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Day of Silence: Internet Radio Goes Dark

If you listen to music, news or other programming via the Internet, you're likely to find a soundstream of silence today. The Day of Silence is a one-day protest being staged by big corporate web radio outlets, innovative smaller companies that are trying to invent a new kind of showcase for recorded music, and individuals who've been flexing their creative muscles by starting up their own web radio stations.

The idea is to focus attention on a startlingly sharp increase--in many cases, more than double the current rates-- in the royalty payments that the Librarian of Congress and the Copyright Royalty Board have decided web radio stations must pay to artists and record labels for the right to play their tunes.

Webcasters from big music providers such as Yahoo and Rhapsody.com to webradio pioneers Pandora.com and Live365 to local broadcast radio stations that have found new audiences on the web--eclectic kcrw.com from southern California, acoustic WXPN in Philadelphia, or bluegrass and alternative rock on Washington's WAMU.org are all rolling down the aural shutters for the day.

Why should you care? In many cases, the new royalty rates will exceed the total annual revenue of the web stations. That means, obviously, that those stations would cease to exist when the new rates kick in on July 15. And pandora.com, which creates a unique radio station for every one of its many thousands of visitors (the service uses a recommendation engine to select music based on your existing preferences), would face the prospect of having to pay separate royalties for each of its customers--an immediate death knell. All protest-related hype aside, thousands of web stations would vanish virtually overnight.

Why is the government doing this? Largely because the recording industry wants to stuff the genie back in the bottle and roll back the extraordinary blossoming of music programming available on the web. But the record industry isn't the only player here. The broadcast radio industry is clinging to its structural advantage over webradio: AM and FM radio stations must pay only one form of royalties--to composers of a given song--while webcasters must pay that royalty and an additional one to the performers of the tune.

Will a one-day protest have any real impact? Probably not, but the last time this happened, in 2002, when the government similarly sought to jack up web royalty rates, a Day of Silence led to national publicity that in turn played a role in a rate cut by the Librarian of Congress. Many of the college and solo operator web stations that went silent after the 2002 rate hike found ways to stay afloat, either by playing music in the public domain or by taking advantage of special rules that were written for small webcasters.

Will webradio really die, or suffer a serious setback? It seems hard to believe, given that the web is one of the few bright spots in a generally dismal season for the recording and music industries. There are two bills in Congress that would attempt to save web stations by restructuring the rates to give small and non-commercial outlets a hefty price break.

Is this all another Washington game of brinksmanship? Yes. Does that mean the new rates won't go into effect? No. What happens next? Silence, and then a lot more noise.

By Marc Fisher |  June 26, 2007; 7:05 AM ET
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Comments

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Marc,
I applaud the action by the Copyright Royalty Board. As a visual artist, I have seen the direct negative effects of the devaluing of internet content. Too often the consumer confuses the low cost of internet access with the value of the content consumed with access. I see this as the protection of the little guy from re-publication without compensation. The actions by the Copyright Royalty Board protect the individuals involved in producing media including sound engineers, musicians, reporters, etc. The producers of sound and visual media only expect the same copyright protections that writers and journalists have always been granted.

Posted by: Ken | June 26, 2007 9:12 AM

These internet billionaires don't want to pay independent artists for playing their music. Some of these start-ups exist ONLY to play other people's music and are made up of computer scientists and Wall Street investors and do not employ one single band or singer. Their entire business models are based on exploiting musicians. They should pay and for NPR to side with big business over musicians is just bizarro.

Posted by: DCer | June 26, 2007 9:12 AM

If people replace listening to internet music with someting else, it stands to reason they will replace their music purchases with something else. Exposure is profitable. Sports teams broadcast all of their games -- even home games -- because the broadcasts are ads for the arena experience. I hope all these starving artists like their 100 percent of nothing. They should ask Roy Pearson how that is working for him these days.

Posted by: RL | June 26, 2007 9:22 AM

It's all well and good to "protect" the little guy. And there's something romantic about looking out for our starving artists. But basic economics are at play here. The article said specifically "the new royalty rates will exceed the total annual revenue". This doesn't mean that the fees will be so high that that the web broadcasters gets to pocket a million dollars. This means that the fees will be so high that there will be no money left over to pocket at all.

So, while it's nice to look out for the little guy, the little guy must still be able to put his product on the market at a price the market will accept. Quite simply, if this can't be done, it won't sell. Then the little guy gets nothing.

Posted by: topher | June 26, 2007 9:23 AM

I say, let capitalism decide. If the cost is too high to license that music, then don't license it and find other products that are cheaper. It's really as simple as that. I see no reason why any special laws or government agencies need to get involved in this.

Posted by: Brian | June 26, 2007 9:24 AM

In my opinion, it all boils down to the basis of our democracy - greed. Gone are the days of musicians simply playing music to express themselves, or entertain people. It is now all about their fair compensation. Don't get me wrong, I definitely feel that anyone who creates something unique should be well compensated, and should not be fearful of someone else claiming it as their own. But that isn't what is happening here - what is happening is opening up a peice of music to a much wider audience than was ever before possible. Isn't that a good thing? It may be my ignorance of the core issues, but as an internet radio listener, I can't tell you how many times I have sought out an artist and bought their work as a direct result of internet radio.

Posted by: Michael | June 26, 2007 9:26 AM

The above comments must have been written by AM/FM radio execs. If not, prove it. Why not call for AM/FM broadcasters to increase their royalty payments? Double the current royalties - one payment to the performer and one to the composer - just as is being forced onto internet radio. It seems hypocritical. Because it is. This move is nothing more than AM/FM trying to keep a lock on the format. The fair thing is to implement royalty fees equally across all mediums.

And if youre really an artist, you think big radio cares about you and your art? Make no mistake. They care about $$$$$$$$$ and what sells.

Posted by: Phil | June 26, 2007 9:27 AM

It seems to me that the real justice issue here is not whether or not royalties should be paid, but how much and what kind. If web radio serves the same public need as terrestrial radio, how logical would it be to have the royalties the same? Clearly artists should receive compensation, without question. But to enact punitive, one-sided royalty structures on one outlet and not on the other discourages the kind of innovation that could result in MORE revenue and exposure for artists, not less. Make the royalties the same across the board, and everyone's interests will be served.

Posted by: Kevin | June 26, 2007 9:29 AM

You guys sound like Sound Exchange plants... Do you really think all the webstreaming is being done to exploit musicians? How many radio stations employ a band? Do you have any idea what you're talking about?

Most internet streaming stations ALREADY PAY ROYALTIES to ASCAP, BMI and SESAC. The additional fees being demanded by the RIAA under the fraudulent banner of Sound Exchange (gee, same building, same floor and same lawyers, but it's independent...honest) is nothing more than a money grab by the major record labels.

You might want to investigate a bit further if you think Sound Exchange is interested in the artists and performers. Look at the way they have structured their revenue... and the % of revenue that actually gets past their 'operating costs' to pay artists.

If you are not seeing revenue as an artist you should be screaming at the RIAA, ASCAP, BMI, SESAC and Sound Exchange, not the radio/web stations that are playing the music that is given to them by the labels so that they can drive SALES. Radio/Web stations provide an outlet for music listening and discovery, not theft.

If you don't stop treating those that are supporting you like criminals, you may soon lose them.

Remember, the RIAA are the same folks that got Ashcroft's Justice Department to declare music piracy was DOMESTIC TERRORISM. Yeah, those folks are interested in musicians... keep telling yourself that...

www.savenetradio.org

Posted by: jD | June 26, 2007 9:36 AM

if you think these stations are all run by internet billionares you are way off. Some may be run by Yahoo but others are small, college or community radio stations with web feeds. It's the best way to hear quality new music from around the world - and Sony, BMG and Time Warner want it to stop because they can't control who listens to what. Nobody is exploiting artists except these mega-labels. If you are an up and coming artist you should be fired up to get your song on net radio - you are reaching your audience, by their choice. And as an artist and consumer I have seen the rewards go both ways.

Posted by: sam | June 26, 2007 9:37 AM

As a consumer my point of view is opposite of what has been portrayed so far. Internet & internet radio should be viewed as a marketing and advertising tool. I do agree with small royalty fees, but this should not be the main source of income for musicians or artists. A true musician and/or artist should make their income through live shows, merchandising and sales of materials that provide a complete entertainment experience. Musicians and artists have become lazy. Instead of embracing the mediums that allow you to reach previously unattainable crowds you are reaching for an easy financial path through higher royalties. In the end it will only hurt the small guys. The model will become the same as in traditional radio, where the big distributors/labels have sales reps that push their labels' music through incentives and personal relationships, leaving out the small musicians and limiting the consumer to listening to the same stuff. Either path is hard for the small artist, which would you prefer, no exposure or full exposure?

Posted by: Dan | June 26, 2007 9:39 AM

What many of you don't seem to realise is that many of us internet broadcasters ARE NOT "billionares". We are mostly small businesses barely eeking out a living. We do not play for free or take advantage of any artists. We do pay royalty fees, already more than regular broadcast radio. Increases like these are only meant to shut down small business to create less opportunity for those who cannot afford to pay high rates. If we let actions like these take place, we limit our choices and once again give up another of our freedoms in this country.

Posted by: Hollybaere | June 26, 2007 9:41 AM

If an artist doesn't get play time because of royalties are too high and he's not part of the payola club, he can come mow my yard. Or put up his own web page and stream his own music. That's where I'm getting music these days, and paying the artist directly to burn me a CD of his own, autographed too.

Posted by: Bill | June 26, 2007 9:46 AM

RL and topher have their thoughts on the right track. I just can't see the weight in the opposing side's argument that anyone in the music business--artists, producers, etc--are getting shafted because of internet radio.

I listen to internet radio quite often and rarely listen to the commercial hum of terrestrial radio. The reason why I prefer the former is because it exposes me to artists that would never ever have a shot of play time on terrestrial radio. More than once it has caused me to purchase albums or tracks from music stores and/or itunes based on what I have heard. Ken, as a visual artist, shouldn't you appreciate that? More internet radio stations feature independent and emerging artists than not. How could killing the station possibly be a bad thing?

As for capitalism "working it out," as Brian said. What is an internet radio station to do when it's only "product" is too expensive to provide? This isn't like the corner store selling Andre Champagne instead of Crystal because the latter is too expensive. Radio stations, all of them, only provide one "product." There are no alternatives. And secondly, many internet stations are non-commercial and therefore aren't looking to do more than cover their expenses in a given month.

Posted by: Paul | June 26, 2007 9:46 AM

So, what you're saying is that a station like somafm.com, which has something like 8 channels of music, and has never turned a profit (and is unlikely ever to do so), should just be shut down, since it cannot tak e in enough donations to survive?

Posted by: Zach | June 26, 2007 9:47 AM

Double digit mark ups are a case that has been in effect since there was a market industrie. All this quibble over what is surly going to turn into a disaster will then mean the the duck in now out of the water and will not be able to sure up its main point of turning around the so called AM Fm types to create an unavoidible barrier of stink.

Posted by: JOSH | June 26, 2007 9:47 AM

This is just another symptom of the recording industry's fear of the Internet. You add to that the pressures of am/fm radio conglomerates and there you have it. Nothing more than a "legal" way of running Internet radio out of business.

All of you guys who posted that it's about protecting the value of art. Are you crazy? have you been asleep for 30 years? When was the last time you saw anything in the Music industry that was done "for the public good"? It's ALL about self interest, it's all about making money.

Radio conglomerates and the RIIA have been working together for years to protect their own pockets. Now they are threatened by internet radios for the simple reason that those are better. MUCH better, and they have no control on them. Imagine that. Popular radio stations playing good music NOT under their control. NOT forced to play the same trash. They just cant let that happen. And the government is actually HELPING them do it.

It's disgusting and revolting.
And people just fall for it s usual.
Makes me want to vomit.

Posted by: Pat | June 26, 2007 9:49 AM

WOW!! Josh has it! That's the insight that people in charge need. Good job Josh.

Posted by: Kwin | June 26, 2007 9:49 AM

The arts should be a culture of responsible, respectful sharing, not one of greed. As such, I tend to eschew the webcasters referred to in this article in favor of either public radio live streams or the wonderful community at Creative Commons.

Posted by: Suzy | June 26, 2007 9:50 AM

I'm a bit appalled by the lack of understanding of this issue by those who have commented here so far. I don't think anyone is arguing that internet radio should be royalty free, or that artists don't deserve money. The fact is that fledgling internet radio companies are being told that they have to pay more money in royalties than existing (and more profitable) over-the-air and satellite broadcasters. I haven't heard any good explanations for this, but it's hard not to read into the intentions of this action. Over-the-air broadcasting stations have been around for over 85 years and have built themselves quite a lobbying force in Washington. If the royalty rates need to be raised why not raise them across the board instead of what appears to be picking on the little guy. And DCer, this is why NPR is siding with internet radio providers.

Posted by: JG | June 26, 2007 9:50 AM

Ken - your argument about perceived devaluation of songs played on internet radio doesn't hold... while the internet may be a "low cost" medium (hardly... it's $50/mo for me), FM radio is free!

DCer - you seem to be under the impression that internet radio companies are trying to get away with not paying royalties. That is simply not the case. As the article states, internet radio is already subject to twice the royalty fees as FM radio, and all they're asking is that the rates don't _increase_. So if anything, artists are getting a royalty boost from internet radio.

Not to mention the fact that most independent bands would not get a shred of airtime on FM. Internet radio is a godsend for small indie bands looking for exposure.

Posted by: Chris King | June 26, 2007 9:51 AM

I don't think that the big corporations have thought this through. As one person 90% of the music I purchas online I decide to buy because I have heard it via the internet station that I listen to. Record companies are not loosing money, they are making more! Internet sales have surpased CD sales. Where do they think we hear the music we buy!

