That whole thing about internet radio royalties being increased

[albionmoonlight]

See, e.g., http://www.cnn.com/2007/TECH/internet/04/17/internetradio.ap/index.html

Educate me.

[JonInMiddleGA]

Here's a starter
http://fmqb.com/article.asp?id=363933
March 7, 2007 --
The Copyright Royalty Board has decided to drastically increase the royalties paid to musicians and record labels for streaming songs online - a decision that was made public Tuesday on the board's Web site. The decision, which is retroactive to last year, also ended a discounted fee for small Internet broadcasters. The board's new rules dictate that the current rate of 0.08 of a cent each time a song is played would more than double by 2010. For music sites run by tax-exempt nonprofit organizations, the board set a flat $500 annual fee per radio channel for a certain number of listening hours per month.

http://fmqb.com/article.asp?id=360967
March 2, 2007 -- ... the rates are in effect retroactively to 2006 and increase every year up to 2010. The new rates are as follows:
2006 - $.0008 per play
2007 - $.0011 per play
2008 - $.0014 per play
2009 - $.0018 per play
2010 - $.0019 per play

http://fmqb.com/article.asp?id=18566
February 9, 2004

The U.S. Copyright Office has announced the new royalty rates for webcasting for 2003-2004, thanks to a settlement between the RIAA, the Digital Media Association, and broadcasters. This agreement means there will be no need for the groups to go to arbitration. Attorney David Oxenford says the rates will remain in effect for 2005-2006 as well, if no new deal is made by January 2005.

The terms of the agreement are the combined result of three different proposals submitted last year. Free online streaming services (such as AOL's or Yahoo's LaunchCast) and online subscription services are given a choice of either paying "per performance" (per song per listener) or per "aggregate tuning hour" (per listener per hour). Commercial broadcasters are given similar options as well, and non-commercial broadcasters can choose to pay per performance, aggregate tuning hour, or just a flat fee.

Specifically, the free, Internet-only services will pay .0762 cents/performance or 1.17 cents/listener-per-hour. Subscription Internet services can choose either of those options or a percentage of their revenues.

Commercial radio broadcasters have similar options, or they can pay per aggregate tuning hour (ATH). Stations streaming news, talk, sports, or business programming will be charged .0762 cents/ATH. Music broadcasts will be charged .88 cents/ATH.

Non-commercial broadcasters, with a listernership under 146,000 a month, will be charged a flat annual fee of $200-$500.

[wade moore]

My biggest question in this is how the heck can they make this retroactive?

[albionmoonlight]

From what I heard (from a source with an unknown interest in the outcome--I came in halfway through the segment), the old system in which broadcasters paid artists a percentage of their profits seemed to be a fair system. The more money you made off the works of the artists, the more you had to compensate them.

This new system basically forces everyone out of the internet radio business who does not (1) totally sell out to advertising, or (2) not care that they lose money on the deal, or (3) is a huge operation able to incorporate internet radio into their business in some sort of combination of (1) and (2).

So, from a listener perspective, this seems like it will cut down on choices and innovation and homogonize internet radio. And it seems like it is not really solving a problem, because people who were making big bucks off internet radio were already paying a percentage of that as royalty payments. No one was making out like bandits here.

[sachmo71]

Pandora will die.

[JonInMiddleGA]

My biggest question in this is how the heck can they make this retroactive?

Just a guess here, but maybe they agreed to continue to discuss & negotiate past a deadline with the understanding that the final plan would be made retroactive?

[JonInMiddleGA]

Found another okay article, this one an interview with AccuRadio founder Kurt Hanson.
http://fmqb.com/article.asp?id=382099

Among other things, it spells out something that I wasn't 100% sure I understood correctly
Question: Define the $.0008 per song, per listener. For example, in the course of a day, if a webcaster averages 12 songs an hour, you would take that rate, times it by 12, times 24, times the amount of listeners and that’s his rate for one day?
Answer: Right.

So, let's do a little math here.
12x24 = 288 songs in a day
288 songs per day X .0008 = $0.23 per listener

So if the average number of people listening at a given moment was 1000,
that'd be about $230 per day in royalties, or just over $84,000 a year.

