Hope on the Hill for Internet Radio

Last month, the Copyright Royalty Board (CRB, left) sent webcasters into panic mode, after deciding that webcasting royalties must be higher: astronomically higher. Ever since a group of technophobes composed the DMCA back in the late '90s, song royalties for webcasts have been treated differently than parallel royalties for over-the-air broadcasts.

Commercial webcasters pay a fee based on how many listeners hear a given song. Commercial broadcasters, in contrast, pay blanket royalty fees for over-the-air performance of songs based on the station's annual revenue. Why the double-standard? Because the internet is scary. And music licensing companies saw an opportunity.

Fortunately, the webcasting fees per song per listener were set at a somewhat reasonable rate until this year, so you didn't hear many complaints from commercial webcasters. Non-commercial webcasters, who by nature have a very different business model than for-profit companies, were allowed to pay a flat webcasting royalty fee (non-commercial broadcasters also pay lower over-the-air royalties).

The 2007 CRB scheme for webcasting royalties is different in a few ways:

1. The per-song per-listener fee for commercial webcasters is much higher, so much higher that for many companies, these royalties are actually higher than annual revenue.
2. Non-commercial webcasters are subject to commercial rates if they have a large audience.
3. These new fees are retroactive to January 2006.

These fee changes will essentially wipe out medium- and small-sized commercial webcasters, as well as larger non-commercial webcasters. Popular public station KCRW has already determined that they would owe more than $350,000 under these new rates.

With this new scheme, internet radio risks becoming a bunch of Emmis and Clear Channel giants, with only a few non-commercial little guys, forced to limit their audience or close shop. Just think of our brave new future where internet radio is even less diverse than what you can find on your FM dial. Blech.

Previously, I was confident that NPR's powerful lawyers would surely convince the CRB that applying commercial webcasting rates to non-commercial webcasters was absurd. Well, the bad news is they tried, and the CRB is standing firm on their new rate scheme.

The only hope left (aside from individual stations negotiating their own terms with record labels) is for an act of Congress to interfere. Thankfully, two congressmen introduced the "Internet Radio Equality Act" (H.R. 2060) to the House yesterday. The SaveNetRadio Coalition is recommending that citizens call up their congressperson, urging them to support this bill. They even provide an easy look-up page to find your rep's contact info, along with a few talking points so you can really get your point across to the intern who takes your call.

 

Comments

[Boris]

I called Steve Rothman's (D-NJ-9) office. A nice lady took down my message and info and said she'd pass the message along. We'll see...

[Fatherflot]

Can somebody give a bottom line prognosis about how this will affect WFMU? Will this kill the webcasts?

[Station Manager Ken]

"Can somebody give a bottom line prognosis about how this will affect WFMU? Will this kill the webcasts?"

Bottom line is NO, it will not kill our webcasts. We've received hundreds and hundreds of waivers from artists and independent record labels which puts us in a different position than most other stations on this issue. We'll be getting even more waivers in the future and we're also putting together an online library of music and audio material that is free and clear of the RIAA and Sound Exchange.

-ken

[DaveX]

I called my congress-critter as well. They took down my info, promised to save the world, etc.. Who knows what will happen?

On the up side, my station manager says that due to the small size of our station, we can weather the changes regardless-- though it's still a lot of wasted money.

[Fatherflot]

Thanks Ken. As usual, you go above and beyond the call of duty, both in finding creative, proactive responses to this kind of idiocy and in being available to and straightforward with listeners about what to expect next.

I'm sure the solution you've detailed above is the best way to go, although it will be a shame to see WFMU DJ's limited in any way in their choices of what to play. What the hell with poor Glen Jones do, for instance? No Springstein? No Sinatra? No Pilot? No Looking Glass?

I guess Kenny G and Irwin will have to work even harder to dig up alternative versions of bygone top 40 hits done by psychotic recluses, children's choirs, and barking dogs. If this is to be the future of WFMU, so be it. I embrace it and I will support it!

[Ron D]

RIAA's affiliate organization SoundExchange claims it has the right to collect royalties for any artist, no matter if they have signed with an RIAA label or not

http://www.dailykos.com/story/2007/4/24/141326/870

http://slashdot.org/articles/07/04/29/0335224.shtml

I really wish a hole would open up and swallow the whole damn organization.

Ron

[Station Manager Ken]

It's true that the RIAA has the right to collect royalties from labels that dont even belong to the RIAA. Equally amazing is that the RIAA doesn't have to pay those labels under many (some would say most) conditions. The only way out of this madness is to get waivers and licenses directly from the artists and labels, so that is what we're doing.

Fatherflot: We won't have to restrict what people play on the air. The waivers and licenses sufficiently lower our rates.

-ken

[Fatherflot]

Ken:

So, DJ's will not be restricted as to what they play "on the air", but will that mean that web streaming content will diverge from air content when a RIAA recording is played on the air? Or will this mean, somehow, that WFMU will simply be in a better position to pay royalties when Glen Jones plays Led Zeppelin and Cat Stevens on the air and on the web stream?

I've been puzzling this out and imagining that the web stream shows will need to have a "home assembly" component, where a three minute passage of dead air is heard, along with the announcement "please insert 'Island Girl' by Elton John and Kiki Dee from your home collection for proper effect."

I was imagining Kenny G having a lot of phone with this challenge--like an entire show of silence punctuated by occasional back-announcing of tracks which WFMU cannot afford to play over their webstreams due to excessive RIAA royalties.

It boggles the mind.

[Fatherflot]

I meant to write "Kenng G having a lot of fun," and I'm both fascinated and disturbed by my own typo above.

[Fatherflot]

. . . As well as the typo in my last typo-correction post. Arrgh.

[Listener Paul]

It's important that everyone contact their congressperson. A few things--this bill is in its earliest stages, so be prepared to follow up. Phone calls are good, and follow up with a real letter in an envelop with a stamp--e-mails don't have the same impact. Address your letter to the district office, not the DC office. Anthrax scares make mail difficult to get through that way.

Your letter need not be long--something along the lines of "I urge you to co-sponsor HR 2060 Internet Radio Equality Act." A few lines why you think this is important are better than cutting and pasting a long explanation from some website.