Posted by: Jen | June 26, 2007 10:01 AM

Our clients have requested that royalty payments be submitted by the Washington Post forthwith for your usage of their valuable information in your post.

These clients include:

www.kurthanson.com/
www.savenetradio.org/
www.kcrw.com/
www.xpn.org/
wamu.org/
www.soundexchange.com/
www.digmedia.org/
writ.news.findlaw.com

Failure to comply may result in a lien being placed on all Washington Post assets in an attempt to recover all pertinent costs.

Our representative, the Honorable Judge Roy "Pants Punk" Pearson, will contact you with the acceptable methods of payment.

Respectfully,

Douie, Stickum, & Howe, Attorneys at Law

Posted by: SoMD | June 26, 2007 10:02 AM

Without web radio, thousands of independent artists would not be able to get the exposure to their work without selling out to large record companies..

Furthermore, as an independent broadcaster, I flip the bill for my station to operate. I have never made a dime from my broadcast. In fact, it costs me money to keep my stream online.

Fernando Bernall
jazzradio247.com

Posted by: Fernando Bernall | June 26, 2007 10:06 AM

And secondly, many internet stations are non-commercial and therefore aren't looking to do more than cover their expenses in a given month.
-----
I believe that the non-commercial model for copyrighted music performance has no legs and will send anyone trying to start a non-commercial business like that, with no foundation or grant, into bankruptcy. It's like giving away free gasoline, it will make you go broke sooner or later.

Posted by: DCer | June 26, 2007 10:06 AM

Ha ha, those first comments are a hoot, especially the faux-Libertarian "Let's trust in capitalism and let the market decide" one. Buddy, that's what this column was all about. "Letting the market decide" is an activity which does NOT include setting arbitrary prices at the government level. (Psst, that's kind of the opposite of capitalism. :( )

Posted by: Jmac | June 26, 2007 10:08 AM

Brian-
You fail to recognize that the existing laws are restraints on capitalism as is this new law. This is NOT capitalism or markets deciding. This is corporate socialism at work. How can you NOT see it?

If you wish for the market to decide, then all rules and laws regarding broadcasing should be eliminated, not just those that help or hurt selected capitalists. Do you really want to live in that world? Be careful what you wish for.

Posted by: David | June 26, 2007 10:08 AM

Congressional obsession with fair compensation for members of the entertainment industry always amazes me.

For example, about the only action taken by the US against Chinese economic bad behavior is to insist on copyright adherence on music CD's etc.

An area which might be a better focus of congressional energy and angst might be proper compensation (through royalties) of scientists and engineers whose inventions have formed the bedrock of (current) US economic and military leadership.

Similarly, illegal export of critical technology to potential adversaries gets the big yawn treatment.

Sincerely
Arnold Thornton

Posted by: Arnold Thornton | June 26, 2007 10:08 AM

I love music but I can't stand top forty. After being dismally bored with music for awhile (and subsequently not making new music purchases either) I began listening to online radio at work, eventually tuning in regularly to Soma FM. I found alot of new music I was excited about and started buying Cd's of the music.

Problem= Regulation logistics & difficulties w/ Potential Piracy
Solution= Raise the rates
Reality= If its hard/impossible to do it on legal playing field, then it will go below ground
Analysis= Just plain idiotic


The digital revolution has already happened. Its already after the end of the world. Evolution didn't happen; its happening. The forward thinking/fast moving win; and we know what happened in slow pokes the tar pits. Cavepeople who remember "beta" VHS should not be allowed to be in charge of things this important.

While the RIAA cavorteurs in the American governmentsaurus are not going so far as trying to un-invent the wheel or the printing press, they are still doing predictably and remarkably crappy job of three-stooging-up the economic frontiers explored by basement entrepreneurs. Just because these idiots are laughable, doesn't mean this is funny.

Posted by: Eric | June 26, 2007 10:11 AM

I'm with Pat, although the meter for that last haiku was *way* off.

Posted by: quaker | June 26, 2007 10:11 AM

I don't understand why anyone would applaud this. Are you honestly telling me that Christina Aguilera and "RCA Records" are THAT hurting for money that they must DOUBLE the royalties on up and coming stations? They knew what they were doing, and they KNEW they would squeeze competition right out of the market because of it. Well, I hope they get what they asked for... a silent internet. AT LEAST I CAN STILL LISTEN TO MY UK STATIONS! Lets see the pigopolists tax them!

Posted by: Muzak Phreak | June 26, 2007 10:15 AM

Not only are a lot of net broadcasters NOT millionaires...many of us operate AT A LOSS. There are those of us out there who pay out of our own pocket just because we have a deep love for broadcasting and doing it our way.

I know that many of the artists that appear on our station wouldn't get the chance to be heard elsewhere. Or if so, not very many places. For some, our station and its loyal culture of listeners are the first exposure they get. We don't do it to sell commercials...we do it for the love of the music.

But the recording industry, in its apparently boundless net-o-phobia, has taken torches and pitchforks and is trying to contain the Frankenstein's monster that it birthed.

HOWEVER...there's a lesson to be learned here. Remember Napster? Remember what happened when the RIAA shut it down? Bigger and more numerous monsters sprung up in its place, using technologies that were even harder to control. Sure, people were shoved further underground, but it didn't mean the practice was any less common. Now, with the same thing happening to net radio, you also have webcasters being shoved underground, and you'd be crazy to think that the most ardent of them won't find ways to broadcast outside of the constraints of US law. THEN where are you "starving artists" going to get your royalties???

Posted by: J.D. | June 26, 2007 10:16 AM

I remain quite confused why people are so upset about internet radio. I always thought artists wanted their music to be heard by lots and lots of people. And that is what internet radio does. Furthermore, it's not like when I listen to internet radio that I get to keep the song afterwards--it's exactly the same experience as if I were listening to AM/FM, except that I get to listen to usually much better music without nearly as many commercials (and did I mention the wonderful variety that is completely unavailable on AM/FM?). The fact of the matter is that individual artists know that the radio has always been a great place for promotional efforts and if they earn some cash back as well (which they currently do), well then that's all the better.

What you see here is intense lobbying efforts coming to fruition. In part, AM/FM is aware of their loss of marketshare, and the various groups invested in the Copyright Protection Racket (er... Board) are feeling that they could get a further pittance from internet radio stations. I find it reprehensible that such a ridiculous and obviously intentional rate hike was even passed.

Finally, internet radio is why I don't pirate music. I can usually scratch the musical itch with internet radio. But arguing about paying a small fortune for music is for another place and time.

Posted by: Greg | June 26, 2007 10:23 AM

The idea that AM/FM broadcasters are not being asked to pay increased royalties is wrong. They are, but no agreements have been reached yet, as described by the LA Times here:

http://www.latimes.com/entertainment/news/business/la-fi-radio21may21,1,1028211.story?coll=la-headlines-business-enter&ctrack=1&cset=true

discussion of this is available in the blog headline "Record industry wants royalty for AM/FM to offset sales slump" so you can search many blog articles that discuss that the music industry is NOT going after fledgling internet broadcasters to the benefit of AM/FM broadcasters- they're going after both.

Some bloggers want to conveniently hide that fact.

The fact of the matter is that when I have 300 channels to choose from, I bought far fewer cds in the past because if I want to listen to a band all I needed to do was find a station playing only that band. It's a different experience than terrestrial radio, one with far more personal choice, and if the artists aren't getting a cut then their music is being exploited.

You don't have to agree with me, but stop trying to paint this as big business trying to put the little guy out of business when these internet billionaires built whole business models on top of artists.

Posted by: DCer | June 26, 2007 10:25 AM

For example, about the only action taken by the US against Chinese economic bad behavior is to insist on copyright adherence on music CD's etc.
------

SUUUUUUURE. There was never any discussion over business software. I must have dreamed that.

Posted by: Anonymous | June 26, 2007 10:30 AM

I always thought artists wanted their music to be heard by lots and lots of people.
-----

why would you get that impression? think it through logically and you'll find your mistake.

Posted by: Anonymous | June 26, 2007 10:32 AM

Chris King,
I do not know the exact rate that the internet broadcast of media is worth. I suspect the compensation rates will adjust over time til a fair equilibrium is established. I support the Copyright Royalty Board because they are setting an important precedent (and the rule of law is all about precedent) to define internet streaming as "broadcasting" and recognize it as a seperate publication from the original radio broadcast. This implies that the definition of "broadcast" is not defined by the use of "radio waves" or "satelite waves" but instead by usage. An analogy that seems apt is in newspapers. If this Marc Fisher column is re-published in another format, such as books, or another newspaper, it is governed by copyright laws. Why should music or illustrations be different?

Ken H

Posted by: Ken | June 26, 2007 10:35 AM

This is a bad thing for internet radio people, it costs alot of money to simply start and keep a radio station going, even online, so if the costs they pay are more than what they make, how will they keep paying these bills? They won't, thus they shut down. I've djed on an internet radio and had the best time of my life doing it, jacking up the royalties simply makes it nigh impossible for people to broadcast.

Posted by: Vash | June 26, 2007 10:38 AM

The Internet is evil. That's what the RIAA wants us to believe. In just a few short years, it's turned the whole world upside down. Rather than actually *think* about how to adapt to the new economics, the RIAA and other middlemen who will eventually be disintermediated out of existence are fighting back. That's fine. The problem for me is, they're fighting dirty, by manipulating the legislative and judicial systems, bribing, colluding, and bullying. If there really are artists and creative folks who still believe they're being hurt by the Internet, then please think about it a bit more. The RIAA is *not* the hand that feeds you. It's me, and all the millions of consumers who appreciate your music, who are touched by your creativity, who are willing and able to directly pay you much more than the paltry trickle of revenue that makes it through the machinery into your pockets now. The truth is, the RIAA is evil. And people should know that.

Posted by: Jim Dutton | June 26, 2007 10:40 AM

ThereIsNoRadio provides talk entertainment in the evening hours of it's programming. The music fills the time between the live DJ's. These talk show hosts do not get paid but volunteer their time so that they can be heard. These royalty rates will shut down this station and these talk hosts will no longer have an opportunity to interact live with their audiences. We pay more to the artists that provide 4 minutes of entertainment than we do the guys that do hours of prep and come up with hours of talk entertainment daily. We pay royalty rates and we don't mind paying royalty rates that are fair. I work a fulltime job in addition to running the station and pay all the expenses, including royalties, out of my own pocket. We do not earn money with this station. We buy the music that we play. I am not a billionaire and I am not trying to rob artists or get rich off of their music. We just want the station to make enough money that we can afford to expand as our audience expands.

Posted by: ThereIsNoRadio | June 26, 2007 10:44 AM

It strikes me, DCer and Ken, that since you're here posting in the middle of the day...someone or somebody must be paying you to do so; otherwise you're like me, and slacking off on your 9 to 5. (The 9 to 5 that pays me to lose money on my internet radio broadcasts.)

Two flaws in your argument:

(A.) Artists ARE getting a cut. You present your argument as though the majority of internet broadcasters aren't paying royalties already, which is simply not true. We're not asking to NOT pay royalties...we're simply asking that we be considered the functional equivalent of XM or Sirius or Kiss FM.

(B.) Internet broadcasters are NOT billionaires. There aren't that many billionaires in the world, let alone ones that are broadcasting. The vast majority of internet broadcasters (and this has been the case from day one) are Average Joes, middle-class people whose love for broadcasting bleeds through every pore and who are willing to lose money every month (to a point) for the music that they love.

Additionally, though you say your music purchases are lessened by your listening to internet radio, I find your experience to be among the minority of net radio listeners. That's aside from the fact that it's totally anecdotal as far as evidence goes. The truth is that the vast majority of internet radio stations that I've ever listened to have links to the music they play (often there's a BUY NOW option) which links to either iTunes, cdbaby, or Amazon where you can purchase the music you just heard. How many times have I purchased the music? Just about every time that I've heard something I really like. And we don't even need to get into how the artists you supposedly stand up for won't even get one thin dime if there is no place for their music to be heard!

Posted by: J.D. | June 26, 2007 10:51 AM

"The idea that AM/FM broadcasters are not being asked to pay increased royalties is wrong. They are, but no agreements have been reached yet..."

You mean to say that RIAA and the AM/FM broadcast lobbies haven't finished "convincing" Congress to not mess with their rates. DCer, you claim to be about fairness but you have yet to adress why it is fair for Internet radio to pay rates that are double that of the AM/FM stations. The answer? It's not. The bottom line is that RIAA and the AM/FM broadcasters are freaking out because someone has found a way to avoid the grossly illegal payola system and so they respond by trying to limit the choices available to consumer by buying votes. That is about as un-American as you can get.

Posted by: John | June 26, 2007 11:04 AM

True artists are those who create beauty to help people feel and to share their message with others. Those who expect to be compensated for it are not artists... they are entrepreneurs.

The fact that album sales and prices have plunged, is what will ultimately wean out the entrepreneurs, and leave the true artists (those who want to play because they love the music). Believe it or not, music quality will actually increase due this.

The enforcement of this new restriction on internet radio is:
1.) Exterminating artists in exchange for entrepreneurs.
2.) Laying the foundation for more restrictions on free speech over the internet.

This "law" is another attempt to stagnate, regulate, tax, fine, control and eventually destroy something beautiful.
On July 15, 2007 true artists will now have even greater barriers of entry into sharing their messages with the world...at least in the United States...

Posted by: "The Day The Music Died" (McLean, 1971). | June 26, 2007 11:05 AM

I live in a small town that doesn't have the music choices to listen to that I enjoy. When I listen to radio on the internet, I can hear new artists that never get played in my town, and that I would not otherwise be exposed to. Then I go out and purchase their music.

Internet radio is good for music artists. If the stations I listen to are forced to shut down, we all lose.

