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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. 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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By adam00 on 7/17/2007 5:07:51 PM , Rating: 2
well, i'm not going to respond to most of your post because its just rant, but a few points...

You know nothing about statistics.
"Sampling rate" is completely irrelevant. The only thing that matters is sample size. To say that 3000 cannot "speak" for 57 million just shows your willful ignorance.
Yes, 3000 can "speak" for 57 million. Its not "my problem," its statistics. Its like I've told you the sky is blue and you say its not. It doesn't matter what you believe, its math.

As for your example with the exit polls with Bush, the percentages did not say that Bush would lose... why? Because of the margin of error. When a poll says Bush 45% and Kerry 47% with a 3% margin of error... that poll doesn't say anything. Bush or Kerry might actually be ahead because of the error margin involved. Now, if a poll said Bush 38% and Kerry 51% with a 2% margin of error that would be a different story.

we have no idea who they questioned. Was it a few retirement homes? The elderly? I do not trust polls if they can't verify the information and none of you should.
If you had read the whole article you'd know it was done by random telephone calls.

From the website:
*Sample = 3000 consumers 12+
Methodology: Random digit dial telephone interviews, one person per household.

Again, you don't know because you are willfully ignorant. Yet, you arrogantly tell the rest of us what to do.


Must be nice to be so above everyone else
Not everyone, just you. I do NOT mock the uneducated or uniformed. I DO mock those that claim as definitive a fact when they are wrong, especially in the case of willful/intentional ignorance. It is not just your stupidity, but your unjustified arrogance that earned you an intellectual thrashing by my hand.

Raised, respond, if you wish to placate your decimated ego. But, I don't really care, you've proven yourself to be an pathetic child who invents what he does not care to learn. Anyone who listens to you at this point deserves to be misinformed. I am finished with you.

"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer

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