Jesse "Doc" Wendel: "The Day The Music Died"
Buddy Holly good. RIAA awful.
Thanks to Doc Wendel for this great and IMPORTANT reminder why the RIAA blows - THANKS DOC!
THE RIAA KILLS INTERNET MUSIC WEBCASTS
THE DAY THE MUSIC DIED or
The Sony Betamax Case -- Part 2 (The Bad Guys Win)
By Daniel McSwain
The Copyright Royalty Board (CRB) has announced its decision on Internet radio royalty rates, rejecting all of the arguments made by Webcasters and instead adopting the "per play" rate proposal put forth by SoundExchange(a digital music fee collection body created by the RIAA).
RAIN has learned the rates that the Board has decided on, effective retroactively through the beginning of 2006. They are as follows:
$.0008 per performance
$.0011 per performance
$.0014 per performance
$.0018 per performance
$.0019 per performance
A "performance" is defined as the streaming of one song to one listener; thus a station that has an average audience of 500 listeners racks up 500 "performances" for each song it plays.
The minimum fee is $500 per channel per year. There is no clear definition of what a 'channel' is for services that make up individualized playlists for listeners.
For noncommercial webcasters, the fee will be $500 per channel, for up to 159,140 ATH (aggregate tuning hours) per month. They would pay the commercial rate for all transmissions above that number.
Participants are granted a 15 day period wherein they have the opportunity to ask the CRB for a re-hearing.
Within 60 days of the final determination, the decision is supposed to be published in the Federal Register, along with any technical corrections that the Board may wish to make.
Within 30 days of publication in the Federal Register, it can be appealed (but only by the participants) to the U.S. Court of Appeals of the District of Columbia.
Because a typical Internet radio station plays about 16 songs an hour, that's a royalty obligation in 2006 of about 1.28 cents per listener-hour.
In 2006, a well-run Internet radio station might have been able to sell two radio spots an hour at a $3 net CPM (cost-per-thousand), which would add up to .6 cents per listener-hour.
Even adding in ancillary revenues from occasional video gateway ads, banner ads on the website, and so forth, total revenues per listener-hour would only be in the 1.0 to 1.2 cents per listener-hour range.
That math suggests that the royalty rate decision — for the performance alone, not even including composers' royalties! — is in the in the ballpark of 100% or more of total revenues . —KH
HOW TO TAKE ACTION
1. Sign this online petition and open letter to the US Congress.
2. Send an email to your members of Congress. You can use our suggested text, or write your own.
3. Print out the email (you'll get a copy) and mail it to your Congresspeople. Follow up with a phone call. You can look up their addresses and phone numbers here .
4. Write a letter to the editor of your favorite magazines and newspapers. If you know someone in the media, let them know what's going on. Have them read my post below, if you like.
5. Don't panic. Together we can save the medium that we all love. We have the passion to make it happen!
The View From Paradise
I'm Bill Goldsmith, and my wife Rebecca and I have spent the last seven years of our lives pouring our hearts, minds, and financial resources into . We are now faced with the very real possibility that all of our efforts will have been in vain, and that the thousands of people who are devoted listeners to our station will have it snatched out of their lives.
I have been in love with radio all of my life, and spent 30-odd years dealing with the conflict between my vision of radio as an art form and my FM-station employers' vision of radio as a conduit for advertising. I have watched the medium that I love turn from an essential part of the process of connecting those who love making music with those whose lives are touched by it into a mindless background hum of advertising and disposable musical sludge.
With the advent of the Internet, we were finally able to bring to life the radio station I had always wanted to work for (and listen to): commercial-free, passionate, and embracing a wide universe of musical treasures, from the classic rock artists I grew up with to the latest indie discoveries, with a liberal sprinkling of world music, electronica, jazz, even classical. We have slowly built up a loyal audience and have been able to support ourselves while living our dream.
An Exciting - But Fragile - New Era for Radio
The Internet has changed radio in a profound way. Instead of a business that required investments so huge (millions of dollars for even a small-market FM station) that a programming focus on the lowest common denominator and an extreme aversion to risk or experimentation was an unavoidable consequence, a radio station with a global reach was now within the grasp of anyone with the talent and determination to make it happen.
Every day we hear from listeners who are profoundly touched by our efforts - by the music we play, by the way we assemble the songs into meaningful sequences that are more than the sum of their parts, by our passion for what we are doing, and our commitment to never contaminating the music with advertising. And our station is but one of many who have attracted that kind of passionate following, and provided that kind of outlet for radio artists like myself.
