RSSDueling Musicians' Petitions Take the Internet Royalty Fight to Congress
By Scott M. Fulton, III | Published April 12, 2007, 10:29 AM
The performance rights organization that the US Copyright Royalty Board designated as the collector of royalties from streaming Internet music services such as AOL Radio and Pandora, is urging independent music artists to write their congressperson, urging that she or he support a significant increase in royalty rates over the next three years.
SoundExchange, which collects royalties on behalf of performers whose music is distributed digitally (as opposed to over the airwaves), is the beneficiary of a CRB decision last month that would officially increase its per-performance streaming royalty rates by 238% by 2010. Last month, BetaNews projections - circulated throughout the industry by streaming audio industry representatives and executives - forecast that in 2010, the Web's top four streaming providers alone could find themselves owing $363 million in royalties, at the same time that the collective performance royalties charged to all 14,000 US radio stations combined would be capped at $550 million.
As SoundExchange explains on its Web site, 50% of royalties it collects are distributed to copyright holders, which are typically music publishers such as Sony BMG, EMI, Universal Music Group, and Warner Music Group, all of whom have representatives on the SoundExchange board of directors. Of the remainder, 45% is distributed to featured recording artists, and 5% to non-featured artists.
"It is only fair that the artists who make the music be compensated by all of those who profit or otherwise benefit from their work," reads the letter SoundExchange urges artists to send to Congress. "Webcasters and musicians are partners, and by working together they can create a thriving online radio marketplace. I believe the decision of the CRB fully recognizes the value of music to the internet radio community and properly realizes the intent of Congress to ensure that artists are fairly treated."
While streaming music providers have argued that the new rate tiers will be too cost-prohibitive for smaller webcasters, the CRB believes that this could be a good thing after all. In its published decision (PDF available here), the CRB argued that high rates could potentially "weed out" lower-class Webcasters who wouldn't be sharing much with artists anyway.
"It must be emphasized that, in reaching a determination, the Copyright Royalty Judges cannot guarantee a profitable business to every market entrant," the decision reads. "Indeed, the normal free market processes typically weed out those entities that have poor business models or are inefficient. To allow inefficient market participants to continue to use as much music as they want and for as long a time period as they want without compensating copyright owners on the same basis as more efficient market participants trivializes the property rights of copyright owners."
In response, an attorney representing some of those same artists is circulating an alternative letter, urging Congress to oppose the fee increase and to save the industry from being weeded in this way.
"We don't understand how having fewer stations playing music can be good for artists," reads attorney Fred Wilhelms' alternative letter. "The more stations there are, the more music, and more artists, will be heard. That's just logical. It's also what really is good for the artists."
Wilhelms goes on to argue some dangerous theories: One is that, with fewer webcasters in business, the remaining competitors would be forced to increase commercial time, and change their formats to include more songs geared to attract a larger audience. As a result, streaming radio could "sound like regular radio. Another regular radio channel not only won't do us any good, it will do us harm." The second theory is that prohibitive royalties could either drive Webcasters out of business or force them to operate beyond US borders, where they could conceivably still reach their listeners without owing artists' royalties.
But SoundExchange executive director John Simson, in a statement released last week, rebutted webcasters' protests by essentially saying they already lost the fight, and they should take that loss like ladies and gentlemen.
"Just because you don't like the outcome of a fairly-played game doesn't mean you should ask the referee to order the game replayed," reads Simson's statement. "Yes, Internet radio is important to the music community, but that doesn't mean that artists and record labels don't deserve fair compensation for their works."
SoundExchange's statement goes on to quote musician Michelle Shocked, who argues that the royalty increase is necessary specifically because those royalties go on to support more than just the big four music publishers.
"A lot of internet users think of music as a product created and generated by major labels with corporate mega-dollars," Shocked writes, "and so think nothing of taking or paying very little to use this music. But the evidence shows that a large majority of music is now created by independent artists with very small margins trying to earn a living and it's in that context that the recent decision to raise the internet broadcasting rates is seen as an encouragement to creativity and independence."
I remember when musicians had to actually "perform" for a living. Not sit in plush MTV-crib houses and record in between parties. Time to gas up the bus again and hit the road.
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|You would think they would have enough money by now ? How much is enough ?
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|Reading this article makes me really angry. It looks just like ideas spread out to fill their own pocket and showing up a fake reason for beeing a company everyone would need.
It will kill the future of independend radios, raise the pirate radios and filters out new exiting unknown bands. I really wonder how this can be any interest of a company.
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|Never again buying a Michelle Shocked cd
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|SoundExchange - the ba$tard child of the RIAA.
Michelle Shocked - Has-been, now desperate for cash.
Jim Simson - An arrogant idiot with no idea of the power of the consumer.
There is STILL absolutely no reason why internet radio should be forced to pay any more than over-the-air. However, this is just another example of the recording industry shooting themselves in the foot. Their sales are down and still sliding and they still haven't gotten a clue as to why.
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|so this on the walls at school....so I am spreading the word and taking THE PLEDGE....via forum...to lazy to photo copy and pass on...maybe ur not...sh*t I am tired....