Posted by: Jan | June 26, 2007 11:25 AM

you would think the idea of a radio station online.. or not.. is whats getting the artists tunes out and into peoples heads.

Seriously, just because i hear Brittney Spears number one hit 10 times today on internet radio doesn't.. mean I'm not going to go out and buy it because i can hear it online... I'm still not going to buy the cd... because no matter how many times i hear it online.. on the radio... or on my roommates computer.. I still wouldn't buy the cd. just because its doesn't strike me well enough to go to the store and purchase the cd..

but, what i can say positive is that I have found out or became aware of so many great bands from online web streams, of music I do enjoy... and have bought the music because i truly enjoy the bands.

radio and music streaming is still to date and has always been a form of sampling artist music to the public on a broad scale.

the entrepreneur artist owes more to radio and online streams more than they care to admit.

Posted by: jason aunkst | June 26, 2007 11:33 AM

Internet radio is one of the only viable alternatives to the pirated mp3. The Record industry is shooting themselves in the foot by pushing for this rate hike; as an industry insider, i know that online radio stations will shut down if the hikes go through, cutting off a revenue stream for the record companies and channeling users listening towards pirated mp3s. The record labels are frustrated with their slumping sales and are looking to increase revenue any way they can. Their lobbyists pushed this legislation through because online radio stations did not have money to have lobbyists on the other side pushing back. This is capitalism at is worst: powerful organization using their money to dictate legislation.

Also The scheduled rate hikes far exceed that of terrestrial radio rates.

Posted by: Foster | June 26, 2007 11:41 AM

Here we go yet again. Congress trying to rule the internet again.

Here is what will end up happening: Web radio will go to overseas servers, or underground pirate listening software will be developed by some 12 year old that will de-centralize hosting like torrents.

US laws only apply to the US, or at least to countries that will honor them. When will the RIAA figure this out, they lost the MP3 battle, they will loose this one too.

Posted by: Rob | June 26, 2007 11:50 AM

Internet Radio is the answer to defeating music monopoly. The only party which truly benefit from the double loyalties fees are the music industry giants, who have the the money to hunt down every little guy with loads of paperworks and lawyers, and now they just got a good excuse passed by congress. Isn't it obvious enough that this pattern has repeated many times in US? New technology breed new ways for ppl to enjoy freedom, giants let that industry mature and make money, pass a bill then wipe the players clean with nothing left.

Posted by: Chris | June 26, 2007 11:55 AM

To All Music Internet Junkies (like myself). I came across a really good site that did not go silent today. wtnrradio.com

It sounds pretty good.

Am I the only one behind the RIAA and what they're doing?

Posted by: jubei | June 26, 2007 11:55 AM

Did anyone expect anything different from a government that favors big business? This has nothing to do with artists being compensated. It has everything to do with the record companies complaining to the government that their artists do not get paid enough. All that is going on here is record companies are trying to increase their revenues; they are not trying to put more money in the pockets of the artists that they represent. It's not as though the record company is going to say to the artists "Here's the increased money we have gained from internet licensing". These companies are just going to pocket the money. What's going to happen is these record companies are going to actually put themselves out of business. It would serve them right seeing that the once again are telling consumers how to listen to their music. And shame on the government for actually listening(or should I say opening their pockets to)to the record companies.

Posted by: Anonymous | June 26, 2007 11:56 AM

Wow...hot topic, lots of comments...

It seems to me like this is another move by a greed driven industry.

Let's think about this - from the perspective of the artist making the music, to preserve any level of creative uniqueness you can't play around with the big labels until you have such a huge fan base that you can call the shots. Bands with boat loads of talent are either watered down to radio friendly garbage or driven out of the industry, or go underground. What do underground bands do? They freaking give their music away for free on the internet. Why? Because then they develop a fan base, and then when they play live more will show up.

To this day, to buy an album at a store the price is about the same as it was way back when the Compact Disk first came out, while price of the technology involved in the process has gone down. We pay the same price and the artist gets next to nothing. The artist has to then water their music down to make it radio friendly (to get radio revenue and for publicity). Web radio I guess is too much like downloading music for the industry to handle. Why? Because the industry loses control. Music is bigger than we think. Music is a part of the overall culture. The music industry likes to be the one saying, this is what will define this decade, they don't want some silly band out there doing it, and they don't want us sheep deciding it either - I mean, they're big record company CO's, they know more than we do and we should just accept whatever they spew out because its best for us. Web radio goes against that grain. I can go to pandora and create a buckethead station and they will play buckethead and things that sound similar to buckethead. Will a regular radio station play one of buckets 15 minute long songs? No, last I checked both radio and the music industry still thinks we lack the attention span to deal with a long song - so artists have to keep songs between 3 and 4 minutes long if they ever want on the radio.

I just simply hate how whenever a music industry topic is started it goes into the protect the artists guilt trip, which is so wrong because the industry itself cares about profits and thats all. But yet they can still somehow convince people that they do care about the artist. And people actually believe them!

So, when it comes down to it... this move to take control over net radio will really just lead music fans back to services like Limewire. Great going guys, show us all your truly greedy faces so we can all say...yup, they love $$$

Posted by: Modius | June 26, 2007 11:58 AM

Once again the government serves the needs of corporations and businesses over the needs of the people. This bill benefits the recording industry at the expense of millions of Americans who enjoy the flexibility of being able to enjoy music over the Internet.

I wonder how many RIAA lobbyists it took to get the CRB to screw the little guy and bow down to their corporate overlords?

Posted by: Dan | June 26, 2007 11:58 AM

Poignant article from the artist's point of view:

http://archive.salon.com/tech/feature/2000/06/14/love/index.html

Posted by: Jake | June 26, 2007 12:09 PM

What a waste of time. Bottom line is this people....the listening and viewing public will produce enough demand to sidestep any and all regulations. It's all a matter of time before the speed of technology and individual ingenuity create the proper platform to pull it off on an unimaginable scale.....sorry, but i have to cut this short....my dvd guy just showed up with some new releases!!

Posted by: Steve | June 26, 2007 12:09 PM

What a waste of time. Bottom line is this people....the listening and viewing public will produce enough demand to sidestep any and all regulations. It's all a matter of time before the speed of technology and individual ingenuity create the proper platform to pull it off on an unimaginable scale.....sorry, but i have to cut this short....my dvd guy just showed up with some new releases!!

Posted by: Steve | June 26, 2007 12:11 PM

What a waste of time. Bottom line is this people....the listening and viewing public will produce enough demand to sidestep any and all regulations. It's all a matter of time before the speed of technology and individual ingenuity create the proper platform to pull it off on an unimaginable scale.....sorry, but i have to cut this short....my dvd guy just showed up with some new releases!!

Posted by: Steve | June 26, 2007 12:12 PM

Folks...do your research....the royalty fess proposed by the Board at the request of the Soundexchange is 300% rate hike and retroactive to 2006. That will make a 1.2 million dollar fee into an 8 million fee over night....Thus, closing a internet radio station such as Pandora or Webcast 365. Soundexchange collects and distributes royalties to artists and record labels. Very little of the money they collect actually get to the artist. This rate increase is not a small jump and it is not just for the date forward. It will kill corp and small webcast companies alike. Soundexchange is upset that consumers are no longer buying CDs. With an IPOD society...what do you expect to happen? You cannot play a CD on your IPOD.....Webcastes all understand a need for an increase, just make it fair across the board so that htey can stay in business and promote the artists....

Posted by: Redebord | June 26, 2007 12:12 PM

do artists have a choice in this matter? can the musicians who do see the benefit of internet radio opt out of this malignant policy? let the major labels price themselves out of the market and let the indies form a conglomerate outside of the RIAA. major labels are dead anyway.

Posted by: ron | June 26, 2007 12:13 PM

True artists are those who create beauty to help people feel and to share their message with others. Those who expect to be compensated for it are not artists... they are entrepreneurs
------

that thinking is anti-artist and flat-out evil. The Rhythm and Blues foundation was created by Atlantic Records and Ahmet Ertegun to keep aging artists out of poverty. Now every musician playing a gig is not really a musician in your eyes.

So from your way of thinking these musicians should give away their art for free to Apple and the lobbyist group, the Consumer Electronics Association, so they can market new devices that allow people to use free music? how many ipods would be sold if no one paid the artists...

Posted by: DCer | June 26, 2007 12:16 PM

The problem i have with the starving artist argument is that they are the ones being hurt if internet radio shuts down. Whereas the major artist and record companies are the only ones benifiting by these high royalty fees. For smaller artist internet radio is the only way for them to get their work heard, because regular radio only plays the top ten songs over and over from the top ten artist and never gives some great bands an opportunity to be heard without being commercialized. Internet radio sites like pandora give listeners the option of finding the music that they actually like and want to buy.

Posted by: Ryan | June 26, 2007 12:16 PM

Let me get this straight: the supreme court rules that restricting big money campaign ads by unions and corporations is a free speech violation, while raising royalties to put small internet radio stations out of business apparently has nothing to do with same. Free speech has become a contortion act.

I am all for fair compensation of an artist. The world is changing, however, and artists must begin to look at broadcast revenue as ancillary (i.e.; touring, merchandise, etc.) and of promotional value.

We must as a society err in favor of the average citizen and his/her right to expression - in empowering a diverse range of opinion and perspective with a low financial barrier to entry.

Posted by: jeffyskate | June 26, 2007 12:22 PM

DCer, will you actually pay attention and READ???

Webcasters aren't getting away with ANYTHING for free!! It's not like they've not had to pay anything. They've had to pay royalties well over AM/FM. Yet I keep seeing you say "giving away music" and stuff like that, as though webcasters didn't have to pay ASCAP and BMI fees and per-play royalties. We do! And most of us operate our stations at either no profit or a slight LOSS! Right now, those losses aren't beyond which we can afford, but SOON they will be. Then there will be no station. And there will be no one there to play OR pay your precious artists.

Posted by: J.D. | June 26, 2007 12:23 PM

Up to this point many of the posts have been about what will happen to the internet radio stations and the major radio/record labels. What has barely been mentioned is what this will cause the consumers to do. All of the hype about fear of piracy is bunk. If the record labels and artists were really that worried about piracy, they would not try to push internet radio under. I say this because that if internet radio goes away, then the consumers who hate airwave radio (or are just in a cubicle that gets no reception)will find a way to get free music (which is what radio is) and music from unknown artists. Yeah!! The return of music sharing programs. Yes it may be difficult for these types of programs to avoid detection and shut-down, but as they say necessity is the mother of invention. If the billionaire record/radio labels insist on killing web radio, it will be them just cutting off their nose to spite their face. The people (the consumers) want to hear stuff other than what is on the airwaves and they will find a way to do it free or cheap. Then the artists will have to fight that battle all over again.

Posted by: A little guy | June 26, 2007 12:24 PM

I love Pandora.com.

Every artist should also.
Sitting here at work listening to music I might actually like instead of the crap on commercial radio, I've found dozens of artists from which I've then purchased albums. A double-click later and Amazon's sending me an album by some obscure artist of which I would never have heard. I spend in excess of $200/month on music - most from artists I only heard on Pandora.

Shut down Pandora - start waiting tables.

Posted by: Artists will lose | June 26, 2007 12:25 PM

The thing to remember about all of this is that these "royalty" fees are to be paid to the licensing companies. Most artists who have found a niche on internet radio are not represented by these agencies, so in effect we will lose our primary outlet AND will never see a dime in royalties. It's a Lose-Lose situation for the "starving artists like us.

Posted by: wendy z | June 26, 2007 12:30 PM

Just for those not in the know, Soundexchange (which is a collection of RIAA companies) collect the royalities on ALL internet radio in the US. Create a song yourself and it gets streamed on-line - then Soundexchange gets some $.

Our government gave them a blank check to collect on all internet radio - public works, indie record labels, it doesn't matter. But if you OWN the copyright to a song do you get the money they collected for you? Sure - if you are willing to pay them a fee.

Yup, this RIAA front company gets to collect for every song played on the internet radio, then they get to charge the copyright owners if they want to get their dues. What a sham!

Posted by: Bob | June 26, 2007 12:32 PM

I am fine with any royalty compensation. The best way a musician can make money is too get out and perform. When was the last time you saw a musican playing at a restaurant for the evening. Nowdays all you have are Kereoke or radio for entertainment.

Posted by: Todd | June 26, 2007 12:39 PM

Since I live in an isolated area, internet radio is my main source of music. I don't know how many times I've heard a new artist, new song, or long-forgotten old song, and either gone immediately to iTunes and bought it, or written the title down on my "music/books to buy" list. I find it hard to believe that the exposure artists get on independent radio doesn't benefit them more than their royalty rate being increased a little.
And anyone thinking this "helps the little guy" so much should check out the fine print about how much more money the ARTIST will really get, and how many hoops he or she has to jump through to get it. I think this is about corporations getting rid of the small competion.

Posted by: SamBrown | June 26, 2007 12:40 PM

After turning of the dial of am/fm music stations years ago, due to the lack of actual talent, internet radio has opened my world over the last 3 months. I've purchased more music in the last 3 months, then I purchased prior over the 5-7 years. If internet radio disappears, so will my exposure to new and exciting musical talent (real talent).

Posted by: 40 year old Val | June 26, 2007 12:42 PM

I hope this happens.. Why? This means the satellite radio industry can kick it up and have more subscribers and more content. Which will be better for all!

Posted by: Alex | June 26, 2007 12:47 PM

If Bob is correct (re: The Way Royalties are Collected and Distributed), then the system is obsolete and needs to be thrown in the fire.

If Im an indie musician, what is worse? An internet radio station promoting my music and receiving a perceived and subjective value from my song? Or a government-endorsed system that extorts the internet broadcaster for each play of my track and pockets the money until/unless I pay for the right to collect? Who gets the money that is not collected?

Are you listening DCer? Whats your answer to that?

