Sunday, The Beginning of the End for Internet Radio
July 13, 2007 4:24 PM
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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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7/15/2007 1:17:42 AM
1. Illegal File sharing will increase.
2. All the cry babies saying they don't get paid for their songs still won't get shit, because their sorry ass closed down all the stations.
3. Music such as the style Techno and Trance are often distributed by the artist them selves to be publically played and recognized, since the song is digitally created and usually guitar or no instruments are used what so ever.
4. Charging per listener and per stream, what is wrong with these guys, first of all the bandwidth only costs XX amount and they want to charge triple digits? and .10 cents a song, i rather take my chances illegal file sharing then using IP blockers.
UNITED STATES are just bunch of capitalists dumb f**ks that thinks the world revolves around them, not saying all Americans should be pointed guilty, but A LOT are ridiculously with their head up their ass thinking about money.
now it becomes two monsters on music, RIAA and SoundExchange, way to go.
I'm for online radio, and i enjoy listening to a stream all day at work to keep my self entertained and out of stress.
screw if im completely wrong, its just what i think.
7/15/2007 8:02:00 PM
Woah, woah. Before you criticize us Americans for our "capitalistic ways", I should point out that the situation we have today with the music industry arose largely as the result of governmental interference -- DMCA, and now rate setting for online broadcasters. Whenever the government gets involved, you can be sure that the result will be economically less desirable. This is why I'm not a fan of big government.
"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer
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