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Increased royalty fees may force some internet radio stations to shut down

Over the last year, the online music industry has been in what many call as a major shakeup. Music artists and labels represented by SoundExchange say they are being treated unfairly, receiving less than a fair amount of money being generated by online radio stations. SoundExchange has been lobbying Congress over the last year to force online radio stations to pay for or pay higher royalties for songs played.

Working closely with Congress, SoundExchange has successfully convinced the industry that increased royalties are a necessity. The D.C. Circuit Court of Appeals has declined to put a stop on increased royalties. This Sunday, Internet radio stations will be slapped with a bill forcing them to pay higher royalties going forward and pay for music aired in 2006. By 2010, royalty rates will nearly triple what stations currently pay. Stations will also incur an annual fee of $500, but the annual fee hasn't been fully worked out. SoundExchange is unsure if it wants stations to pay $500 per station or per channel.

"This is just about the artists getting paid fairly. Artists and labels just want a fair share of the pie," said Richard Ades, a SoundExchange representative.

Late last month, many online stations banded together for a single day of silence, marking their stance against SoundExchange and its demands. Called "Day of Silence," the move created public awareness about how damaging the new proposed royalties could be. Despite the demonstration, SoundExchange chief executive John Simson said, the "rates are fair."

Tim Westergren, founder of Pandora, one of the largest Internet radio companies, said, although his company is able to pay for the new royalties he and his company would not go down without a fight. Pandora along with Yahoo, Rhapsody and Live365 represent the four largest Internet radio companies today. Whether large or small, all types of broadcasters will be affected. SoundExchange said it has taken this into account. Small and non-profit broadcasters will have a royalty cap of $50,000 per year -- still a very large amount.

"Nobody wins when Internet radio gets shut down, including artists who ostensibly are being represented by SoundExchange, the organization pushing for high rates. It's ironic. If SoundExchange gets their way, it means less money for musicians because people will cease to pay royalties all together," Westergren said.

Even with the cap, small broadcasters are still in distress. Michael Clark, owner of two small stations said that after Sunday, he would owe roughly $14,000 USD just for the holiday season of 2007. As for all the music that his station broadcasted during the 2006 year, Clark will owe $8000 on Sunday. One of Clark's stations already closed down because of the new changes and he was unsure of what to do after Sunday, he said.

Jake Sommers, owner of a similarly small station that plays jazz faced similar decisions and consequently closed down his station. Jazzplayradio.com closed on April 30th of this year when Sommers realized he would have to pay $2000 per month to keep his station of 20,000 listeners afloat.

"We never made a dime. It was a labor of love. Everything we made we put right back into radio station. It was a bunch of trumpet geeks playing music for other trumpet geeks," Sommers said.

As Patty Smyth once sang, "sometimes love just ain't enough."


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RE: Chicken little
By RaisedinUS on 7/14/2007 10:26:53 AM , Rating: 5
A bunch of people running around claiming that the sky is falling when, clearly, this just means that the free ride is over.
Free ride? We already pay a license fee per month for the listeners we have. We also spend a lot of money for quality bandwidth not to mention software and buying Cd's. How many hosting services are going to get hit because they have no one to buy the expensive bandwidth they bought to sell? Most have to sign a lengthy contract for Os/Ds/T3 lines.
Your "free ride" argument is stupid and uninformed. I wished the world was as candy coated as you think it is.
As anyone knows, MORE government isn't a good thing.


RE: Chicken little
By wordsworm on 7/15/07, Rating: -1
RE: Chicken little
By RaisedinUS on 7/15/2007 11:33:46 AM , Rating: 3
If you read these posts, you would see I already have. Perhaps a little more reading on your part would reveal that answer.
More good government is always a good thing. Wrong again. Almost everything the government gets into, they screw it up with more people, more salaries, more red tape more BS then more taxes to pay for the bloated service they provide. They quickly loose site of the original goals and add more rules and regulations, then it balloons out of control.

One again you idiot, what free ride? We already pay a monthly license fee per listener. What do terrestrial stations pay? What do satellite radio pay? Why does the government have to compensate artists? If they suck so bad that they aren't making money, they need a new field of work. You honestly think they make the bulk off their cd's?
If Yahoo tells me next year that I will have to pay an additional $1.20 on top of the $70ish I paid this year, I will pay it without feeling much of an impact. Next they will tell you to die and ride the comet. Will you comply?


RE: Chicken little
By peritusONE on 7/15/2007 11:51:33 AM , Rating: 1
quote:
Next they will tell you to die and ride the comet. Will you comply?