Posted by: ron | June 26, 2007 12:51 PM

The protest is not hype if you consider things from a Creative Commons or moral perspective. The system is alleged to force radio stations to pay SoundExchange regardless of artist intent [1]. This would make it impossible for people to run a variety of private internet radio stations, especially advertisement free stations. When artists grant permission to share, it should be allowed without further interference. More fundamentally, there is no "structural advantage" for broadcasters. Traditional broadcast is wasteful and limiting [2][3].
[1] http://www.dailykos.com/story/2007/4/24/141326/870 [2] http://dir.salon.com/story/tech/feature/2003/03/12/spectrum/index.html?x [3] http://www.mises.org/fullstory.aspx?Id=1662

Posted by: Will Hill | June 26, 2007 12:51 PM

Congratulations, Alex. You're now the owner of the dumbest thing ever said in this discussion.

Posted by: J.D. | June 26, 2007 12:52 PM

Sham Shamarific!!!

Artists who play music make money by playing live. The only way for an artist in the music industry to actually make a living is to go underground or go top 40. Look at Wu-tang. Are they hurting from internet radio/peer to peer downloads? No. Because the Wu took control over their music, they made themselves big without having to water themselves down and now they can work with any major label and get paid because they call the shots. Most bands and musicians aren't any where near that business savy.

Do your research. buy what you know will go as straight to the artist as possible (like the buckethead 13 volume set, in search of the... which was pretty much produced and packaged in bucketheads living room). And then, if you really like and want to support the artist, go see them live - and buy a shirt while your at the show. But don't be naive and think that buying the CD actually puts money in the artists pocket - or that these new royalties will put money in the artists pocket.

Posted by: Modius | June 26, 2007 12:53 PM

Freuquently the only place that I hear music worth buying is on the Internet. If those stations go out of business, the recording companies will lose a lot of sales. They are really not seeing the big picture here. Maybe the radio stations should only play the music when the recording companies buy the time!

Posted by: B Williams | June 26, 2007 12:55 PM

Frequently the only place that I hear music worth buying is on the Internet. If those stations go out of business, the recording companies will lose a lot of sales. They are really not seeing the big picture here. Maybe the radio stations should only play the music when the recording companies buy the time!

Posted by: B Williams | June 26, 2007 12:55 PM

"That thinking is anti-artist and flat-out evil. The Rhythm and Blues foundation was created by Atlantic Records and Ahmet Ertegun to keep aging artists out of poverty. Now every musician playing a gig is not really a musician in your eyes."

-------------------------------------------

You should read more carefully DCer,

"True artists are those who create beauty to help people feel and to share their message with others. Those who EXPECT to be compensated for it are not artists... they are entrepreneurs."

True artists create because they want to, not because they will get paid to. I never said there is anything wrong with playing a gig live and offline...I'm supportive of musicians and artist alike; however, I disagree with the fake argument that Soundexchange is using.

In other words, (because I need to make this bluntly obvious to you), I am attempting to discredit Soundexchange's main argument to the US government for raising fees and destroying INTERNET RADIO, and the medium used to help starving artists become discovered.(nothing to do with live performance gigs)
This idea is not even remotely evil...

Posted by: Anonymous | June 26, 2007 12:57 PM

This effects all streaming radio .... sat. radio is streaming radio.

This will not be better for all.

And the first poster, you applaud this action???? Don't you think something stinks a little when airwave stations do not have to pay this fee? Think maybe internet broadcasters are getting gouged with a 2x rate hike with a $500 minimum per station/year?

I run one of these. Small time. 25 listeners. Streaming fees + licensing cost me about $250 a year. I barely pulled in enough to keep that going. Now I am faced with $500 + streaming fees + royalities.

Right.

Posted by: Shaun | June 26, 2007 12:59 PM

I loved the way that, after Lars Ulrich gave a rousing speech to congress during the Napster hearings, Roger McGuinn offered an amazing point of view that, in light of these new proposed regulations, becomes quite relevant again.

Please forgive me, as I am at work & typing quickly so I don't get caught ;-)

Basically, Roger McGuinn addressed his history as a musician with the panel. He talked about the only money he got was a split from the advance his band received. Even though the Byrds penned & performed "Turn, Turn, Turn" & "Mr. Tamborine Man", 2 number one hits, they never saw royalties from the music companies.

Now, the immediate resosponse may be something like "that was decades ago & Music companies are held to higher standards now" or some variation. Mr McGuinn then also indicates that his music is avaialbe online, and from internet radio & distribution sales, he get 50% of the royalties from sales. He later (in another interview following the Npaster hearings) stated that since the inception of Napster, sales of his music has increased tremedously (number unknown), due to listeners hearing music downloaded from Napster, and then the listener going to buy the CD. When was the last Byrds record released? Try to google that one & then explain why music sales increased with the wide-spread use of Napster.

Internet radio provides the same outlet as napster, just within the guidelines of the rules. Rules that should be applied evenly to all music outlets (what about your cable company streaming music through TV channels? Are they affected by these rules too?). With these new rules, we are creating some sort of Legislative oligarchy - what to listen to & where to hear it. Bending to big business allows them to let us hear what they want us to hear. I imagine that this may spur a new music revolution, as those small struggling artists that don't get commercial airplay, have to go back to fighting 'the man' in their lyrics, creating better music in general.

The better the music, the more airplay, the more sales - hmmmm almost sounds like we've heard this tune before...

Posted by: slugg | June 26, 2007 12:59 PM

savenetradio.org has a FAQ page that breaks down the current performance royalty fees paid by the various radio mediums:

Broadcast ($20 billion/year): 0% of revenue
Satellite ($2 billion/year): 7% of revenue
Internet ($74 million/year): 58% of revenue

The Internet Radio Equality Act is promoting a more traditional rate for Internet Radio, either $0.0033 USD per hour per listener OR 7.2% of the station's revenue. All of this with a $500/year minimum.

This would support artists and keep internet radio alive long enough to develop a usable business model that will support radio stations and artists alike.

And, as always, the less music is stolen, the less dumb mistakes federal law and the RIAA make, so stop ignorant lawsuits by purchasing your music legally!

I've even taken my podcast's website down for the day at geekons.com in protest, because I feel that podcasts will probably be next on the list after internet radio.

Posted by: OneSeventeen | June 26, 2007 1:00 PM

I really am an artist and, although I will lose radioparadise.com and Pandora.com when this goes into effect, the new royalty rates (fair or unfair) would compensate me and my peers whenever one of these independent broadcasters plays one of my songs. I am not asking for millions, just for my fair share. Like others have said here, the business models of these independent broadcasters reflects the current (very relaxed) rules on compensating artists and the record companies that represent them. New business models will need to be created if new rules go into effect.

I have read elsewhere that the royalty rates are going up FOUR times, not two times. I think there is probably a good compromise somewhere between what we had and what they are proposing. Washington loves a good compromise and I hope that both sides get a little bit of what they were hoping for.

Posted by: pianocomposer | June 26, 2007 1:02 PM

It definitely sounds like people from Sound Exchange are posting here. The facts are that the vast majority of online radio stations have ALWAYS been paying royalties (including royalties that AM/FM stations have not had to pay) but the new ruling wants online stations to pay more in royalties than they bring in via revenue. That's ridiculous!

Online radio stations have asked for a fair way of paying royalties based on revenue.

How is that not the fairest solution?

Online radio stations play artists that nobody else will play. Without these stations, the majority of artists will never be heard. I can't believe any artist would be siding with Soundexchange on this issue. No online station is arguing against paying royalties, we just want the royalties to be fair (not 400% increased in cost like in the proposal)

Posted by: Gary | June 26, 2007 1:06 PM

At work, I recently started to listen to soma fm out of San Francisco. They play the same music that I listen to at home on CDs. (Yes, I still buy CDS.)

My impression is that AM/FM radio stations are simply using legislation to cripple internet-based 'stations.'

Hmmm...I wonder if the AM/FM stations that stream their broadcasts will now be paying the double royalties.

Posted by: charlieahern | June 26, 2007 1:07 PM

To DCer when you say:
"and if the artists aren't getting a cut then their music is being exploited."

No no. The *ARTISTS* already are getting a cut. It's the record companies who aren't getting a cut.

And by the way, when you say "AM/FM will have to pay this additional tax", no, they won't. It will take a bill in congress to remove the exemption from this tax. That won't happen, not in this climate.

The truth is, the RIAA member want web radio to die off not because of royalties, but because it presents opportunities for independent musicians to get their music heard without going through the RIAA and Clear Channels of this world. What they're afraid of is they're losing control of consumer distribution slowly via the internet, but they still control the artists because the RIAA controls the middle. If the web broadcasting flourishes, it's easy then for artists to have their songs heard and then sell the songs themselves without the record company's "help".

Please. You people are so transparent with your astroturfing. You sicken me.

Posted by: Skeptic | June 26, 2007 1:08 PM

When people hear more music they like, they will buy more music. AM/FM radio stations have never appealed to me, but internet radio exposes me to new songs, and sites like pandora actually help me find music I would want to buy. The majority of people have no desire to see their web radio go silent, and no one is actually being hurt by its existence. If the recording industry was actually concerned about people not buying because they can listen for free, they would be going after things like harsh limits on the minimum size of the music pool or the ability to skip songs, but just insisting on more money just makes them look bad and goes against what most people want. If artists aren't making enough money, its because the record labels are taking so much of it, not because we are listening to music online.

Posted by: mobius1 | June 26, 2007 1:12 PM

Let the Marketplace do the pricing.

I continue my XM plan in my car just so I can browse into XM music from my computer. In fact, the station I listen to is not even available from satellite any more so I travel with it off. If XM stops or charges for my Internet access, I will probably stop XM.

So if the media distributors keep up the brutal game of lawyering technology to death, they will die by the sword. I support the right of artists to gain what the market will bear for their creations but if they are restricting availability to 78's when I am wirelessly beaming, they ain't getting my dollars.

I am not in the business but I would advise these neandrathals to remember the cassette tape vision where we were encouraged to copy that would possibly lead to someone else purchasing a real tape. I can record HDTV in 1080i but will still buy a Blue-Ray because it doesn't cost that much and has lots more features on the "recording".

But hopefully more of us will get the picture, shut out these middle men with the lawyers and give our money directly to the artists.

Posted by: Tom Mariner | June 26, 2007 1:13 PM

I think "pianocomposer" is just an industry shill. He/she says:

"I will lose radioparadise.com and Pandora.com when this goes into effect, the new royalty rates (fair or unfair) would compensate me and my peers whenever one of these independent broadcasters plays one of my songs"

This doesn't make sense. If all the web radio stations go out of business, who exactly will pay you this royalty? AM/FM doesn't pay these rates, so you'll get $0. Nothing. So tell me the truth. Do you work for SoundExchange (RIAA members) or Clear Channel. Because your ideas will not have any positive value for musicians. None. And in the long term, it ties your fortunes even tighter to the RIAA, the very people today cheating musicians of royalties. But don't trust me. Google for "record companies cheating artists of royalties". Open your eyes, dude.

Posted by: Anti-Troll | June 26, 2007 1:14 PM

I quit radio 4 years ago because of the stranglehold the recording industry has on what people get to listen to. The business model that's been around for the past 80 years suddenly isn't working, and the executives in charge either can't or won't go through the effort of understanding a new market. This is just another grab to maintain absolute control.

The recording industry's message is clear:
If we can't sell your music, you don't deserve to be heard.

Posted by: Dan | June 26, 2007 1:16 PM

Right on target dan!

Posted by: Anonymous | June 26, 2007 1:20 PM

Please visit this page for information on what you can do to help change this:

http://theclassicalstation.org/save_our_streams.shtml

Posted by: Phil | June 26, 2007 1:21 PM

exactly skeptic....it really boils down to control of culture...music is a huge part of culture. Net radio allows us choice. The big labels want us to culled into submission by top 40 hits. tell me, when are you going to hear something like immortal technique on regular commercial radio? you won't because he won't water down his music.

Its about control over culture, the rich get richer and the poor cannot be allowed into that club.

Not to beat the dead horse, but again I will say --- musicians make most of their money by playing live, not via royalties or via CD sales. Net radio gives them the same exposure peer to peer systems did - but net radio plays by the rules. So now they big guys change the rules to make it impossible for something that isn't top 40 driven to remain afloat.

Posted by: modius | June 26, 2007 1:26 PM

Almost every CD or song I have purchased in the last 6 months was because I heard the music *first* on internet radio. I somehow doubt that I am the only one whose purchases have been driven by internet radio listening.

The rocord industry is really missing the boat here. Where else do they get an environment where people can go from listening to buying in a matter of seconds (clicks)? I am much less likely to buy something I hear on my car (or satelite) radio simply because by the time I get to my computer I will have forgotten the song or the impulse to buy will have passed.

Posted by: JeffR | June 26, 2007 1:28 PM

One thing to note in all of this is that there will be no option to for radio stations to even play non-RIAA music if this decision goes through.

SoundExchange has a government monopoly and the legal right to collect royalties on all songs played, even if those songs are not owned by any of their members. They hold on to this money until the artist(s) join their organization (and pay a rather hefty fee themselves)

So no, most independant musicians won't see a dime from this.

On another point, SoundExchange and the RIAA are working towards making all station pay these increased royalty rates, including traditional AM/FM station. It will be interesting to see the reactions when all radio is shut down as a result of this attempt to control music to death.

Posted by: Nala | June 26, 2007 1:30 PM

Like a previous poster, free internet radio has inspired me to buy more cd's than I have in years, and I'm talking about hearing the song, going to the band's myspace page and mailing them a check. No record company involved. Band gets the maximum percentage of my money.

I hope Europe has some good internet stations because if this goes through that's what I will listen to, and that's too bad because I love American indie bands. In fact, I play in one, and we have a myspace page where you can download our poorly recorded songs for free.

