(Editor's Note: Paul R. Gathard is president of Barnabus Road Media, a company that provides streaming radio services to several hundred commercial radio stations throughout the United States, Canada, and Europe, as well as several internet-only radio stations. Mr. Gathard has also served as an advisor to Small Webcaster Community Initiative. As such, Mr. Gathard is in a unique position to understand the needs of both commercial and non-commercial webcasters, and has proposed a royalty solution he sees as reasonable as it is equitable.)
I am sending this open letter to the general membership of
the Recording Industry Association of America, or RIAA. My appeal is to all
members of the RIAA, including its directors and officers.
It is my belief the RIAA does and can further influence the
Board of Directors of the Performance Rights Organization, or PRO, called
SoundExchange. I ask your thoughtful consideration in the rescue of thousands
of small webcasters subject to the Copyright Royalty Board decision of March
2007. Webmasters who, by virtue of this new, unexecuted CRB rate structure, will surely
wither and die upon it being made retroactively effective back to January 1,
2006.
I too believe all webcasters should pay copyright royalties
based upon the amount of music listened to by the public over the internet. I
further believe all webcasters should pay the same copyright rate for an hour
of music played whether it is broadcast by a for-profit or
not-for-profit business organization. Further, the revenue of the webcaster
should have no bearing on the copyright rate that applies, as this tends to
create a loophole for some webcasters to pay only the annual minimum copyright
fee.
Artists and record labels should receive fair compensation for
their creative and financial investment that most webcasters use to attract and
retain an audience. I firmly believe the fairest standard would be to have one
set rate for each hour of music played, using the Aggregate Tuning Hour, or ATH,
method as the standard technical means of reporting and
being the most easily usable method by webcasters of all sizes.
The problem with the CRB ruling of last March is primarily
that the copyright rate issued will dramatically be in excess of the gross
revenue of 90% of all webcasters operating in the United States. I suggest the
following rate schedule, which would produce adequate revenues from the largest
webcasters, and by virtue of a substantially smaller annual ATH, not bankrupt
smaller webcasters:
- The copyright royalty fees used to cover SoundExchange’s
administrative expenses should be a combination of one flat $500 annual fee per
website provider with a component of the royalty rate used to cover the volume
aspects of handling larger webcasters where auditing and other expenses may be
required.
- I would leave the 2006 reporting and fees paid as an
already completed transaction, meaning there would be no retro-payment to or
from SoundExchange for 2006 royalty payments. The new 5-year rate period would
be from January 1, 2007 until December 31, 2011.
- Rates
first apply against the minimum annual fee and then any webcasts over a monthly ATH
threshold produce additional payable royalties as suggested below.
- No loopholes or exceptions.
- A new omnibus webcaster copyright royalty rate schedule, suggested as follows:
Current CRB Rates ($ per performance) | Proposed Rates ($ per ATH) |
Year | Rate | Year | Rate |
2006 | .0008 | 2006 | -- |
2007 | .0011 | 2007 | .00028 |
2008 | .0014 | 2008 | .00031 |
2009 | .0018 | 2009 | .00033 |
2010 | .0019 | 2010 | .00035 |
2011 | Unknown | 2011 | .00038 |
A rate structure featuring one rate applied to all webcasters
for each hour of ATH cannot be argued as being unfair when applied to all types
and sizes of webcasters. Artists and record labels will be paid, across
the board, the same fee for each hour of ATH played no matter what.
Although the suggested rates are lower than what the CRB
imposed upon commercial webcasters, the rates are in line with what the CRB
used for non-commercial webcasters below the monthly ATH threshold for the year
2006. I think these proposed rates recognize some element of the beneficial music
promotion and advertising provided by webcasters, and that these rates will actually generate more revenue to RIAA
members than the rates that surviving post-CRB webcasters would currently pay.
There are no restrictive barriers to webcaster growth or loopholes in this rate structure and it will keep bad business models from escaping the righteous payment of royalties for each hour of ATH digitally transmitted over the internet.
How can the recording industry be perceived by the public to
be good and wholesome if it ruthlessly causes the demise of the internet radio
industry? If nurtured with low
copyright royalty rates, Internet radio will grow and become more prosperous,
but killing internet radio before it has a chance to prove its worth makes little sense.
Make those playing your music pay something, but do not make
the price of your product so high that webcasters will not dare the financial risk
of signing up with SoundExchange. Don’t push edgy webcasters into illegal
piracy when lower copyright royalty rates would have provided an equilibrium point and lowered their financial risks.
Sincerely,
Paul R. Gathard, President
Barnabas Road Media, Inc.
