has sprung back up thanks to Rep. Jerry Nadler proposing a music royalty bill that would effectively bump up the rates that cable and satellite radio stations have to pay to make them more aligned with the insanely high rates that internet streamers are supposed to pay (rates so high, and set by a group of judges who don't appear to know what the internet is half the time, that no real business can be built off of them). This is in contrast to a different, but similar, attempt by Rep. Jason Chaffetz to basically bring the internet rates back down to the same rates as those other providers.Of course, this is all somewhat related to the RIAA's ongoing push for a Performance Rights Act, which would force radio stations to pay extra royalties for when they play music. Under existing law, radio stations only pay the composers/songwriters for songs played on the air, due to the recognition that radio airplay is basically a massive advertisement for the musicians and it's silly to have stations pay the copyright holders for advertising their works. In fact, it's doubly crazy when you realize that the history of radio is filled with pretty indisputable evidence that the major music labels find tremendous value in radio play: payola. Payola is all about the labels increasing the airplay, knowing that it leads to all sorts of revenue elsewhere. But the RIAA is so insanely greedy these days that it's been begging for this form of a "bailout" for quite some time -- seeking to get radio stations to pay them for playing the same music that the labels are paying the stations (indirectly, of course, thanks to all the payola settlements) to play!
These proposals don't directly address that issue, but are clearly based on this idea. In fact, Nadler is incredibly upfront that he views taxing internet radio is his way of making up the money that isn't being collected from terrestrial radio:
“The lack of a performance royalty for terrestrial radio airplay is a significant inequity and grossly unfair. We can’t start a race to the bottom when it comes to royalty rates and compensation for artists," Nadler said in a statement. "The Interim FIRST Act would provide artists with fair compensation for the valuable creations they share with all of us."In other words, because we can't fund an RIAA bailout off the backs of terrestrial radios (thanks in part to the powerful lobbying of the NAB), we'll instead increase the existing (and already crippling) tax on the useful and innovative services that are trying to help drag the RIAA (kicking and screaming) into the future.
Pandora is, quite reasonably, worried about this turn of events, noting that this new tax would be "astonishingly unfair."
Nadler seems to think that Chaffetz's plan is unfair because it would mean lower royalties from the internet streamers, but that's a gross distortion for a few reasons. First off, it assumes a perfectly static market, which is wrong. Second, it seems to assume that the identical number of services and the identical number of listens will occur. That's not true. As it stands now, the rates are so damaging that Pandora -- the top player in the space -- has made it clear it may never be profitable. Yes, never. Nadler's bill would effectively make sure that no one else in that market would be profitable either. The end result? Many of these services don't exist or never get started. That would actually mean fewer services, fewer listeners and lower royalties.
It's almost as if he has no concept of price elasticity. Lower prices can create higher total income. Also, the idea that any particular Congressional Rep. should be (effectively) determining what the "fair" price is for anything is, well, horrifying.
If these royalties are going to exist, is it really so crazy to think that perhaps (just perhaps) keeping the rates low, to encourage these useful new services to come along and grow, might be a good thing? But, instead, the RIAA and its members are so greedy for the largest payout per music listen, that they're clearly willing to kill off useful legal streaming services like Pandora. In the long run, that's not good (at all) for the record labels and the RIAA, but they've never been particularly good at seeing beyond the price per listen.
Either way, can anyone explain just why the government is bailing out the RIAA in the first place?
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Filed Under: bailout, internet streaming, jerry nadler, licensing, royalties
Companies: riaa
Reader Comments
The First Word
“Quid Pro Quo?
All legislation is fund-raising at this point. Congress is a corrupt, ineffectual institution.Subscribe: RSS
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Because if the RIAA goes away then members of congress will be missing a good bit of money from their pockets.
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If you don't pay, then don't complain when the private RIAA copyright police bust down your door, burn your house down, shoot your pet, and fine you for composing music without having paid a copyright license on the music to be composed.
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Re: Can we just skip to the part where the artists start paying the labels to perform their own music?
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Actually, since it would go to all artists, including your friends and fellow flunkies who get their music in the air, it would seem that it's fair to all involved.
Further, let's be fair. Payola is no longer a real deal, because airplay doesn't directly lead to selling more recording anymore. It might lead to selling concert tickets or something, but unless the artist is on a label that has a 360 deal involved, it would be a painful waste of money.