Posted by: Chris K | June 26, 2007 1:33 PM

"have I done the world good, or have I added a menace?"

-Guglielmo Marconi

Posted by: Anonymous | June 26, 2007 1:42 PM

why can't Pandora et al just set up their servers off-shore? There are plenty of internet stations all over the world that are not going to be going off air. I listen to the BBC6 half the day and then a station from Thailand the other half. It's a big wide world of music out there people. You just might have to dig a little bit to find it.

Posted by: Glenn | June 26, 2007 2:19 PM

I smell a couple industry plants in here.

Posted by: Stopher | June 26, 2007 2:19 PM

Music lovers will find another way to discover new artists outside of the commercial markets (which will soon include internet radio because the format will be so heavily taxed with royalties that only generic top 40 dullness will get played). Who still remembers how the amazing creativity that defined music in the 1980's was made possible on a large commercial scale by MTV and other new media outlets for music? Commercial radio didn't give those new artists the break they needed until they became popular through other media outlets. The artist deserves a royalty, but the format that is hosting the songs should have an incentive to play the music in the first place. Like a profit motive. When the motivation of entrepreneurs to build up their customer base, is removed, the format will go commercial (only run by large media companies who can negotiate their way out of these anti-capitalism-consumer-creativity increases in the royalty rates). The music loving public will be stuck with FM radio style internet radio stations that only play a rotation of the same top 40 songs over and over all day long. The general public will stop listening. Until they find a new outlet. Looks like its time for another new invention to save great music from corporate dullness again.

Posted by: Jim | June 26, 2007 2:23 PM

I pay for the CDs I play. I pay for the website and streaming service I use. I am NON FOR PROFIT. Meaning I PAY so others can listen to music on my streams. People like the music they BUY the CD or Songs from some corporate service. If a Church is non for profit and gets compensation on things.. why shouldn't us? Most stations I know are only for fun and amusement of its listeners while playing online games. Does the recording industry really need to clear us all off the internet, so they can establish their own ways of streaming music at over inflated prices? The REAL question should be... if MULTI MILLION DOLLAR CUMMULUS... pays less than YAHOO... and CUMMULUS (forgive the spelling) pays less and Makes more in revenue... why aren't they going after them? Ive been webcasting since 2002 and for alot of people this was a great forum to get their independent music out, and for many of us, gave us a taste of being a DJ used to be. Pick your songs, do requests.. not like Corporate radio .. where you play what MTV and the other corporate Giants want to shove down J.Q. Public's throat.

Posted by: Bill - Internet Radio Owner/DJ | June 26, 2007 2:41 PM

Internet radio should not have to pay more royalty and fees to artists that a regular radio station that you hear in your car. It is basically the same radio that you hear in your car. If they want to make internet radio pay more then they should make HD radio and every other radio station pay more because that just isn't fair. What everybody is doing is just getting greedy and if they don't stop then we just won't have any music to listen to because it would have to go bankrupt and all the music and radio stations would be gone.

Posted by: Vanessa | June 26, 2007 2:48 PM

do unto others what you wish to do unto yourself

the golden rule

Posted by: Vanessa | June 26, 2007 2:53 PM

You SoundExchange shills should be ashamed of yourselves. I bet you even disagree with what you are saying but you go on astroturfing anyways. Most people either support Internet radio or simply ignore it. Maybe a few ignorant artists buy into the SoundExchange rhetoric, but the rest of us are against you and for webcasting. So you shills stick out like a sore thumb. Now go away and play in traffic.

Posted by: Rob Thornton | June 26, 2007 2:54 PM

Ok let them enact this dribble then when internet radio goes offline it will be back to the days of file sharing and ratio sites. It is really a sad sad day when our own government tries to control what we do. Not like this isn't already happening. With the way things are currently many people who listen to music can use internet radio as a "fix" for that need. Once this "pile of dung" is set in motion people will have to get the music elsewhere. Come on people think where will they get that then? What pisses off the government is people are making money and they can't get a piece and it is truly revolting. I will admit I am not the most educated person but I have learned this..More revenue for musicians, sound engineers, and the governement is generated from internet radio then will be generated without it. I know I will still get my music somewhere.

Posted by: Stu | June 26, 2007 2:59 PM

Today I can say the CBC (public funded (web)radio in Canada) is worth it. The closest senator I could contact is Hillary, NY is just across the St.Lawrence from me, but I hear she's busy with something else.

Posted by: canucklehead | June 26, 2007 3:01 PM

Hey, if the RIAA and/or the CRB want to take it to this level, I say let net radio die. Let traditional radio die. Then they can enjoy the dearth of free advertising that they had once taken for granted. Speaking of which, do they charge MTV royalties for playing music videos?

more on this at http://abramnichols.com/blog/?p=476

Posted by: Abram Nichols | June 26, 2007 3:08 PM

To all the 'starving artists':

The only music I buy or shows I go to are from bands I've heard on independent, listener supported, radio stations streaming on the web. Allow RIAA to price them out of existence and no more music or box office sales for you. So please if you no longer wish to get paid at all for your art go kill the goose that laid the golden egg.

Posted by: Norm | June 26, 2007 3:43 PM

I have been broadcasting on the web since November 2000 and will publicly state that I have never made a dime off of my radio station. In fact, I pay to broadcast, with those payments covering the royalties of ASCAP, BMI and SESAC.

I broadcast as a hobby and, thanks to this impending rate hike, will have to find something else to do after July 15th if nothing changes from the current course. I play independent music as well as mainstream music, and my indy artists love the exposure and web traffic that my station sends their way.

To suggest that the current system is ripping off the indy artist is ludicrous. If an artist is not getting paid what they believe they should be for their music through my station, then they should fire SoundExchange and deal with me one on one. I won't charge any administration fees and will give them all the pennies per play that they legally deserve and they can bank all of it.

All Christmas Internet Radio
http://www.AllChristmasInternetRadio.com

Jeremy

Posted by: Jeremy | June 26, 2007 3:59 PM

Looks like the original comments were left by Soundexhange board members who were tipped off as to when this blog would post.

Nice job Washington Post, doing yet another dis-service to your readers and showing once again you have no regard for the duty and obligations you owe the public.

Posted by: Jeff | June 26, 2007 4:16 PM

Wow all the "Starving Artists" are certainly out in force. I haven't bought a cd in years except for stuff that i hear from NPR. Whether it is classical or pop or whatever. I guess if NPR stops doing music reviews. I won't have to buy your cd's anymore. Looks like you artist that are starving will have to get a side job, enjoy the daily grind.

Posted by: Tim H, Florida | June 26, 2007 4:17 PM

Under current law, a webcaster can agree to pay the statutory royalty rates through SoundExchange. The law mandates that (after operational expenses) 50% of the fee goes to the holder of the copyright in the recording, which is usually the label. The four RIAA members get 70% of that 50%, so they get 35% of every net royalty dollar paid into SoundExchange.

Of the remaining 50%, 5% is set aside in funds for session musicians and back up singers. These funds are administered by AFM and AFTRA, respectively.

The remainng 45% goes to the featured artists on the recordings, or so SoundExchange would like you to think.

According to the SoundExchange website, there are 20,000 artists who have registered to receive royalty payments through them. Unfortunatel, there are also 8,500 artists that SoundExchange has received payments for who they say they cannot find. That's approximatel 30% of the artists they have received money for.

They cannot find them. And they don't want to find them.

They don't want to find them because if they don't, after three years, they get to keep the money for themselves.

7,500 artists had royalties earned for webcasts before March 31, 2000 forfeited last December.

Another 1,000 have been added to that total for another forfeiture scheduled for June 30, 2007.

Yep, next week.

SoundExchange hasn't even bothered to fake trying to find people this time. Unless you go to their website to check on the artists they say they cannot find, there is no public mention of this forfeiture.

How much is at stake? SoundExchange says the "average" artist gets $360 a year. You may not trust that number. I don't. SoundExchange doesn't have to show anyone their math, and they've shown a real tendency to make up numbers as they go along.

Be that as it may, next week 8,500 artists face forfeiting two and a half years of royalties.

8,500 X $360 X 2.5 = $7,650,000

Not a bad payday for not doing the job you promised to do, and got a goverment sanctioned monopoly to do it.

But, like they say in the infomercials ... there's more.

All that stuff about the artists getting 45% and payments made to directly to them?

It only applies if the webcasters agree to pay the statutory rate; the one set by the CRB.

If the webcasters negotiate deals directly with the labels, or even if they accept the "offers" SoundExchange has purportedly made, the 45% share and direct payment is not guaranteed.

That means that the money can be paid directly to the labels, and they can decide how much the artist gets. For those veteran artists who recorded in the 60s under contracts that paid 3 or 4% royalties, the labels could decide that's what their share should be now. For those artists who the labels say still haven't recouped advances and expenses, they won't even get that 4% until all the expenses are recouped.

In all the current noise, SoundExchange has not stepped up and said that this will not happen. At most, one member of the Board has suggested that most labels will choose to let SoundExchange do the bookkeeping. If you figure that using SoundExchange as a middleman will cost EACH of the four majors a couple millon dollars a year, do you really think, as desperate as the industry is, that's going to happen?

On Thursday, the House Small Business Committee holds a hearing into the CRB rates and their impact on Internet radio. The timing of the Day of Silence (and the resulting swamping of Congressional switchboards and fax machines) should help the committee focus on the actual facts, rather than what SoundExchange would like them to believe.


Oh,and one note for DCer - The Rhythm and Blues Foundation was not started by Ahmet Ertegun because he wanted "to keep aging artists out of poverty." He did it because he wanted to throw a party. The historic Atlantic artists who were already in poverty (Lavern Baker, Ruth Brown and Sam Moore, among others) who he invited to appear at the Atlantic 40th Anniversary show sat down with the then-current Atlantic stars, including Phil Collins before the show. All the performers told Ertegun that he wasn't going to be able to throw his party unless he fixed things for the veterans. The R&B Foundation was part of the solution. It has turned out to be a dismal failure, and instead of correcting historic injustices, it has been reduced to doling out charity. It was definitely the wrong example to pick to support your argument.

Posted by: Fred | June 26, 2007 4:18 PM

How is exceeding a companies revenue for one expense a shafting "the little guy".

If they go bankrupt because they can't pay one expense, that WILL shaft "the little guy".

Percent of revenue is NOT shafting "the little guy". (maybe it's soundexchange tying up those pennies in administrative cost that's the problem, not the internet stations)

Posted by: christine | June 26, 2007 4:23 PM

There's a lot of cognitive dissonance going on here. The "I hate the music industry and the RIAA, but I buy their stuff anyway," kind.
I'm at the point where I think people get the culture and government they deserve.

Posted by: Caslon | June 26, 2007 4:32 PM

What's really unfair about this is that web broadcasters are already paying more than FM broadcasters for doing the same thing. I work for a small FM radio station that had to shut off their web stream because of the stricter rules and higher cost, even though fewer people listened to our webcast than to our FM broadcast.

What is it about webcasting that demands such a premium price?

Posted by: Ben | June 26, 2007 4:32 PM

"I haven't heard any good explanations for this, but it's hard not to read into the intentions of this action."

JG, what are the bad explanations? Before I learned about this issue, I assumed that the Librarian of Congress used the same royalty policy for both broadcast radio and webradio. I can't imagine a credible defense for tacking on the additional performer fee for webradio.

I have a stake in this as a listener. Broadcast radio formats have become so narrow that I've given up trying to find unfamiliar music there. With webradio and satellite radio, I can learn about underground artists and I can hear oldies that haven't been run into the ground.

Posted by: Tonio | June 26, 2007 4:50 PM

i notice my favorite streaming station wmud is silent today so i read the article to find out why i was already aware of the royalty issuses involved and have read the comments so far in an interesting twist i listen to internet radio because there is a broadcast tower a 1/4 mile away drowning out most everything else
with thier insipid bs lets hope this is resolved in favor of the little guy

Posted by: esteban | June 26, 2007 5:11 PM

This all sounds like a poetic way to say 'Greed rules, pay up or disappear'. Cripes.

Posted by: Susan | June 26, 2007 6:59 PM

I am a pirate radio operator. I turned off the pirate radio operation because I could effectively stream a radio station legally and at little to no cost (depending on content played).

This puts us back at square one. I might as well put the FM transmitter back up (as should 10,000 other pirates out there).

I'd rather risk the FCC busting me then deal with the mafia tactics of the RIAA and it's sister agencies.

Posted by: Elijahblue | June 26, 2007 10:51 PM

Let me tell you what's really at issue here. As a card carrying member or SAG and AFTRA, a person who was an A&R director at a label as well as a one time owner who has three gold singles and one platinum album to our old label back when we had it (S.O.S. Records). The entire argument put forth by SoundExchange is BS. It's ridiculous. Because we created a song doesn't mean we're entitled to be paid for it. We create music, we pay to get it exposed in one way or another and hope to God people will think it good enough to buy. That model appears to not be good enough anymore. Please note. I'm not a plant for either side. I prefer truth over lying, cheating, manipulating cowards hiding behind the shroud of this "we care about the Artist" nonsense. I am now on the broadcast side. I can tell you that no other "ART" form in the world gets money unless it's product is SOLD. Authors, Painters, Sculptors, all their work is displayed with the hopes of being sold. They don't get money for it just because they MADE it.

While P2P can affect sales, internet radio as well as radio do more to generate sales, create awareness and keep dead catalogues alive.