A bit of an extreme comparison to paying an extra $1.20, dontcha think?

The simple fact of the matter is that people own the rights to the product you are broadcasting. Regardless of what you think, they have the right to charge more for said product, and you must comply. This doesn't come down to good government or bad government, it comes down to current law. It seems to me that since internet pirates (and on the other hand, those who want to pay for music, but just at a severely discounted price) have been argueing about this for the past 7-8 years now, that you guys would figure out a different arguement. You are not going to stop the big record labels, so why not come up with something on your own? It's a big enough community of you guys, use your brains instead of whining all the time.


RE: Chicken little
By RaisedinUS on 7/15/2007 12:10:20 PM , Rating: 3
The simple fact of the matter is that people own the rights to the product you are broadcasting
You totally miss the point. We PAY the license fees that we are required by the RIAA to pay.
Same as you going to buy your favorite brand of CPU and realizing it's now $3000. And next year without notice they will charge you an additional CPU cycle charge of $.10 per CPU per machine.
The point is a FAIR charge not this BS charge they are trying to get through. This is really about shutting down internet radio. If you can't see that, you are blind.
use your brains instead of whining all the time.
Nice, but you came in and whined about: A bit of an extreme comparison to paying an extra $1.20, dontcha think?
But that's ok. If the RIAA rams this bill through, every internet user will suffer in the long/short run. This will leave the door wide open for more taxes on the internet and all your purchases from New Egg. It can't happen? Watch and see.
It seems to me that since internet pirates (and on the other hand, those who want to pay for music, but just at a severely discounted price)
It seems you are implying all internet radio stations mooch music. I have a huge CD collection I have built since CD's first came out. Yes, I actually BOUGHT them and I pay the license fee each month to play them. I think you need to remove your rose colored glasses for a bit and see what's really going on. But, you do have blurredvision.


RE: Chicken little
By wordsworm on 7/15/2007 1:02:36 PM , Rating: 2
I seem to recall that RIAA is in the process of collecting revenue from traditional radio broadcasters http://arstechnica.com/news.ars/post/20070522-riaa...
You're acting like a spoiled child. The breakdown of the fees were mistaken in at least one category.
quote:
It isn't just a $.10 charge per song
It's 10 cents per listener per month that's cited in this article. That's a nominal fee.

quote:
ride the comet
If the gas station starts to charge more per liter, we must pay it. If oranges suddenly become more expensive, then if you want oranges, you must pay more. If you want to listen to music, or become a music provider, then we're just as responsible for the increased costs.

Your logic is harmless against my arguments, your insults
quote:
you idiot
juvenile,
quote:
It isn't just a $.10 charge per song
is fallacious (from Tuan)
quote:
Sommers realized he would have to pay $2000 per month to keep his station of 20,000 listeners afloat.
That's 10 cents per listener per month. That's not 10 cents per song. I have no doubt but that Sommers' listeners listen to more than a single song each.

Having to pay more makes things more complicated, granted, more expensive, also granted. However, the fees requested are extremely reasonable. I'm curious, you mentioned in your previous article, you wrote
quote:
We already pay a license fee per month for the listeners we have.
Does this mean you have your own radio station? What's its webpage address? Would you mind if I mirrored your website and got my own advertisers? It would certainly be easier than making my own online radio station. Or would you want the government to come along and stop me from copying your work for my own ends? It's like complaining about the police when you're caught red handed, and then screaming bloody murder when, understaffed, they don't come in a timely manner to your rescue. If you compose, play, and record your own music, you're free to play it on your radio station without having to pay anyone anything. But you're copying someone else's work. Not all artists like to go on tours (ie., Portishead). They've managed to get some of their work in commercials, but should that be their only source of revenue? Or should they also get some revenue from broadcasters? RIAA is already talking about leveling the playing field by making traditional radio stations pay for the music that they play.

If the government does nothing, it is the same as letting a robbery go on and doing nothing about it. I don't want to have to pay more any more than anyone who is conscientious about their pocketbook.


RE: Chicken little
By RaisedinUS on 7/15/2007 1:28:12 PM , Rating: 2
As I have stated, the terrestrial stations pay nowhere near the fees per month as they want to charge internet radio.
This while the world’s three major copyright holders’ groups - ASCAP, BMI, and SESAC - collectively charge terrestrial broadcast radio stations $972 per year per station, for the rights to broadcast exactly the same music to an equivalent or larger audience. From:http://wiredpen.com/2007/04/03/proposed-internet-r...
quote:
It isn't just a $.10 charge per song

Read again. It's $.10 per song PER LISTENER PER STREAM. That is again: $500 per year, per stream. If you have 2 it equals $1000. $.10 per song per listener: If you have 1000 listeners that's $.10 per listener multiplied by how many songs they all listen to. If all 1000 listened to 100 songs, that's how much money???
I fail to see how this fact escapes you. Terrestrial stations do not pay this "performance" tax.