Nice rant, but it shows perhaps that you just don't work in the music industry and have really no clue what is going on anymore.
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I think everyone can see exactly what is going on here. That is the problem. Corruption used to be covert.
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1. The RIAA is merely an industry association. It is not a label, but, among other roles, serves as a lobbying group on behalf of the labels. Of course, those who have business interests that may not intersect with those of the RIAA have their own lobbying groups.
2. This is merely a bill. It most certainly is not legislation passed by Congress and awaiting signature by the President. That would happen, if at all, well into the future.
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Today is Thursday.
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You have a pointed head when it comes to discussions such as this one.
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His point was that since this isn't a law, you should not get excited yet, no need to take any action. Everything is still ok.
In the future, he will post something like this:
This is merely a bill awaiting the president's signature. It is not signed yet. That would happen, if at all, well into the future.
Implied message: nothing to see here. Don't get excited. Especially no need to take any action. Stay asleep.
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This is the third time in as many days that I've seen a variation on this statement.
You see, it's irrelevant. We may or may not know the inner workings of the big label music biz nowadays, but we absolutely know what they've been doing to society at large.
That is our concern. We are concerned that they behave like honest, forward-thinking businessmen rather than what they do right now. It's not necessary to be an industry insider to recognize bad behavior and push to fix it. In fact, doing that appears to be impossible if you're an industry insider.
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My concern is the pollution of the minds of the people on here with false or at the very best misleading information.
Journalistic integrity seems to mean almost nothing to him so long s he can get on his soap box and write something controversial against the RIAA or MPAA...
I'm not a proponent of these groups. I'm certainly not here to defend them. But Mike makes it hard for me to do anything else. It's most upsetting. Oh well...I guess I do it to myself...right?
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To make it challenging, they have to have done it by themselves without going into a deal with someone (no iTunes or netflix examples)
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Then you should actually point out the false or misleading information. I don't think this was a good example of that. I'd be surprised if many people were "misled".
But 9 times out of 10, whenever some AC comes here to try and point out something false or misleading, they're either wrong or they're harping on some really minor point that doesn't affect the big picture at all.
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And yet that's invariably what you do. Now you would have us believe, in spite of that clear and consistent record, that it's just a coincidence and you really have some other, altruistic purpose? Please.
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They have nothing to do with this bill. I think Mike knows that when he writes "RIAA" people get all flustered and angry at the world...He exploits the average persons lack of knowledge of the music business and copyright law. It's irresponsible journalism...
Either that or he's unaware that the RIAA (in this case) has no interest and definitely isn't doing ASCAP and BMI a "favor" by lobbying on their behalf...
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How high those rates should be? I would never entrust any politician with such a job! Let the recording companies create their own collection societies and let those collection societies negotiate deals with the interest groups for internet radio, broadcast radio and satellite/cable radio. Then we are getting somewhere.
I would like politicians to stay as far away from national regulations in favour of record industry and instead focus on determining how to protect other groups than right holders in copyright law and make international deals with those included. I must be living in a dreamworld?
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We also tend to further generalize organized crime, mafia, MPAA and anti-piracy outfits around the world in the term MAFIAA because they fit so well.
Take it easy ;)
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I do realize that. However, it's just plain wrong to generalize ASCAP and BMI under the RIAA. They don't represent record labels...they represent artists.
If people in the comment section want to call them the MAFIAA (grow up) all power to them!
Mike, on the other hand, should show a little integrity. After all, he's a journalist, right? he's reporting on issues that mean something to him, right? doesn't he owe it to himself and his readers to not shover enriched BS down their throats?
I'm sorry, but there's no excuse for this flagrantly one sided and poorly explained article.
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Yes, although ASCAP & BMI also engage in reprehensible behavior that resembles that of RIAA et al., so it's not out of bounds to refer to them with RIAA et al as a group using some kind of shorthand.
"RIAA" isn't technically correct, and "Big Content" is too vague. What would you suggest?
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I don't call you Mike Masnick even though you often comment on his writings.
If that sounded patronizing, that wasn't my intention. I just see no reason to refer to entities as anything other than what they are. Especially because ASCAP/BMI doesn't represent record labels...at all! It's misleading for the sake of being inflammatory...uncool!
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It doesn't matter who these group represent. What matters is their behavior with regards to the world at large. And when it comes to that, they are often all operating from the same playbook. So why isn't it appropriate to refer to them collectively in that context?