Just 15 years ago the labels paid people millions like Jeff McClusky & Associates to get their music heard on the radio and now the labels are trying to say it's not important. All that exposure means nothing. That's their position. Laughable. Not only that the labels paid extra for a WHEN YOU PLAY IT SAY IT CAMPAIGN because radio back then was too stupid to tell people the name of the song and artist they were hearing so they could actually BUY IT. Internet radio has been doing all of that for years and never once have one of you bust out ignorant Artists said thanks for the help. We've never charged you a dime because it's always been a you scratch our back, we'll scratch your relationship. That can always change as you wish I'm sure. Perhaps the labels don't want to pay everyone, just those they control. I mean after all, all that dead catalogue we're playing? Wow, that's more money they never had to pay to those artists? They now have to pay.

Posted by: Sal Amato | June 26, 2007 10:59 PM

Looking through these posts there seems to be an extremely wide range of opinions, but arguing with each other doesn't seem to be helping the situation either way (though it can be fun). We all know the RIAA and recording industries are businesses and the nature of business is to make money. We have to accept they will do everything in their means to accomplish this goal. Including but not limited to manipulating laws in their favor. Also, artists regardless of motivation, financial or artistic, should be compensated fairly based on the quality of their work...like any other craftsman. Being that both the recording industries and artists rely on us to pay their bills, I suggest that you let your actions do your talking for you. If you are FOR the new rulings, purchase music only in CD format (or another one of the more profitable formats). If you are AGAINST the new rulings, stop buying music for a few months or years. I know that I can live without buying new music for a year, but how do you suppose the recording industries will fair with a dramatically reduced income for a year?

Thanks for reading my post, DM

Posted by: DM | June 27, 2007 12:46 AM

woot.

Posted by: [)oodlebug Sanchez | June 27, 2007 12:50 AM

no business can survive if they alienate their customer. i fail to understand why the webcaster is being taxed, which is what this is, for an industry that has failed its custyomers and artists. i do feel that some compensation is in order to alleviate the strains of piracy but it really comes down to the internet provider. there would be no comcast, verizon, aol w/out content. if anybody should be poaying anything its the guys already collecting the monthly subscriptions for internet access. why not just add a $1 to the monthly bill, fork it over to whatever copyright board, and let it be. everybody, i mean everybody, pays a $12 a year, whack it among the riaa, mpaa, etc, let them establish a distribution scheme btween the labels and artists and end this fiasco. if they persist in this death spiral, they'll see piracy @ bibical levels.

my wife is a laid off sony music employee but we saw her job getting axed after the MILLIONS spent on the michael jackson album. not only is this about greed but incompetence. besides, why should we reward an industry that can't keep itself clean from price-fixing, payola, missed royalty payment that it deserves a michael moore film to be made about it.

Posted by: doug marcus - sewell, nj | June 27, 2007 3:41 AM

For the message firstly posted, in point of fact, publications have fewer copyright protections than those of musical works.

Secondly, it is well to remember that in a considerable number of other countries broadcast entites pay 3-4% of their revenues for the broadcasting of recorded music. In addition, they pay approximately the same percentage for the use of the lyrics and compositions associated with the recorded music they broadcast.

Such an arrangement is sustainable. However, the Copyright Royalty Board's decision of March 2nd removed the terms of the Small Webcasters' Settlement Act of 2002.

This act allowed Internet radio stations whose revenue did not exceed 1.2 million dollars the option of remunerating royalty fees on the basis of the percentage of revenue model. Thus, in royalty fees those stations that did not earn revenue in excess of 250,000 dollars were required to pay 10% of their revenue. Those stations that earned revenue in excess of 250,000 dollars had to remit fees constituting 12% of their revenue.

While this was a system more expensive than which exists in other countries, still, it was manageable. Then, earlier this year, the CRB eliminated this provision, and it required that all stations pay according to the per performance schedule. More than that, it imposed progressively higher prices per performance each year from 2006 through 2010.

Thus, for example, in 2007 alone, Internet stations will have to pay .0011 per performance (one performance is when one listener hears one song). Assuming 100 concurrent listeners and assuming 15 songs per hour and multiplying these numbers by 24 hours by 30 days by 365 days, well....
Doing the arithmetic certainly shows why such fees are not sustainable for all but the wealthiest Internet broadcast services.

In addition, the writer probably knows these fees are to be applied retroactively to January 2006, causing many stations to discontinue broadcasting and many others to declare bankruptcy. Effectively, the application of these royalty rate increases and special fees will consume between 50-350% of revenue. I do wonder how many businesses would be able to continue in such an arduous environment.

But let us assume for the moment that these fees someday are applied to terrestrial radio as well, does the writer assume that many of these stations will continue broadcasting music hitherto as they have? While a number of such stations will continue to broadcast music, they will truncate the amount of time to which they devote such programming. And, it is likely that the playlists they use in future will be even more limited than they are today, given this scenario.

Perhaps the writer would find interesting one of Kurt Hanson's articles on this subject. For example, he estimates that many terrestrial radio stations make a profit limited to approximately 6-10%. However, as he estimated that paying these type of fees would increase expenses by almost the same factor, it is patently obvious that many of these stations would limit or eliminate music programming from their formats.

Given the reality of such a scenario, how would the artists benefit then? Even now, when terrestrial stations broadcast the music they broadcast, more likely than not it is the well known artist and, often enough, the already wealthy artist who benefits. Scarcely does the struggling artist benefit from the present situation where over the air radio is concerned. Should the CRB's decision be applied to terrestrial radio, for example, by an act of Congress, that situation favoring the wealthiest musicians will be exacerbated, indeed.

Finally, the writer of the first posting might find copyright law as it relates to this issue as fascinating as I do. The Digital Millennium Copyright Act replaced the older and fairer standard, the 801(b)(1) criterion, in favor of the "willing buyer, willing seller" standard. The effect of this substitution, ultimately, was that such a change gave leave to the CRB to rule as it did. In effect, the CRB was simply following the law, however poorly that law was crafted in 1998.

The problem with the willing seller and willing buyer standard is that it incorrectly assumes that the parties negotiating such fees are on a level playing field, which is assuredly not the case. Internet radio trying to negotiate fair prices in the face of the power of the RIAA is, to state the matter subtly, rather daunting, if not impossible.

Perhaps the writer needs to know that, when setting royalty rate increases, the older standard took into account various factors. For example, it required that rate increases, etc. be fairly set, and it required that rate increases be set in the context of the effect on existing broadcast services.

The 801(b)(1) standard required that the interests of the copyright holders, the copyright users and the general public be weighed when adjudicating such matters. Stated differently, it prescribed that, while society should reward the copyright holder for his or her works and creative efforts, it prescribed that other stakeholders are involved in this process as well and that their interests also should be taken into account.

And, it would be well to consider that, in general, satellite radio pays 7.5% of its revenue for the broadcasting of such fees.
Why Internet radio should suffer and labor under such obviously discriminatory practices is a mystery to me. Perhaps the writer of the first posting could explain that to me.

Thank you.

Posted by: Charles St.James | June 27, 2007 5:13 AM

I am an internet broadcaster. I am in my 70's, and play music for people in my age group. I started doing this when the last station in my area that played the real oldies, changed formats and now plays the same music as other FM stations play.

The music I play is from the 40's and early 50's. The great majority of the artists heard have passed away. As has the songwriters, arrangers, etc.

So, who gets the royalties?

I have received emails from 100's of listeners that appreciate being able to listen to the music that they grew up with, and, from a lot of younger people are discovering a different type of music.

I do this as a hobby. I pay to broadcast. I have not made a cent. At first, I included the music from my old record collection. Later, as I expanded, I would find cd's that would have songs from back then. I have purchased more cd's since I started broadcasting than I have in the past. I have also purchased single recordings over the internet. Exactly who gets the money from my purchases? Not the artists.

I am all for today's artists to receive compensation for their work. But, the ruling to increase rates will only make me stop doing my broadcast. Who does that hurt? Not me, I still have the music that I can listen to. But, the people that have found a few hours or minutes of music they love will listen to what, the FM stations of today that play absolute trash.

Thanks for letting an old guy get this off his chest.

Posted by: Bob | June 27, 2007 6:23 AM

I run a small net radio station. Under my license, I can not and do not carry any advertising, sponsorship or generate any kind of income. I play 24/7 music and pay royalties every quarter. The entire station is funded out of my own pocket.
Having said that, I am shutting it down despite having a small but loyal listenership. Why? Because the new few structure will bleed me dry. To go commercial will cost me an arm and a leg, both financially and timewise.
The losers? Well, I have my music so will run it from home on my pc. The audience I do have, they will either turn to other stations or simply listen to their own music. However the big losers are the artists. They won't be getting my royalty fees anymore.

Posted by: James | June 27, 2007 10:13 AM

I have discovered so many artists I now love due to internet radio, and not even the big names like Rhapsody or even Yahoo, but the little indepedent stations. I would have never heard of these artists, or *bought* their material, if all I had to listen to was AM/FM radio. I don't know about other markets, but I live in Tampa, FL and we get two choices here - crap and trash, otherwise known as Cox and Clear Channel. This is just another way to ensure that they are able to force feed us the same drivel of 15 songs over and over so they can line their pockets with Benjamins.

I agree that the only people who are going to suffer are...you guessed it the artists. I say that with the definition of someone or a group of people who make art, not the Paris' and Britney's of the music industry.

It is disgusting. I am contacting my senator and congressman today.

Posted by: Kat | June 27, 2007 10:40 AM

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Posted by: hugepeter | June 27, 2007 10:43 AM

hey..."day of silence" a really scaring one.
If you blog or have a webpage check out http://www.widgetmate.com

Posted by: muellerduran | June 27, 2007 10:45 AM

DCer, you claim to be about fairness but you have yet to adress why it is fair for Internet radio to pay rates that are double that of the AM/FM stations. The answer? It's not.
-------
You are aware that you responded to a post of mine that said that the RIAA asked the AM/FM stations to pay the same or similar amount, right? How much more simple could I have put it? Terrestrial broadcasters are being asked to pay too. The idea they aren't is false.

but also, can anyone really, truly suggest that the internet radio experience is the "same" as broadcast radio and therefore should pay an "equal" amount?

Posted by: DCer | June 27, 2007 11:08 AM

DCer, will you actually pay attention and READ???

Webcasters aren't getting away with ANYTHING for free!! It's not like they've not had to pay anything. They've had to pay royalties well over AM/FM. Yet I keep seeing you say "giving away music" and stuff like that, as though webcasters didn't have to pay ASCAP and BMI fees and per-play royalties. We do! And most of us operate our stations at either no profit or a slight LOSS! Right now, those losses aren't beyond which we can afford, but SOON they will be. Then there will be no station. And there will be no one there to play OR pay your precious artists.

------

I have a perfect solution for you, Mr. Unreasonably Angry, PLAY ONLY MUSIC YOU YOURSELF CREATE. IT'S THAT EASY! sheesh!

I disagree with you and suddenly I'm accused of "not reading." Is that rational discussion?

Posted by: DCer | June 27, 2007 11:11 AM

If Im an indie musician, what is worse? An internet radio station promoting my music and receiving a perceived and subjective value from my song? Or a government-endorsed system that extorts the internet broadcaster for each play of my track and pockets the money until/unless I pay for the right to collect? Who gets the money that is not collected?

Are you listening DCer? Whats your answer to that?
-----


Actually I wasn't listening (technically the word is reading) because I had to go to the dentist.

Your argument makes no sense to me and incorrectly describes how artists get paid via royalties. You create an untrue straw man and ask me to defend something that doesn't exist- not possible.

What is a "subjective value" and how can I use it to get my 1966 Vox Continental repaired?

I can read what you told me: You have a bad business model that needs to be updated to reflect paying the artists more. So what's your business solution to this change in the marketplace? Will you succeed, partnering with artists or will you collapse in failure?

Posted by: DCer | June 27, 2007 11:18 AM

True artists create because they want to, not because they will get paid to. I never said there is anything wrong with playing a gig live and offline......
This idea is not even remotely evil...

----

And I think you are being so judgmental that the argument that you yourself wrote is wrongheaded. How dare you define what a "true artist" is? That is evil. You wrote it, own your words and don't try to weasel out of them.

Posted by: DCer | June 27, 2007 11:22 AM

Oh,and one note for DCer - The Rhythm and Blues Foundation was not started by Ahmet Ertegun because he wanted "to keep aging artists out of poverty." He did it because he wanted to throw a party. The historic Atlantic artists who were already in poverty (Lavern Baker, Ruth Brown and Sam Moore, among others) who he invited to appear at the Atlantic 40th Anniversary show sat down with the then-current Atlantic stars, including Phil Collins before the show. All the performers told Ertegun that he wasn't going to be able to throw his party unless he fixed things for the veterans. The R&B Foundation was part of the solution. It has turned out to be a dismal failure, and instead of correcting historic injustices, it has been reduced to doling out charity. It was definitely the wrong example to pick to support your argument.
------

Post a link if what you wrote is true. I talked to the late Ruth Brown about this in the 1990s and it was no failure then. I talked to people who worked with artists who got 1960s contracts with corrupt managers fixed and they loved the group. I saw no issues online except a funding issue related to the 2003 awards show. So cough up some evidence.

Posted by: DCer | June 27, 2007 11:29 AM

DCr, maybe you should explain to us just what life is like for a corporate puppet such as yourself, so we may then understand your failed reasoning.

Please include how much you're being paid to post this drivel, and why it is that you don't think that money would be better deserved in the pockets of true artists, which does not include the talentless, souless, corporate designed, one hit wonder bands we're all completely sick of, and choose to no longer endure.

Note that your corporate puppet performance here is just as unconvincing.


Posted by: David | June 27, 2007 12:09 PM

DCr, maybe you should explain to us just what life is like for a corporate puppet such as yourself, so we may then understand your failed reasoning.
----
I am a former musician with a few cassettes out and am friends with many musicians. Your anger is uncalled for and unpleasant to read.

I post around all kinds of issues on the WaPo boards and am most concerned today about Marc's column on traffic user fees.

