Even after compromises from SoundExchange and the CRB, web radio broadcasters are not optimistic about the future
The U.S. Copyright Royalty Board’s new rates “would bankrupt us,” says Tim Westergren
of Pandora, echoing a sentiment reflected widely by the webcaster community.
Spurred by SoundExchange’s efforts to raise the cost of broadcasting music on
the web to what is widely
believed to be unreasonable levels, webcasters everywhere are vigorously fighting what may very well
be their end.
In a pair of interviews with DailyTech,
Proton
Radio’s Jason Wohlstadter and Pandora’s
Tim Westergren shared their thoughts on what SoundExchange’s revised royalties plan
means to them and their stations. The CRB’s rates are “disruptive for
everybody, rightsholders included: even if you increase your rates, and if it
puts those rate-paying stations out of business, then you’re going to get
nothing. These rates [don’t rely on
the] economics of web radio,” says Westergren, “so, I think it’s a terrible
ruling and one that needs to be fixed.”
“Kurt Hanson of RAIN
estimates that the rate increase is around 400% ... that's pretty ridiculous no
matter the reasoning is,” says Wohlstadter.
One of the biggest problems, argues Westergren, was that the
original talks in 1998 and 2002 were hamstrung by politics and semantics, and
as mentioned before, completely disconnected from reality. “The committee had to abide by language in the
federal statute … and that language was monkeyed with.”
“The CRB just missed it,” says Westergren, “if you read the
ruling and the rationale as it’s articulated by the royalty board and their
subsequent followup to it, it demonstrated a complete lack of understanding of
the business that we’re in. I think that there were structural problems and I
think that resulted in a really flawed decision handed down.”
Not everyone is affected equally by the CRB’s changes,
however. In the case of some independent stations that deal primarily with
underground music, deals have been worked out directly with the labels -- many
of which are run by fellow enthusiasts. Such is the case for Proton, and
Wohlstadler argues that the direct approach is far more valuable to niche
artists:
“I see Proton as one of the
main avenues of promotion for these artists and labels. We generate revenue for
them by linking show tracklists directly to store fronts where listeners can
buy songs they just heard. I believe this makes the labels more money than any
royalty would. In our niche over 5,000 songs are released a week, our station
is one of the few promotional outlets available to labels to extend shelf
life.”
Westergren also touches on the challenges from working with niche
music from Pandora’s collection of over 40,000 artists:
“We
have over half a million songs in our collection. On a daily basis, 94% of
those songs play … Of those 40,000 plus artists, 39,000 are not being aired or
have never been played on any form of broadcast radio, so it’s a real vital
channel for artists.”
The important thing to remember, both stations stressed, is
that they have no problems paying the royalties if so compelled provided SoundExchange
asks reasonable rates and existing agreements are understood.
“My hope is that
if SoundExchange comes to us requesting royalties for Artist A on Label Z, our
contract in place with Label Z would take us out of any obligations,”
says Wohlstadler. Web radio, according to Westergren, “needs to survive and it
needs to be nurtured. Not to say it gets a free pass, but as we resolve this
rate debate, we need to really keep in mind the value that it’s offering for
musicians.”
"Let's face it, we're not changing the world. We're building a product that helps people buy more crap - and watch porn." -- Seagate CEO Bill Watkins
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