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No, as Mike himself repeats frequently here, he is not a journalist.
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I apologize Mike. I'll no longer hold you to the standard I thought you aspired to. (wow...that sounded rude even though I really didn't mean for it to).
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I didn't "misunderstand". I misinterpreted because the reference was ambiguous. Mike never referred to the above Act. Had he done so, I would have properly interpreted what he meant by performance.
As I wrote bellow. When a person refers to performance royalty without any qualification, the base assumption is that they are talking about the performance of the musical work, not the sound recording. The former right predates the latter (for obvious reasons) and when unqualified, performance refers to the underlying work. This is standard.
Again, as I wrote bellow, I jumped the gun and I apologize to Mike for that. The ambiguity led to a misinterpretation on my part.
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"...thanks to Rep. Jerry Nadler proposing a music royalty bill that would effectively bump up the rates that cable and satellite radio stations have to pay to make them more aligned with the insanely high rates that internet streamers are supposed to pay (rates so high, and set by a group of judges who don't appear to know what the internet is half the time, that no real business can be built off of them)."
I see no ambuguity there. Just saying.
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Again, I was wrong...but it was ambiguous.
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The Copyright Royalty Board, which is appointed by The U.S. Library of Congress, has entrusted SoundExchange as the sole entity in the United States to collect and distribute these digital performance royalties on behalf of featured recording artists, master rights owners (like record labels), and independent artists who record and own their masters.
SoundExchange started out as a division of the RIAA and was later spun off as an independent organization; yet that "independent" organization has on its Board of Directors two representatives from the RIAA and six representatives who are RIAA members (including the four largest music labels: Sony, EMI, UMG, and Warner).
SoundExchange is a founding member of the musicFirst lobbying coalition (in a somewhat controversial situation of a non-profit funding political lobbying), which is one of the primary advocates of the "performance rights" interests.
Perhaps you could express your complaint more clearly, because Mr Masnick made no mention of either of those two collection agencies -- appropriately so, as apparently neither BMI nor ASCAP has any involvement with the collection of performance royalties on digital recording. As to RIAA involvement in that issue, there is significant evidence suggesting a connection.
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Noone is getting angry at the world, just at the dinosaur industries for acting like they do.
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You are absolutely, 100% wrong on this point. The "Performance Rights Act" stipulates that royalties get paid to performing artists, not songwriters. This is in addition to the rates paid to songwriters and publishers.
So the PRO's (BMI, ASCAP, and SESAC) are the ones who have nothing to do with these bills. Those entities those that hold the copyright on the underlying compositions. They do not represent those that hold the copyright on the sound recordings.
If this bill passes, the PRO'S get no extra money at all. All the money goes to the RIAA clients.
Grant Muller has a pretty decent take on it, here:
http://grantmuller.com/making-sense-of-the-performance-rights-act/
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Anger Management.
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I'm pissed off
I pay my monthly subscription so I should bloody well be able to skip as many songs as I want.
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Compensation for sharing??!??! Where's my compensation for all the torrents I seed?????!!!
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(waving hand excitedly) oh, i know, i know ! ! !
um, motherfucking eagle ! ? ! ? ! ?
art guerrilla
aka ann archy
eof
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There is no other reason why.
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Mike's minions are assembling around something that is wrong and ridiculous on it's face!
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Disingenuous Mike...They're not bailing out the RIAA...
Look, The RIAA is a non-profit organization. It isn't them getting "bailled out"...
Also, the RIAA has nothing to do with performance rights...That's ASCAP and BMI. come on!
On the substantive issue, I don't know that this law is a good idea. I'm also not sure that it's a bad idea.
We have a model here in Canada where copyright collectives apply to the Copyright Board for tariffs on different types of uses. Radio broadcast (as well as Internet radio broadcast) are covered by tariffs and wouldn't you know it, our radio stations are still alive!
The reason why this may not be the worst idea is because while imperfect (and I have my criticisms of them), collective licensing societies usually get a large part of their revenue to the artists. These royalties are accrued independent of how favorable or unfavorable your record deal is.
Collectives like ASCAP and BMI should be able to collect for the performance of their catalog on the radio. I mean...why not?
Why would the RIAA be lobbying for a "Performance Rights Act"? THEY DON'T COLLECT PERFORMANCE ROYALTIES!