Now, on the scale of 1000, a number I picked thinking of what might be something reasonable, that's one thing.

But take a look at the latest listener estimates for some of the major players.
http://www.arbitron.com/onlineradio/home.htm

Yahoo Music/LaunchCast for example, the largest of those currently measured by Arbitron, averages 164,800 listeners Mon-Sun 6a-12m (overnight hours presumably lower). Let's just guess that the overnights have half that number (since they're not as bound by timezones as local radio & such).
So that's roughly 144,000 listeners at any given time x 288 songs x .0008 =$33,177.60 per day x
365 days = $12,109,824 annually

[Coder]

Maybe it's time for the radio-stations to start charging the record companies for the advertising they're doing by playing their records.

[JonInMiddleGA]

Maybe it's time for the radio-stations to start charging the record companies for the advertising they're doing by playing their records.

Legally they can't.

[sachmo71]

Maybe it's time for the radio-stations to start charging the record companies for the advertising they're doing by playing their records.

That's the whole sad result of this thing. If I hear a new group on Pandora, I'm going to go try to find their music and possibly buy it. I guess the record companies figured that the sales they gain from these stations does not outweigh the losses they take from the pirating that goes on from them.

[Coder]

Legally they can't.

I thought it would be something like that.. my comment was part sarcasm part frustration. I just can't believe that the record companies keep biting the hand that feeds them over and over because they're too greedy.

[Young Drachma]

I started the internet radio station out here and we took it offline before this decision was made public. We're planning to relaunch in the fall, because our station is attached to a larger project I'm doing, but...this whole thing reeks of a double standard because terrestrial radio doesn't pay royalties, but they want internet radio to do it.

If they would just say what everyone is thinking, but won't say, which is "we think all of the music on internet radio is stolen and we want to get a cut," then at least they'd be up front.

Instead they talk about internet stations wanting 'something for nothing', when they're really just trying to minimize choice and competition in the interest of so-called "fairness."

[SirFozzie]

considering how broad this is, there's pretty much an expectation that Congress WILL step in and set rates before this takes place

[Young Drachma]

Oh yeah, the rancor has been huge. I think they underestimated how much hellraising there would be over this.

[SirFozzie]

Here's a story on Business Week on how broad and overbearing this is

http://www.businessweek.com/the_thread/techbeat/archives/2007/04/the_death_of_we.html

[path12]

I still don't understand how internet/digital radio is considered or should be treated any differently than broadcast radio. I am not downloading streaming radio, but I am using the music I get that way and purchasing it.

I understand that the record companies are in panic mode about the drops in sales, but I think that also has a lot to do with the itunes phenomenon -- I know I purchase as much or more music than I have in the past, but I am far more likely now to purchase single songs rather than going to the local Best Buy and picking up a CD.

[Young Drachma]

My friend and I went to the mall over the weekend and he was like "let's go into the music store." I balked. I explained that I'd already heard pretty much every new album this past week, because I subscribe both to Rhapsody and Zune, so...I consume this stuff pretty quickly once its released.

And I don't buy CDs. I think as someone who used to spend a ton of time in music stores back in the day, there is something really lacking in the 21st century music store experience that whole industry needs to bridge before people like me will start to trickle back.

[DanGarion]

From email I got from the founder of Pandora.

Hi, it's Tim from Pandora,

I'm writing today to ask for your help. The survival of Pandora and all of Internet radio is in jeopardy because of a recent decision by the Copyright Royalty Board in Washington, DC to almost triple the licensing fees for Internet radio sites like Pandora. The new royalty rates are irrationally high, more than four times what satellite radio pays, and broadcast radio doesn't pay these at all. Left unchanged, these new royalties will kill every Internet radio site, including Pandora.

In response to these new and unfair fees, we have formed the SaveNetRadio Coalition, a group that includes listeners, artists, labels and webcasters. I hope that you will consider joining us.

Please sign our petition urging your Congressional representative to act to save Internet radio: http://capwiz.com/saveinternetradio/issues/alert/?alertid=9631541

Please feel free to forward this link/email to your friends - the more petitioners we can get, the better.

