Yesterday marked a significant day for the music industry, especially for those that broadcast music to users on the Internet. Designated as the official national Day of Silence, thousands of Internet broadcasters around the nation went silent for 24 hours. The demonstration was part of a larger movement to protect broadcasters from being subjected to royalty hikes.
Online broadcasters state the industry is at risk of collapsing because of the new royalty regulation. SoundExchange, the organization responsible for lobbying the new regulations state otherwise, indicating that the new rates are fair and are necessary to compensate music artists.
SoundExchange chief executive officer John Simson spoke out for the organization earlier this year. According to Simson, "rates are fair" and the proposed legislation to nullify the May 2, 2007 ruling of the Copyright Royalty Board (CRB) would hurt artists. SoundExchange said in a statement that if the bill passes, "artists would have to write checks to cover refunds to corporations whose CEOs and top executives are paid millions of dollars per year."
While Simson complained that the Internet radio bill was retroactive, the CRB's ruling too is retroactive. Besides the higher fees, broadcasters will be forced, by law, to pay for music that was streamed to users even before the new law was conceived, citing that with or without the CRB ruling, online broadcasters owe money to artists.
SoundExchange continues to march forward with backing from the Recording Industry Association of America (RIAA). Both organizations have said in the past that the music industry and artists suffer from the lack of revenue. According to Simson, small webcasters account for only two-percent of Internet radio revenue and the new changes won't affect them. Simson mentioned that those against the changes are mainly "mega-multiplex services like AOL, Yahoo!, Microsoft and Clear Channel, which will benefit from rates substantially lower than those set by the Librarian of Congress in 2002."
"Because the bill is so heavily favored to enrich the big webcasters, it raises the question as to who is really behind the SaveNetRadio Coaltion," said Simson.
SaveNetRadio is an organization made up of a number of artists, labels, listeners and webcasters who all believe that SoundExchange and the CRB ruling jeopardizes online radio. Many independent artists believe that online radio is the most important way for them to be heard without being part of a major label.
"Internet radio has allowed IronHorse to bring its music to the public. We do not have a label and therefore our chances to get on regular radio are nil. We have increased CD sales and have acquired a European following," said IronHorse, an independent band.
Online broadcasters issued statements of their own, indicating that the music industry already has what it wants and now is just going too far."Webcasters want musicians to be compensated. For years we've even accepted the fact that we pay far higher rates than other forms of radio. What we want is a rate that properly remunerates artists, but also allows this medium to thrive. That is doable, and it's a win for everyone," said Tim Westergren, founder of Pandora.One major issue for broadcasters is that many of them already pay separate royalties to music publishers and songwriters. With the propose fee reaching up to 0.19 cents per play in 2009, broadcasters and critics are complaining that the rates are unacceptable because there are yearly increases to the rates.While Internet radio faces its own battle with the music industry, traditional radio has its own war to wage as well. Last month DailyTech reported that the RIAA proposed legislation that traditional radio have to pay extra royalties. According to RIAA chief Mitch Bainwol, music creation is suffering a decline in sales -- not due to a decline in music quality but due to the lack of revenue.Without a doubt, those representing music creators are fighting for something entirely different than those that make artists famous. National Association of Broadcasters chief David Rehr previously stated that the current system actually benefits both sides of the industry."The existing system actually provides the epitome of fairness for all parties: free music for free promotion," said Rehr.Despite the obvious, the RIAA and SoundExchange plan to march forward, whether or not Internet broadcasters go silent or listeners oppose."The time comes that we really have to do this," said Simson.
quote: SoundExchange said in a statement that if the bill passes, "artists would have to write checks to cover refunds to corporations whose CEOs and top executives are paid millions of dollars per year."
quote: Both organizations have said in the past that the music industry and artists suffer from the lack of revenue