You have to inform yourself a little better Mike. This one is just sad...
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Re: Disingenuous Mike...They're not bailing out the RIAA...
Performance royalties are collected by SoundExchange (spun off from the RIAA and still very much their buddy) and a lot of that money ends up in the pockets of labels (e.g. RIAA members)
And you can debate whether or not it makes sense if you want, but it's true -- the number-one lobbying force behind the PRA is the musicFIRST coalition. Its key founding member? The RIAA.
http://www.musicfirstcoalition.org/supporters/coalition
Not as sad or uninformed as you think.
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Re: Re: Disingenuous Mike...They're not bailing out the RIAA...
SoundExchage does administer performances of SOUND RECORDINGS (not the underlying musical works).
Does this draft bill remunerate the sound recording makers or the musicians/song writers?
I can't get a text of the draft bill so I can't tell. But Mike certainly hasn't made that clear. Everything I've read so far leads me to believe that it would be ASCAP/BMI administering these royalties, not the RIAA ro SoundExchange.
If you say "performance royalty" without qualifying it, it leads one to believe your talking about performance rights on the composition. But of course Mike didn't specify that either.
At best, this is confusing, at worst, it's disingenuous.
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Re: Re: Re: Disingenuous Mike...They're not bailing out the RIAA...
The original Performance Rights Act is easily found. Here is the full text:
http://www.govtrack.us/congress/bills/111/hr848
It was about the public performance of recordings, summarized well by Wikipedia:
Under the [existing] Digital Performance Right in Sound Recordings Act, sound recordings have a limited public performance right in digital transmissions, such as webcasting.[2] This bill would expand the performance right to cover terrestrial broadcasts, such as AM/FM radio.
Those royalties are collected by SoundExchange. That bill's biggest backer was the RIAA, largely through musicFIRST. You can also see them supporting it on their own blog:
http://www.riaa.com/newsitem.php?id=7BE7264B-5BC4-C823-777D-73D5B410805A
Nadler's new bill is not identical, but accomplishes much of the same stuff -- and is still expanding recording royalties collected by SoundExchange. It is, of course, also strongly backed by musicFIRST:
"The only real solution is for Congress to create a legal performance right, but raising terrestrial radio’s digital royalties is an important interim step towards that goal. By effectively reimbursing performers for lost income, Rep. Nadler’s draft legislation recognizes the injustice of denying fair pay for airplay," said Ted Kalo, executive director of the musicFIRST Coalition, in a statement. "The discussion draft proposes a 21st century marketplace standard that treats artists and platforms fairly and equally."
Perhaps more of this background information could have been included in the post but, as you can see, it's all out there -- and the conclusions you've jumped to are incorrect.
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Re: Re: Re: Re: Disingenuous Mike...They're not bailing out the RIAA...
You're right and I was wrong. It is about the performance of sound recordings. Although, quite frankly, I wasn't the one reporting a story here.
Like a lot of other people, this post confused me. I read every word twice and looked at all the sites Mike linked to. I also did a search of my own. It seems the other sites that have covered this issue wrote much the same thing as Mike (hence why he cites them but doesn't add anything).
I've read the text of the old proposed act. You're absolutely right, it covers performances of sound recordings. But you must understand that this article was totally ambiguous. How is one supposed to know? When I hear the term "performance royalty" without any further qualification, it means performance of the musical work, not the sound recording. There are historical reasons for this...one significantly predates the other.
I'm a big boy and can admit when I jump the gun. That said, my original criticism remains valid!
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Re: Re: Re: Re: Re: Disingenuous Mike...They're not bailing out the RIAA...
All of his subsequent comments further indict him as a troll. He states that he read the article twice, read all the links provided in the article and then 'did his own search'. In other words, he had little or no information on this topic prior to reading Mike's article, then only after reading it, sought to disprove it and proceeded to draw both mis- and un- informed conclusions on the topic while accusing Mike of doing the exact same thing. His comments continuously claim Mike's article is ambiguous while ambiguously citing the reason as a difference between acronyms of organizations, a minor point to the larger topic. Finally, he admits to his error, only after being called out, but does not cede his point, instead choosing outright denial and maintaining his 'victory' (grow up).