Understand that we are fully supportive of paying royalties to the artists whose music we play, and have done so since our inception. As a former touring musician myself, I'm no stranger to the challenges facing working musicians. The issue we have with the recent ruling is that it puts the cost of streaming far out of the range of ANY webcaster's business potential.

I hope you'll take just a few minutes to sign our petition - it WILL make a difference. As a young industry, we do not have the lobbying power of the RIAA. You, our listeners, are by far our biggest and most influential allies.

As always, and now more than ever, thank you for your support.

tim_signature.jpg
-Tim Westergren
(Pandora founder)

[Ksyrup]

And I don't buy CDs. I think as someone who used to spend a ton of time in music stores back in the day, there is something really lacking in the 21st century music store experience that whole industry needs to bridge before people like me will start to trickle back.

I'm not sure exactly what you're referring to, but for me, the biggest issue in CD-browsing as I used to do is the lack of inventory. But that's easily explained because of the internet. Unless you're running a specialty shop, there's no reason to stock up on obscure artists. It's not worth buying inventory that is unlikely to sell, when people can fulfill that need online. I'm sure some of the mom-and-pop stores out there are in a catch-22 - they need a way to get people into their stores, yet it is tremendously expensive to stock their stores the way we're used to then being stocked. It's much easier for me to buy the popular/less expensive stuff at BB, and order the harder-to-find stuff online.

I've recently become good friends with the guy running a local CD shop, and instead of automatically buying online, I order imports and such through him if the prices are close. But I'm only doing that because I want to see him do well, not because it's easier or less expensive for me.

[DanGarion]

I've recently become good friends with the guy running a local CD shop, and instead of automatically buying online, I order imports and such through him if the prices are close. But I'm only doing that because I want to see him do well, not because it's easier or less expensive for me.
Unfortunately, most people are dicks and could care less about the local business owner.

I personally used to love to go to Tower Records and listen to the new music they had on their listening booths. I remember going there at 10 PM on a weekday and checking out the new stuff about once a month (that's about how often they changed them). I found a number of new bands to enjoy from that.
RIP Tower Records.

[JonInMiddleGA]

...this whole thing reeks of a double standard because terrestrial radio doesn't pay royalties, but they want internet radio to do it.

Just to clarify that a bit. Terrestrial radio does pay composer royalties, just not performance royalties. Also, online streams of broadcast signals are subject to the same fee structure described here.

I imagine that you knew all that already, but I figured there might be some who pop into the thread who didn't.

[Young Drachma]

Just to clarify that a bit. Terrestrial radio does pay composer royalties, just not performance royalties. Also, online streams of broadcast signals are subject to the same fee structure described here.

I imagine that you knew all that already, but I figured there might be some who pop into the thread who didn't.

Yeah, I was aware. Thanks for clarifying it though.

[Young Drachma]

Unfortunately, most people are dicks and could care less about the local business owner.

I personally used to love to go to Tower Records and listen to the new music they had on their listening booths. I remember going there at 10 PM on a weekday and checking out the new stuff about once a month (that's about how often they changed them). I found a number of new bands to enjoy from that.
RIP Tower Records.

Yeah, not being very clear today. The lack of inventory and mostly selection drove me online in the first place. It's far more efficient for me to search online to find new music than to troll through the store for hours. That's where a knowledgable music store staff could help people with that sort of thing.

I know it's why my mom always liked going to the record store and still waits to go to our old home town to get music, because she talks to the people there and they give her recommendations.

And I realize my tastes are really obscure and eclectic and part of that was largely because of what I do for a living and how much time I spend listening to music. But...I think there is another way to do it save from the conventional way we have and I think that's probably what I was eluding to when I wrote my original post.

[DanGarion]

Yeah, not being very clear today. The lack of inventory and mostly selection drove me online in the first place. It's far more efficient for me to search online to find new music than to troll through the store for hours. That's where a knowledgable music store staff could help people with that sort of thing.

I know it's why my mom always liked going to the record store and still waits to go to our old home town to get music, because she talks to the people there and they give her recommendations.

And I realize my tastes are really obscure and eclectic and part of that was largely because of what I do for a living and how much time I spend listening to music. But...I think there is another way to do it save from the conventional way we have and I think that's probably what I was eluding to when I wrote my original post.

You don't have that obscure and eclectic tastes IMO. :)