There are people from internet radio who astroturfed the above and admitted they had internet radio stations. Why pick on former musicians?

Posted by: DCer | June 27, 2007 12:24 PM

For DCer:

Concerning the creating of a successful business model, this person wrote:

"You have a bad business model that needs to be updated to reflect paying the artists more. So what's your business solution to this change in the marketplace? Will you succeed, partnering with artists or will you collapse in failure?"

In respect of a bad business model, may I write that Internet radio is a business model that well could be profitable. But this model is hampered by unreasonable conditions not imposed upon other broadcast media, as I indicated in my first posting.

To repeat some of the points I mentioned above, for example, while satellite radio pays approximately 7.5% of its revenue for the broadcasting of recorded material, Internet stations making no more than 1.2 million dollars in revenue, since the enactment of the SWSA of 2002, have been required to remit 10-12% of their revenue for the broadcasting of recorded music.

While this percentage is not impossible to meet, it does represent a greater percentage of revenue. Secondly, by prescribing the maximum amount of revenue at 1.2 million dollars, the SWSA effectively placed a ceiling on the size of any given Internet radio station.

For example, Internet stations that exceed that revenue ceiling are then required to use the per performance rate schedule, with all the impossibly severe burdens that schedule implies. That no other broadcast medium is subject to such ceilings and conditions is significant and is one of the reasons why Internet radio has struggled during the past several years.

And the point I raised about the differences between this country and other countries is, for me, important. In other countries the percentage of revenue consumed by the broadcasting of recorded music is no greater than 5%, which is an evironment quite sustainable even for stations being operated on a marginally profitable basis.

Certainly, there are Internet stations that are poorly operated, and even if the laws were crafted in ways more reasonable where Internet radio is concerned, it is doubtless that there are stations that would not be able to survive. But, relative to the laws of capitalism, they would fail and cease to exist not because of discriminatory laws or conditions. Rather, their business models would fail because their particular business models are inherently flawed.

Asking that the laws be crafted in such a way as to respect and honor fairness is not asking for preferential treatment. Nor is Internet radio being capricious or unreasonable in doing so. It is asking Congress to revisit flaws contained in previously enacted legsilation.

Finally, asserting that Internet radio is not the same as broadcasting terrestrially is a bit off the mark. In the ways that are important, to all intents and purposes, that is, Internet radio is essentially quite similar.

Copies of music can and have been made from both media. Indeed, as the technologies converge, as more and more FM stations convert to digital broadcasting, for example, surely, aural quality will converge.

Even so, audiophiles report that "ripped" or recorded music from Internet broadcasts is scarcely of the same quality as that of downloaded music. Specifically, Internet broadcasts stream at significanly lower kilobit rates. Thus, there is much more incentive for the person who wants to engage in the illegal sharing of music to download music than there is for that person to record music being broadcasted over an Internet radio station.

Internet radio should not be blamed for the decline in record sales. That unhappy situation is occurring because, as music is becoming more portable and as younger consumers are eschewing comparatively expensive CDS, users of music are finding other means. Internet radio is not responsible for that situation, and, more to the point, it has been reported that Internet radio actually promotes the purchasing of music tracks. That the technology and the preferences of consumers are changing all the time should not make Internet radio responsible for macroeconomic forces, which are quite beyond anyone's control, of course.

As in the experiences of terrestrial broadcasters, Internet broadcasters cannot stop those who are determined to record music those stations are broadcasting. What is important is what the listener does with that recorded music. As in the case of recorded music from FM stations, recorded music, regardless the medium from which it is being recorded, being employed for personal use should not be a reason for blatantly and shamelessly discriminating against an entire broadcast medium, which, if anything, has the potential more and more to promote the music the recording labels want promoted.

Thank you.

Posted by: Charles St.James | June 27, 2007 12:50 PM

No Charles, thank YOU for a well-thought out post looking at internet radio, even non-profit internet radio as the business it is and how that relies on musicians and artists to assist it.

I disagree with a lot of what you say, I believe the difference between taping songs off the radio and storing digital music on the internet is the same as drinking a beer and driving and drinking 10 beers and driving. Neither are good ideas, but one is so bad that everyone agrees it's a crime.

Filesharing and internet music exploitation is different because of scale and speed and that difference is the major difference. I know that this law does not address filesharing, but the scale of the internet is a reasonable difference to consider. I taped a few records from friends when I was 12- 3 or 4. I worked with a coworker who had a binder of 100 mp3 cds with easily 6000 songs if not more. Scale is the reality.

I have no interest in starting a fight with anyone. I've been the target of harassing emails from hackers when I talked about my perspective before, so I'm concerned about where and when and how I talk about this issue. This is my last post here.

A dear friend of mine was fumbling around with her life, no decent job because she wanted the time to tour with her band... in 1994 or 1995... a royalty check came in from her song appearing as a hit on some European radio show and she used it to return to college. Those are the stories I remember about royalties.

Posted by: DCer | June 27, 2007 1:08 PM

For DCer:

I do respect and appreciate your opinion.
When I've posted messages, for example, at Live365, wherein I operate three tiny stations, I always endeavor to be as courteous and polite as possible.

I disagree with those who find it necessary to use personal invective and
insults in order to attempt to debate.
Intelligent debating means politely exchanging viewpoints, and I think you've been quite courteous. I do appreciate that, and I am sorry for your sake that you've experienced such rude behavior, for which there is no excuse, of course.

Concerning difference in scale, indeed, I would agree with you. There is a difference in scale. But the parallels and the logic are not dissimilar. If, from an FM station broadcasting digitally, for instance, one were recording onto a CD, essentially, one is doing that which is quite similar to the person who records a portion of an internet broadcast.

Please correct me if I am mistaken, but as I understand correctly copyright law, making recordings of music for personal use is legal. What one does with recorded music of course determines whether an act is illegal. Sharing recorded music is illegal, of course. Recording music for personal use is not, as I understand this aspect of the law.

What I was trying to convey in my last posting was this idea: it is more likely that one will find the illegal sharing of music among those who download music than among those who record excerpts of Internet broadcasts if for no better reason than because downloaded music has an aural quality superior to that of music being streamed or broadcasted over the internet. Because such broadcasting occurs at a lower kilobit rate audiophiles will aver that the audio quality is rather inferior. Thus, one would reasonably conclude, as well, that there is less incentive to illegally share music recorded from Internet broadcasts and that such recording is likely being done more for the sake of personal use.

That being so, my concern is that Internet radio is being unfairly blamed for conditions not of its making and for conditions over which it has little or no control. In part, because the Digital Millennium Copyright Act specifies the phrase "perfect copy", flawed logic flowed from this dubious premise, in my opinion.

And I do quite agree that artists should be compensated for their creative works and efforts. But, respectfully, I would ask you to reread my first posting. Everything is relative. The nucleus of my opinion is that, were the per performance schedule extended to terrestrial broadcasting, given the arithmetic involved, it seems to follow that more broadcast media would tend to eschew or, at a minimum, truncate the broadcasting of music. That being so, I asked the rhetorical question as to how artists would benefit given such a scenario. Simply stated, then, if significanly fewer songs are being broadcasted over media, in general, royalty payments will certainly be affected.

And, to put things into perspective, even under the existing rate structure, for the privilege of broadcasting to a relatively few number of listeners, I pay royalty rates quite substantial. Nor am I complaining, as I chose to do this and as I think artists should be compensated.

But I would like to share with readers my thoughts as to why I think the CRB's decision has created a situation quite untenable, and, if I may, quite unreasonable for many who are involved in this type of broadcasting. In my humble opinion, I do think that the Internet Radio Equality Act attempts to address some of these flaws and inconsistencies. In a republic it is responsible, and at times, necessary for citizens to petition legislators to revisit laws that have been shown to create problems and unfair conditions.

Thank you for your interesting and sincerely expressed thoughts.

Charlie

Posted by: Charlie | June 27, 2007 1:52 PM

The net is a great equalizer, until someone tilts the rules, as in this case. Do you think that this is a coincidence that AM / FM rates *aren't* changing? Since ClearChannel scooped up so much of the U.S. market, they have a large investment to protect. This is simply "squeezing out the little guy" who dares to break step with what the monopolizing taste-makers have managed to build. Where are anti-trust laws when you need them?

Posted by: Bruce Wilson | June 27, 2007 2:02 PM

Yes, in this situation I think that factor is operating as well, although, officially, the NAB (the National Association of Broadcasters)has expressed its opposition to the CRB's decision as well.

There was one additional point I wanted to leave for the person leaving the message about the scale of the Internet.

The argument is made that terrestrial radio is inherently different than Internet radio and, therefore, rules for over the air radio should be crafted differently. On the face of it, that would seem so.

However, as one can record music being digitally broadcasted over an FM station and then illegally purvey that recording over the Internet, following the logic of some of the persons posting messages here, should not terrestrial radio be subjected to the same restrictions (strict playlist rules and reporting requirements) and the same royalty rates as those imposed upon Internet radio?

If terrestrial radio should not be subjected to such rules and fees, then why should Internet radio be forced to operate in such an environment?

I think my question is: What are the material and substantive differences between Internet radio and terrestrial and satellite radio such that one is correct in justifying laws discriminating against one medium in favor of other broadcast media?

Thank you again.

Charlie

Posted by: Charlie | June 27, 2007 3:29 PM

I am outraged at the continued ignorance of the listening public about the kinds of royalties artists earn. To say the amounts are adequate goes beyond ignorance. If internet radio can't afford the royalties for the music they broadcast, they should sell advertising like every other media outlet. You get what you pay for.

Posted by: AngryComposer | June 27, 2007 3:39 PM

For the angry composer, may I write that I have learned a considerable amount concerning royalty fees and the issues surrounding these topics.

As I understand the process-- and I do admit that my understanding is as not as extensive as that of an expert in this field--royalty fee payments are somewhat bifurcated.

Thus, for example, when an Internet station, or a satellite station, for that matter, plays The Byrds' Mr. Tambourine Man, that station is responsible for paying royalties to those who performed the song, namely, in this case, The Byrds.

In addition, that station is responsible for paying royalties to the other copyright holder of the song, the record company associated with the peforming rights of that song. But, more than that, this hypothetical station is required to pay royalties to the Society with which the song is registerd, in this example, SESAC.

As I wrote, all artists and composers should be paid royalties. At the same time, when considering whether Congress should pass into law the IREA, it is well to put into perspective why proponents of the IREA are advocating as they are.

By any standard one wishes to use, it is clear that Internet radio is discriminated against. Of course, whether one thinks that desirable and justified, I shall leave to the reader. But there can be no doubt that Internet radio labors under restrictions and higher fees than do other broadcast media.

As I wrote above, while Internet radio is required to pay 10-12% of its revenue for the privilege of broadcasting recorded music, even satellite radio pays but 7.5% of its revenue for the enjoyment of those privileges. And, as I wrote above, once an Internet radio station exceeds 1.2 million dollars in revenue, it must use the per performance rate schedule that any fair minded person would agree is quite burdensome and difficult to meet.

Concerning advertising, still, many advertising dollars go to terrestrial radio. But even if more of those dollars were already in the hands of the larger and more successful Internet radio stations, the effects of the CRB's decision are such that the calculus does not favor the continued existence of even the more successful Internet radio stations.

I return to my rhetorical question: What are the material reasons for discriminating against one medium in favor of other broadcast media? And, should the CRB's decision extend to other broadcast media, to what extent will music continue to be a part of programming? To the extent that this programming will then diminish in volume, how will the artist be affected in terms of the royalties he or she will receive given such an environment?

Thank you.

Charlie

Posted by: Anonymous | June 27, 2007 4:43 PM

In the example I cited, I neglected to mention that the other stakeholder, so to speak, is Bob Dylan, for he was the writer or composer of the song, Mr. Tambourine Man.

Thus, in the form of royalties, the following stakeholders must be paid:
Bob Dylan, composer (SESAC, registering Society); The Byrds; Sony Music/Columbia Records. Thus, the interests of all of these stakeholders must be accounted for and are accounted for when legally licensed Internet stations pay fees they are required to pay.

Nor does any responsible broadcaster eschew or renounce those obligations. Those involved in Internet radio are simply asking for the crafting of laws that will treat fairly this comparatively new medium.

Thank you.

Charlie

Posted by: Charlie | June 27, 2007 4:51 PM

Wish I read this yesterday, I could have posted a lot of valuable info.

First, traditional/terrestrial radio stations collectively have a cap on what they have to pay to SoundExchange. For example, the cap for BMI last year was $208 million. What they do is negotiate with groups of radio stations and decide how they can proportion the royalty rates so BMI can collect the legal maximum. (Yep, different rates for different stations.) There IS NO CAP on what BMI and ASCAP, et al can collect from internet radio stations.

Second, the proposed rate is not just a new rate for performers. It is more importantly a new rate based per "performance" AND per listener. Traditional radio does not pay a per listener rate at all (because they don't know the exact number, only Arbitron estimates). Some companies have estimated the difference to be over $7 per listener the web stations would have to pay vs. the AM/FM stations.

Third, Fisher left out that the rate is retroactive to the beginning of last year. AccuRadio paid $48K in royalties last year. Once the new rate goes into effect, AccuRadio will owe $550K more in royalties! Money it doesn't have. So they'll have to declare bankruptcy.

Finally, to Shaun, with only 25 listeners you'll likely only pay the $500 minimum. It is NOT $500 + royalties. There is a $500 initial minimum, but only if royalties exceed that then you pay more.

Posted by: proxli | June 27, 2007 5:04 PM

Another thing I needed to mention to angrycomposer:

Please understand that, while terrestrial radio pays royalties to the composers of music, it does not pay royalties to the performers of the music it broadcasts.

Therefore, using the example above, a terrestrial radio station that does not also broadcast over the Internet is required to pay royalties only to Bob Dylan and SESAC, the registering Society of the composition of that song, when that radio station broadcasts the Byrds' Mr. Tambourine Man.