WAKE UP:
1500 college students have been sued and now internet radio is on it's last leg………
Take the PLEDGE
1. I WILL NOT BUY ANY CD'S OR DOWN LOAD FOR PAY MUSIC
2. I WILL LISTEN AND SUPPORT COLLEGE RADIO STATIONS ONLY
3. I WILL WRITE MY CONGRESSMEN AND SENATORS
I WILL CONTINUE THIS UNTIL SOUNDEXCHANGE HAS BEEN DISBANDED AND THERE ARE FAIR LAWS FOR WEBCASTERS…..
SO TAKE THE PLEDGE
Copy what is between the words PLEDGE and send them to your friends either thru email or just printing something out or tell them….but get the word around….it is time to take back our music…SPREAD THE WORD
Webcasters aren't arguing that there should not be royalties. They have been paying them for years. They aren't even arguing that the royalties should be as low as terrestrial royalties. They just want the royalties to be at a reasonable level such that the services can continue to operate
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|Are any of these people thinking about how most artists get their work heard? You hear a a song on the radio that you like and you go to the store (be it brick & morter or online)and buy it. If you only have a select few stations able to afford the totally outrageous cost then you'll have those few station dictating what is heard. The new artist will be out of luck. New music will never be heard. In my opion, the new fee/extortion will be the death of new artist and music.
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|SoundExchange seems to be putting words in the mouths of artists and independent labels as a way to rally support for these drastically higher royalty rates. I've talked to some people quoted in SoundExchange press releases, and they indicated that they didn't know the whole story.
SoundExchange will say, hey, we're trying to show that a wide variety of musicians and labels will benefit from internet broadcast royalties, and we're fighting against all these people who think the royalties shouldn't exist at all. Can we quote you as saying something to support the royalties?
And of course, the artists supports royalties. They just don't know how unfair the CRB royalties are, and in the cases I've talked to them, they realize that these rates really are unfair and that it's not in their interest to kill off webcasters who are exposing listeners to new artists - exposure they can't get on regular radio.
And they don't know that SoundExchange gets to write off all their expenses suing webcasters and fighting webcasters before the artists or labels get paid. All in the name of "enforcement".
This fact was recently posted on a mailing list by an attorney who used to work for SoundExchange:
``SoundExchange can deduct from the royalties it collects the costs for enforcement that it conducts, so that would be limited to activities under the statutory license. For example, SoundExchange has filed public notices with the Copyright Office of its intent to audit statutory webcasters. The costs of those audits can be deducted under the language that is set forth in the Copyright Act (17 USC 114(g)(3)) and in regulations (see, e.g., 37 C.F.R. Part 262).``
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|Seems like a classic case of the "false alternative". SoundExchange says to artists "Hey, these guys don't want to pay you at all for your work..." (which we all know is totally false) "... do you think that's fair?" and of course artists and labels say "Hell no!". SoundExchange then gets to quote all these artists and labels as being in favor of their rate decision even though that opinion is based on an incomplete, biased, almost slanderous depiction of reality. Classic RIAA business tactics though, of course.
What's tragic about all this is that Internet radio is not only virtually identical to regular radio in terms of its potential threat to profits (from listener recording, etc.), and not only do the same justifications for traditional radio hold just as true with Internet radio (it's basically a marketing tool for music promotion), in fact Internet radio is *far better* at promoting music of all kinds than traditional radio.
I listen to normal broadcast radio 5-10 hours a week and Internet radio 10-20 hours per week. When listening to broadcast radio my informal accounting indicates that I hear the announcement of song title and/or artist name about 25-40% of the time. Internet radio (at least the stations I listen to) is slightly better at 50-65%, when an actual DJ is part of the station's format at least.
Where it gets interesting is that while playing Internet radio all the stations I listen to indicate the song title and artist name *at all times* immediately accessible in my player. Terrestrial radio just can't compete with that. What's more is that since I'm at my computer I can immediately and easily find methods to purchase that music, making the conversion to sale process incredibly fast - unheard of for traditional marketing.
These are just the average stations I'm talking about, too. The better stations, like RadioParadise.com, which have setup whole custom websites, actually have far, FAR better listener-to-purchaser conversion paths than almost any other source of new music. If I hear a song I like while listening to Radio Paradise I can log on to their site, look at their current playlist, click on the song and artist name and I am brought to an entire page dedicated to that song by that artist. There I can rate and comment on the song and there are no less than 2 and sometimes as many as 6 *direct* online purchase options. There are also direct links to the artist's website, song lyrics, tour schedule, etc. A veritable wealth of purchase conversion methods all of which funnel me into making a purchase much, much quicker than traditional radio could ever hope to allow. Other similar high-quality "best of" Internet radio stations and music services offer similar levels of conversion possibility - Pandora, Last.FM, etc, etc.
The ability of Internet radio to garner the music industry increased profits is frankly staggering. Never before has such a direct listener-to-purchase path been possible. So I think it's really just tragic that the RIAA and record labels aren't seeing this as the *tremendous* opportunity that it is. Were I a record company shareholder I'd honestly be outraged. Money is being lost here, not gained.
- Oshyan
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|Funny that some artist no one's ever heard of and probably can't make any money is the one supporting SoundExchange's case. Why don't they quote someone more relevant, like U2 or The Rolling Stones?
Everyone should write to their Congressman to complain about this. http://www.savethestreams.org/
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|Whoever gets Bono wins.
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|Will NEVER buy a Michellle Schocked CD again!!
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