From Wikipedia: Troll (Internet): In Internet slang, a troll is someone who posts inflammatory, extraneous, or off-topic messages in an online community, such as a forum, chat room, or blog, with the primary intent of provoking readers into an emotional response or of otherwise disrupting normal on-topic discussion.
Therefore, with no power whatsoever to do so, I both create and present this commenter with the Repentant Troll Award. "Because its one thing to troll then repent but its a greater feat to troll and repent whilst still trolling."
That said, +1 for not being an AC and I forgive you.
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Quid Pro Quo?
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More Inequity
It's not fair that people can see it for free.
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Hm.
I have sort of a chicken-22 going on here.
I actually need to sell some artwork so that I can in turn invest in some legislation so I can sell more artwork, etc.
But thanks for the tips.
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Voila, instant cash for no real work needed!
And now to see how many trolls I can sucker in to agreeing before this last line.
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Weird Math
It looks like record label folks and the people at RIAA went to the EA School of Business Mathematics (yes the game company). Where else can one learn that it's better to have 1 person $100 than for 1000 people to pay $10?
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Silly wabbit
Campaign contributions.
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Its a new tax on all newborn children. Said child may here some music at some point and they did not pay for that music. This tax is levied against the parents and should be equal to no less than 10% of the fee paid for said birth.
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I likewise await the Bourne Music Tax. We all have to pay it, but none of us can remember what it was for, yet it continues to kick our ass....
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Notice how I used the magic phrase on the internet it certainly adds weight and credibility to my demands these days.
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Also, the Interim FIRST Act will require artist distributions to go to SoundExchange as presently written. The Performance Rights Act also required this.
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The current royalty structure requires webcasters (as well as cable and satellite radio) to write checks to ASCAP, BMI and SESAC while writing a separate check to SoundExchange. SoundExchange currently takes a percentage of the royalties paid for "administrative functions" and splits the remainder 50/50 between the artists and the record labels.
The Interim FIRST Act doesn't change the mechanics of the royalty payments. It simply changes the standard used to determine what those payments will be. Section 801(b) requires, among other things, to consider damage done to the industry. Interim FIRST would put everyone on the "willing buyer/willing seller" standard, which is guaranteed to substantially raise everyone's rates.
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Solution
Then there content will be more valuable to them, when they release a movie they can charge a minimum of $50 for the dvd and up the price for an e-book to $20 and a music track to $5. Yes they will lose a lot of customers but hey if they cannot afford it they do not have to consume it.Most if not all radio stations will be unable to stay onair with the costs involved so it will make space for others to improve there signal, there will be no internet radio's but hey why have them, let the content providers up the prices so high that only a minimum amount of people can afford it.
We should have left the studios to change the laws exactly as they wanted and let them destroy themselves, at least then they would be half dead by now and maybe realise that the customer holds the purse strings.
And yes some people would pay for the content at a raised price, maybe not many but there are a good few families that could afford to buy 20 tracks a month or a few movies to watch a month. They might lose 90% of there customers and have to close 90% of the theatres but hey they will still be making money, and the 90% of the population that cannot afford there content will look elsewhere and I am sure find other forms of entertainment to entertain themselves with.
I think the big mistake we keep making is even considering the studios and artists, I mean they just want our money, they don't care if we can afford to pay, they only want the rich to consume there content , well I for one say let them do what they want, we will all still torrent things we really want to consume, they will get the high prices on there music, and everyone will be happy.
I don't know why people are so interested in the studios getting a better business model which involves free, leave them to it , they will soon hang themselves if we give them enough rope.
We should be calling for them to be allowed to change copyright as they see fit, exactly how they want. I mean most of the population disregards copyright now as being unfair so why encourage them to make it better, let them do what they want , don't advise them don't discuss it with them, just torrent whatever you can't afford and everyone will be happy, just don't let them try to take my freedom away from me, my freedom to share with others and all will be fine.
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So how much...
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It makes almost as much sense as voting in Sheriffs, etc...
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Yep:
http://www.theonion.com/articles/riaa-sues-radio-stations-for-giving-away-free-mus i,48/
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Which of course means nothing will be given back to the public or to the people who actually paid for their continued existence, bravo USA.
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Y'all asked: "...can anyone explain just why the government is bailing out the RIAA in the first place?"
I mean, the banks did it; why shouldn't they?? It's all free money, they have a right to steal it too!!
Yeah, right. It might be time to sharpen those pitchforks...
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Royalties straight to Musicians
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