As we know, Internet radio is required to pay royalties to the performers of that song and to the recording company, in this case Columbia/Sony, as well as to the composer of that song and registering Society to which that song is reposed.

I hope this makes the explanation clearer.

Charlie

Posted by: Charlie | June 27, 2007 5:04 PM

I am sorry to mention this, but Soundexchange and BMI should not be used interchangeably.

BMI, ASCAP and SESAC are the Societies that collect and distribute royalty payments for composers and lyricists.

Soundexchange was created after passage of the DMCA, and it is responsible for the collection and distribution of royalties where performance righs are concerned. That is, Soundexchange is concerned with royalties owed as a result of recorded music broadcasted through Internet radio and Satellite radio.

Unless someday performance rights obligations are extended to terrestrial radio, the latter is not liable to Soundexchange for the broadcasting of recorded music, unless, of course, terrestrial radio stations are simultaneously broadcasting over the Internet.

And the latter is partly why so many in Internet radio are understandably exercised about a situation that they perceive is inherently and blatantly unfair.

Concerning the CRB's decision and my first posting above, performance is defined as a song being broadcasted to a listener. Thus, when there are 100 listeners hearing a song, there are 100 performances.

The other reason so many in Internet radio are upset is because, as I indicated above, the CRB's ruling negated the terms of the SWSA and required a per performance schedule of payments for all Internet radio stations, large and small.

Those upset by the CRB's decision were upset not merely because of the rate increases, per se. More than that, upon learning of the CRB's decision, they were upset because the percentage of revenue scheme was being scuppered.
Charlie

Posted by: Charlie | June 27, 2007 5:50 PM

What did musical composers and artists do before the advent of radio? They had concerts and shows. They actually had to perform to make money. It seems to me that the genie cannot be stuffed into the bottle at this point. The technology has pass beyond that point. Now the question becomes more of a philosophical one. Do artists write music to make money or to send a message in a creative medium? Do the musicians of the world want to save face from looking greedy? We'll see. Granted, talent deserves recognition, however, does one deserve to make 20 million dollars off of a song that was written in a week, for some a few hours? There are thousands out there that can write better music that can't get a fair shake in the music industry because they don't have the look or the image that a record label wants. Perhaps it's the record labels that are scared, and not the artists. Perhaps the record labels need a good shakeup.

Posted by: lurknsmirk | June 27, 2007 6:49 PM

Think on it this way.
Who really benefits most from the royalty increase?
1)Corporate Radio, the RIAA and the major record labels who have been in bed together for an awfully long time. It's almost incestuous.
Who has the money to lobby (bribe is such a dirty word) for the royalty increase? (See 1)
Who has to protect their investment in overpriced dj contracts and new HD radio equipment?
(see 1)
How much of this increase will the bands actually see?
Little or none.
How much do they get from those same royalties now?
Little or none.
Web radio is actually good for the music industry. It provides people the opportunity to hear music they will never ever hear on traditional radio. Why? (See 1)

Posted by: 1FLWB2 | June 27, 2007 8:07 PM

I do support copyright laws but when you think hard about this, royalties are wrong - plain wrong. Once you have purchased a legal copy of a music disk (or other artistic work), you should be able to play it whenever you wnat and to whomever you wish. This is my reasoning...

I see no difference between the creations that an artist or musician make and those that an inventor makes. When an inventor creates something new and patents it, he is entitled to protection under the law from others using that invention without permission and without being financially compensated. (That part of this argument equates to copyright law).

However, once a manufacturer has paid for the right to use a patented item or a consumer has purchased a product containing that patented item, both are free (under current law) to use the product for profit without further compensation (royalty) to the inventor. Just imagine the unbelievable cost of an airline ticket if every time an airline company flew an airplane (with hundreds of thousands of patented items on it), they had to pay the inventors (patent holders) of each part a royalty fee.

Why should things be any different for artists? Why should the artist retain the right to lifetime income after he has sold a legal copy of his work to an end-user? Remember the end-user has no right to make other (illegal) copies of the work, but he should have the right to use it as he wants. Another example: the taxi driver who makes a profit from his fare should not have to pay royalties to the patent holders of every part of his taxi. No one would expect that. Why do we then accept royalties as the norm? No one except artists get paid for the rest of their lives for work they did years (decades) ago. I know I don't.

Posted by: rlp1488 | June 27, 2007 10:11 PM

I have *no* problem with the current royalty rate setup for internet radio (and yes, I am an internet broadcaster). My experience is from the side of the truly "little" internet broadcaster, we average around 1800 total listener hours per month.

We pay a rate that is more than fair and is in many cases and scale way beyond what terrestrial radio pays. And we operate at a loss!

Our expenses far outweigh donations received. It's a hobby/labor of love, to build something that far out paces any local stations in content and quality of content without commercial/political interests dictating what we air.

Our ('net radio) impact may not be as high (yet) but to put this off on internet broadcasters large and small is just not right. It's pure greed.

Posted by: Rick_SaGR | June 27, 2007 11:07 PM

For DCer, wherever he may be.

I cannot post a link to support my observations about the R&B Foundation. What I reported I saw with my own eyes as attorney for several of the veteran artists involved.

I was invited to sit on the Foundation board and declined after checking others who were leaving the Board because it had already abandoned its commitment on general royalty reform in favor of handing out "awards" of $10,000 to needy artists. The organization bled money like a hemophiliac, and regularly lost money on its annual "fundraiser" dinner. It got so bad that Ahmet Ertegun eventually reneged on the second half of his $2 million committment. Given that the money would have passed through the Foundation like water through a sieve, I really can't blame him. The 2003 Pioneer Award Dinner was just the final straw - the envelopes that were supposed to contain the stipends that went with the awards were empty.

I know of no one who got contracts with "crooked managers" fixed through the Foundation as you assert. The "Atlantic 35," which included Ruth Brown, Lavern Baker, Sam and Dave and other veteran Atlantic acts, got their negative royalty balances erased (and frankly, the idea that Lavern Baker was still tens of thousands of dollars in the red to the label was ludicrous to begin with), and had their royalty rates raised, but that all happened as part of the same negotiations that created the Foundation, not because of the Foundation.

Ruth Brown, who was one of my mentors in this business, had a lot invested personally in the success of the Foundation, and what good works it did are almost completely attributable to her efforts. She tended to focus on the positive when speaking of the Foundation to outsiders, but pulled no punches behind closed doors.

And just because you can't find information on the Internet doesn't mean it doesn't exist. Sometimes eyewitness testimony will have to suffice.

Posted by: Fred | June 28, 2007 12:08 AM

When one examines and understands the substance of the matter, the unfairness that was incorporated into the DMCA and the lasting effects that aspect has had on Internet radio (necessitating the temporary adjustments of the SWSA, which, although it allowed this medium to continue to the present, effectively hobbled the growth of Internet radio), it is my hope that Congress will enact into law the IREA.

While I would welcome a negotiated resolution that would extend an amplified version of the SWSA, much would I prefer reform that is codified into the form of a federal statute, which would constitute a firm foundation for the stability and growth of this new medium.

For my part, should I be broadcasting a few years from now, I do not care to re-experience the stress I've known since March. I fear that a negotiated settlement eventually, a few years hence, will cause Internet radio to be subjected to the same haggling and threats it has known since this debacle began several months ago. I feel uncomfortable knowing that this medium can be so vulnerable.

For these and other reasons, I hope Congress will view this matter in the context of the long term interests of Internet radio by enacting this important legislation.

Charlie

Posted by: Charlie | June 28, 2007 1:58 AM

If webradio shuts down because the outlets can't afford the royalty rates, doesn't that hurt the artists and labels since they will lose an outlet for their music?

I want artists and songwriters to be able to earn a living from their music, and I also want broadcast radio and webradio to be able to stay in business. I would assume there's a workable compromise that can be reached. Does that sound too idealistic in a Rodney King way?

Posted by: Tonio | June 28, 2007 10:29 AM

And just because you can't find information on the Internet doesn't mean it doesn't exist. Sometimes eyewitness testimony will have to suffice.
------
But you have to agree that a posting to a blog offering eyewitness advice is just about the last place someone would look for quality information.
------
I know of no one who got contracts with "crooked managers" fixed through the Foundation as you assert.
------
I am going to go out on a limb and say the artist that I was told was able to get onerous contracts revoked was... Esquerita? Mr. Wiggles? I'm drawing a blank and for some reason both Mr. Wiggles and Esquerita seem like the right answer. I'm talking about Mr. Wiggles from around Norfolk. When you were a lawyer with the R+B Foundation, did you work with Mr. Wiggles?

Posted by: DCer | June 28, 2007 10:37 AM

WXPN collected over 11,000 signatures on a petition to send to representatves during our day of silence. I would quibble with your aseertion that WXPN is an "acoustic" station. Here is an hour of music from this AM:

Lindsey Buckingham - Countdown
Beastie Boys - Off The Grid
Oasis - Roll With It
Marvin Gaye - Pride And Joy
Guitar Slim - Things That I Used To Do
Mark Ronson - Stop Me
Rhett Miller - Help Me, Suzanne
Tommy James & The Shondells - Crystal Blue Persuasion
World Party - What Does It Mean Now?
Fujiya & Miyagi - Ankle Injuries
Sufjan Stevens - Chicago
Smashing Pumpkins - Tonight Tonight
Charlotte Martin - Everytime It Rains

Posted by: David | June 28, 2007 10:39 AM

For some reason, I thought I read DC'er say he/she/it wasn't going to post anymore. Maybe I misread it.

In any case, DC'er, you sort of tossed aside my points and conveniently skirted them... But my main point was that (A.) Artists are getting royalties and (B.) The vast majority of internet webcasters aren't billionaires. Those were the major tenets of your previous arguments.

Now, as to your more recent ones, I understand that there is a concern as far as pirating music by ripping streams. I'm sure there are people that do this, but I'm not sure how much of a threat it is. As Charlie has rather eloquently put it, the vast majority of streams out there are at a much lower bitrate than your average mp3. Very few small webcasters can afford to stream at 128 kbps. My webcast is (I think) about 64. Any recording of my stream would be inferior to anything you might buy. Besides, if your intention were to pirate music, I submit that anyone who was savvy enough to know how to rip a music stream would probably choose to waste less time by pirating the song via P2P, as recording a song in real time is tedious and cumbersome. Most of the streamripper programs out there are shoddy (and from somewhat dubious companies that load them with spyware.)

But even so, with all things being equal, what if people are recording radio broadcasts? I remember as a youth, before I had any means to earn any money, I would pop a cassette into my little boombox and record about ten of my favorite songs off the radio to listen to later. Did that stop me from buying the cassette later on? No. If anything, it encouraged me to buy it, because let's face it: anything recorded off the radio has some sort of noise artifact, a music or announcer overlay at the beginning and end, and is just generally not the desirable experience.

As for playing only songs that I create, you don't seriously suggest that any station could survive off one songwriter only, right? I mean, yes, I've written songs with people who have gone on to win Grammys, but I can't sustain a whole station in perpetuity by myself! Actually, though, most of my station's playlist are artists who are my personal friends, but now because of this ruling, I have to pay too much to even play songs my friends have done!

And finally, to the upset Artist: I submit that if artists aren't getting enough in royalties that your anger be turned toward the ones who are REALLY screwing you: SoundExchange and RIAA.

Posted by: J.D. | June 28, 2007 12:14 PM

DCer -

I was not an attorney for the Foundation. I was asked to sit on the Board because I represented a number of artists, including several members of the Atlantic 35, and had a reputation as an advocate for veteran performers. Even though I did not join the board, I later worked on a number of projects with Foundation personnel related to artists in need of medical care and medical insurance, two areas in which I have some background. I also referred a number of artists in need to the Doc Pomus Emergency Fund, which was administered by the Foundation.

In all the time I worked with them, I was aware of no Foundation initiative that would have covered the type of service you remember. It was initially intended to champion royalty reform for surviving veteran artists who had been screwed over by record labels going back to the 50s. Thanks to the makeup of the Foundation board, which was half label executives, that mandate was immediately derailed and replaced with the program of handing out charity disguised as Pioneer Awards. If you look at the list of the annual recipients, there are some glaring omissions and some equally odd inclusions. The explanation for both was the recognition of the immediate need of the recipient for the $10,000 in cash that went with the award. After the first couple of years, artists who were not in any need started getting the Awards and cashing the checks. This was a part of the reason why the Foundation ultimately went broke.

Esquerita was dead of AIDS several years before the Foundation got started, so that rules him out. The only Mr. Wiggles I know in music is a breakdancer from NYC. I can't find a reference to any recordings made by anyone under that name. The Foundation was always directed to assisting artists who had some recognizable career, so it is extremely doubtful that some local talent would have attracted their attention.

So, to try to make this relevant to the current discussion, the Foundation provides an object lesson in why you can't have an organization that is run by a Board split between label and artist representatives and expect it to actually do what it is supposed to for artists if that duty is in anyway counter to what the labels want. It happened with the Foundation, and it is happenning with SoundExchange.

Any entity that says it is a coalition between artists and labels is actually more of a food chain, and nothing more.

Posted by: Fred | June 28, 2007 7:55 PM

Esquerita was dead of AIDS several years before the Foundation got started, so that rules him out. The only Mr. Wiggles I know in music is a breakdancer from NYC. I can't find a reference to any recordings made by anyone under that name.
----------
Mr. Wiggles was a southern soul/R+B star and essentially the biggest singer in Richmond, VA/Norfolk in the 1950s prior to the Beach Music scene. Since he was well-known to me as a Chitlin circuit phenomenon, I wouldn't know his general popularity to squares. It looks like he lost his URL, so I can't post it.

Apparently I heard the story wrong.

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