The Internet's paradigm-shifting gift to radio programmers and music lovers - at least those in the US - is now in danger of being taken away by the misguided actions of the US Copyright Board. The performance royalty rates released by the Copyright Board on March 1, 2007 are not just extreme, not just burdensome. They are a death sentence for all US-based independent webcasters like Radio Paradise, SOMA-FM, Digitally Imported, and many others.
The facts and figures of the new rates are detailed in Kurt Hanson's newsletter for 3/2/07. Kurt's analysis of the financial impact of the new rates is entirely accurate, and chilling.
The Artificial Analog vs. Digital Divide
There has been much discussion about how unfair these rates are, but our listeners find one fact particularly appalling: while Internet stations like ours are being told they must pay royalty fees that exceed their income, sometimes by several times over, FM stations - including those owned by media conglomerates like Clear Channel - pay nothing at all!
Yes, both FM stations and Internet stations pay royalties to songwriters and/or music publishers. But the royalties in question are owed to the owners of performance copyrights, which means, in most cases, record companies - and to them, FM stations pay nothing at all.
How is it possible for such a massive disparity to exist? For the answer to that we need to go back to the 1990s, when music industry lobbyists persuaded Congress to include wording in two pieces of legislation (the Digital Performance Right in Sound Recordings Act of 1995 and the Digital Millennium Copyright Act of 1998) that drew a sharp division between analog and digital broadcasts. Their reasoning was that a digital radio transmission was not a radio broadcast at all, but a sequence of perfect digital copies of music performances provided to the user, who could then copy them rather than paying to own a CD.
This is a profoundly flawed piece of reasoning, but members of Congress (who at that time had no idea how this whole digital thing worked) accepted it at face value, and agreed that it was only fair that digital broadcasts be subject to additional copyright fees, to be determined by an impartial (in theory…) ruling by the Copyright Office.
Let's Get Real About This
Let's reassess that reasoning in the light of 21st-century reality. Is there, in truth, a fundamental difference in the experience of an online listener to Radio Paradise and someone who was listening to identical programming on an FM station? Every one of our listeners - indeed, anyone who has ever clicked on a webcast as background music while working - knows the answer to that question. No! There is no difference whatsoever. Radio is radio, whether it comes in digital or analog form.
A Grave Disservice to The Public
Crippling an exciting, groundbreaking industry like Internet radio is certainly not in the best interests of the public, nor that of musical artists, and not even - if history is any judge - of the music industry itself. Just as they were unable to see how the advent of home music taping actually spurred the sale of LPs and CDs, they are unable to tell exactly what impact Internet radio and other forms of digital media will have on the future of their industry - and to behave as if they do know, and for Congress to go along with them, is a grave error, and public disservice, that needs to be recognized and corrected.
So, if we are building a business - even a non-commercial business like Radio Paradise - by the use of copyrighted material, isn't it fair that we pay for its use? Perhaps it is. But the fact remains that what we are doing does not differ in any substantive way from what a company like Clear Channel is doing, and to move forward under the fiction that such a distinction exists is neither fair nor rational.
Perhaps the most equitable solution is for all broadcasters - analog or digital, terrestrial, satellite, or Internet - to pay such royalties equally, just as they all pay more or less equally for the use of music compositions. This is the situation in many other places in the world, including most of Europe. The fact that the US broadcasting lobby has successfully out-spent and out-maneuvered the music industry on this issue should not be "balanced" by Internet radio royalty rates so high that they cripple that entire industry.
That kind of reform will take some time - time that people like my wife and myself just don't have. We are hoping that we can, along with a small group of other independent webcasters, negotiate a separate settlement with the RIAA, similar to the one we negotiated in 2002. That agreement allowed us to operate by paying a royalty equal to 10% - 12% of our gross income in performance royalties. That has been enough of a burden for a struggling "mom & pop" operation like ours, but it has allowed us to survive since that point. However, that agreement has expired, and we are now liable for royalties, retroactive to the beginning of 2006, that are equal to approximately 125% of our income.
What's The Solution
The truly fair solution is a moratorium on the collection of any fees and the imposition of any penalties until Congress has had the opportunity to revisit the decisions they made a decade ago, and see if there is not in truth a profound wrong that deserves to be righted.
- posted by Jesse "Doc" Wendel
Labels: music, RIAA