A candid look at Internet radio royalties from the inside
(SoundExchange's recent royalties mandates are set to induce massive changes in the fledgling world of online radio. In an effort to better understand precisely what these changes may bring, I
have asked two vastly different webcasters for their thoughts. Our first respondent is Jason Wohlstadter of Proton Radio,
an independent webcaster that specializes in electronic music and
features a variety of programs and features around the genre. Jason is
responsible for a large part of Proton Radio's back-end operations,
including the management of Proton Music, Proton Radio's music label.)
DailyTech: First, can you describe Proton Radio? What is its purpose, and how does it fit into the overall landscape of online broadcasters?
Wohlstadter: Proton Radio is an electronic/dance music radio station that specializes in exclusive mix shows (60-80 minute continuous, uninterrupted music) from international and domestic resident and guest DJs. Our purpose is to unite and promote our niche genres of electronic music: progressive house, breaks, techno, electro and others. Unlike most radio stations, we offer our services not only as a live broadcast but also on-demand. Subscribers can tune into archives of over 5,000 episodes.
DailyTech: What is your opinion on the old and current royalty systems? Do you believe they are/were fair to all parties involved (artists, stations, labels, et al)?
Wohlstadter: The music played on our station is very much under the radar -- the underground labels we feature are almost entirely run by hobbyists. Songs are rarely copyrighted or published properly, so we actually don't have much experience dealing with intermediaries such as ASCAP or BMI. Instead we interface directly with the labels and artists who see Proton has a lifeline of promotion for sales of their music.
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.
When we were approached by ASCAP a few years ago we sent them a list of some of the artists we play and we never heard back from them. In all honesty, Proton will sooner handle paying royalties to labels directly rather than going through a 3rd party. If they were to come back to us, tell us which artists that we play are registered with them, we'd be happy to oblige. But I don't know if its worth their time since so many of our artists are unregistered.
As for the new system, Kurt Hanson of RAIN estimates that the rate increase is around 400% ... that's pretty rediculous no matter the reasoning is.
DailyTech: Compared to the old royalty rates, how will the new CRB rates affect Proton radio?
Wohlstadter: If things go sour and Proton gets targeted -- which may very well happen -- our goal is to have contracts in place with the 3,000 or 4,000 or so labels that are played on our station so that we can work deals directly with them rather than deal with 3rd parties such as ASCAP, BMI and SoundExchange. And if things get really bad we'll just stop broadcasting, and instead offer our music On Demand only or at the very least from labels that we have deals with.
DailyTech: How well do you feel that stations like Proton
Radio were represented in the CRB's process to change royalty rates?
How well do the changes serve everyone's best interests?
Wohlstadter:
Actually, I haven't been following it too closely. That may be naive on
my part, but as we work with very directly with the labels and have
never had any issues, I'll be watching to see what happens to the likes
of Pandora and KCRW.
DailyTech: There is a lot of concern that the royalty system is unfair to independent stations that may broadcast music that is both registered and unregistered with SoundExchange. How does the CRB handle this? Given the nature of electronic music, Proton Radio must see a lot of both. Will webcasters be forced to pay royalties for all music broadcasted?
Wohlstadter: The crazy thing that I've read about the new rates is that SoundExchange can collect royalties for music that isn't even registered with them. I can see how this might be a good thing for a lot of artists. But I know most electronic music artists are not even based in the states, and would have neither the time nor energy to figure out how to get their money. I'd rather just pay the labels directly.
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 we might have to SoundExchange.
DailyTech: Many webcasters fly "under the radar" and do not participate in SoundExchange at all. Together, everyone forms an ecosystem that, like any other, can be fragile. Do you see this ecosystem being disrupted by the CRB? What do you see happening to the rogue/independent stations that do not comply with the new CRB ruling?
Wohlstadter: Well I guess Proton would be a rogue, under the radar webcaster. But if our solution, direct label deals, is a viable one I think in the long run it will be better for everyone. Artists will get paid, labels will get more attention from the stations, and the stations will be playing music from labels/artists that want them to. I don't know how disruptive the CRB hearing will be for us personally, I will keep my eyes on Pandora and the other big guns, before freaking out -- but I will also use it as kick in the behind to get in gear and properly establish legal approval from all of our labels to play their music. Since they highly value the role we play in the ecosystem, its never really come up before, but it would be good to have.
"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive
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