Your logic is harmless against my arguments, your insults
Your "arguments" are based in pure ignorance. As for my insult, I insult you because you are too lazy to read .
quote:
Sommers realized he would have to pay $2000 per month to keep his station of 20,000 listeners afloat.
Did you factor in the $500 per month per stream of has this small fact eluded your vast intellect as well? How many streams does he have? And you wonder why I call you an idiot.
Does this mean you have your own radio station?
Yes I do and I am NONPROFIT. And because you don't understand things well, that means I make NO money. It's a hobby. I sell no advertising, I hawk NOTHING.

If the government does nothing, it is the same as letting a robbery go on and doing nothing about it. I don't want to have to pay more any more than anyone who is conscientious about their pocketbook. Do you wear rose colored glasses too? Perhaps you and blurredvision are the same person? Again I ask:What robbery? Answer this simple question. You do realize the fees collected don't go to the artist but to the WRITERS. No, you didn't as you only want to argue instead of factually arming yourself.
Bottom line is this: Why are internet stations being charged with FAR more FEES than terrestial stations and satellite radio are being charged?


RE: Chicken little
By RaisedinUS on 7/15/2007 1:44:05 PM , Rating: 2
And to add to your stupidity, you post a link to an old article: RIAA: Radio needs to pay up

By Nate Anderson | Published: May 22, 2007 - 09:50PM CT

From the article YOU posted the link for: Most digital broadcasters in the US do have to pay these performance royalties, which is why satellite radio currently pays 7.5 percent of its revenues for the privilege of playing music. Webcasters pay a fee as well, but terrestrial radio is exempted.
And here's another juicy nugget: Radio has long paid out money to familiar names like ASCAP and BMI, but these are collection societies that represent composers and songwriters, not the music labels or the performers. Not surprisingly, the performers have often concluded that this was not an ideal arrangement and that they would prefer to be paid when their work is broadcast.
And yet another: On May 9, David Rehr of the National Association of Broadcasters sent a letter to various senators who might get involved in the issue, telling them that the performance royalty "is not a right—this is a new tax."
You are not spoiled, you are lazy.


RE: Chicken little
By Hawkido on 7/16/2007 1:03:07 PM , Rating: 2
quote:
If you compose, play, and record your own music, you're free to play it on your radio station without having to pay anyone anything.


Actually, if you read all the bills the RIAA has in flight. one of them states a universal inescapable royalty fee they wish to charge of anyone who plays any song (their own included) and you have to pay the royalty collection agency they set up (sourceforge?) to get the royalties for the song you wrote, recorded, and broadcast over a medium you paid for.

Keep this in mind: They want independant publications dead. If not dead they want independant publications to pay the established music industry for their own survival. Either you die or you pay them for something they have NO RIGHT to collect from you. Next legislators will use the laws put in effect by RIAA to attack free speech by charging royalties on talk radio, and internet talk-radio (the printing press of the internet age).


RE: Chicken little
By Hawkido on 7/17/2007 2:42:38 PM , Rating: 2
Sound Exchange not sourceforge... LOL Where'd I get SourceForge?


RE: Chicken little
By wordsworm on 7/18/2007 9:45:53 PM , Rating: 2
I see what you're saying. But it's not SoundExchange. The idea that they're putting forth is almost unbelievably reasonable. Certainly the artists should have some revenue from the webcasts. It's not just service providers renting out bandwidth that should be making a profit. The artists deserve something too, contrary to what I've inferred from RaisedinUS. The RIAA is a much different animal. I agree with you 100% about them.


RE: Chicken little
By HakonPCA on 7/15/2007 11:16:09 PM , Rating: 2
"Next year they will tell you to die and ride the comet. Will you comply?"

VERY NICE REFERENCE - to all those people trying to argue against you, please read ATLAS SHRUGGED and then you'll understand what he (or she?) is talking about!!!

AGAIN very, very nice!!

thanks for the reference, more people need to read that book


RE: Chicken little
By daemoth on 7/16/2007 12:34:23 AM , Rating: 2
People should try biting off the Fountainhead first. More story, more moving, less being clubbed over the head by Ayn Rand's Objectivist Doctrine.


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