Internet radio equality

So I’m probably coming to this hopelessly late, but something called the “internet radio equality act” was introduced today in the Senate in response to a recent move by the Copyright Royalty Board to significantly hike the fees that internet radio stations pay on the songs they play. I know just enough about this to be pretty confused, which means I don’t have any insight to offer to one way or another (though I confess my instincts tell me that drastic increases in regulatory fees is probably not going to be a good thing for people who love and listen to music via online radio). But I put it out there fwiw. I do think I remember seeing a note from Marlin Taylor of XM34 Enlighten about this a while back (he was, naturally, opposed to the Copyright Board’s decision), which means the small world of sg is not immune.

Questions I have: what are the chances of this legislation passing before the Copyright Board decision goes into effect (I see the Senate is voting on this next Tuesday)? And factoring out the chicken-littling from affected radio stations and the partisan rhetoric of the Board’s proponents, what are the realistic on-the-virtual-ground effects we should expect if the fee hike takes place (that is, will internet radio get put behind a subscription wall, disappear altogether, something else entirely)?

Update: in his typically omniscient fashion, reader CVH covers a lot of the important bases in all this:

The CRB has the authority to impose rates based on federal regs given as part of the Communications Act and other FCC regs. The move for higher rates has come because of lobbying on the part of the RIAA (record industry). Yes, all broadcasters, broadcast or internet-only, pay royalty fees to the performance rights organizations, but those rates are not taking internet play into account. The proposed CRB rates are totally different. Webcasting is not covered by those agreements.

The CRB’s proposed rate increases of anywhere from 300% to 1200% of the current rates would have a major impact on any AM or FM station that simulcasts online and would really hit entities that are solely internet broadcasters, since many of those are already non-profits that don’t have deep pockets. The RIAA and thus the CRB are really going after the big boys, Yahoo, AOL, etc., but in the process many small webcasters will be seriously affected if the rates are allowed to go into effect. Actually, the start date has been moved back to July 15 from next Tuesday which gives hope that some Congressional action may take place that will override or at least moderate the CRB’s ruling.

I can say that as someone who works in the industry it’s extremely confusing and time consuming - in the last few months I’ve pored over literally hundreds of pages (in VERY fine print) reviewing the history of the situation, the Federal Register’s records, the appeals and review process and, finally, the most recent ruling. There are some exceptions (for some non-comms and educational outlets) but what it really does seem to come down to is the RIAA, losing millions of dollars a year because of the slump in CD sales and the impact on downloading, is trying to legislate additional revenues. The monies are supposed to be distributed among all parties but who knows how or if that will really work.

The pending bill (see link below) gives hope but if it is unsuccessful, initially, AMs and FMs that simulcast will probably pull their signals, at least temporarily. There is usually little revenue associated with internet radio - it’s a convenience and more than anything a marketing tool. But if the expense outweighs the benefits, which will undoubtably be a different equation for each radio operation, there will be little incentive to continue it as it’s been. Internet-only stations will be in the toughest position; those that simulcast online will have to decide if it’s economically feasible to continue. Online radio is a growing but still small percentage of overall listenership and many listeners would not pay for the “convenience” of having it, especially in the case of commercial stations that play commercials and non-program content for up to 32 minutes per hour.

Here’s a link for more info if you’re intersted: www.savenetradio.org/

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Comments

  1. thom wrote:

    sounds like the broadcast radio industry lobby is alive and well. Did they call in a death threat to internet radio?

    Our are the record labels and publishing companies behind this to up the ante for the right to play their music?

    don’t know, but interested.

  2. Daniel Britt wrote:

    I’m going to speak loosely to this as I understand it (which may not be completely accurate - I know enough to be dangerous)…. But, as I have understood:

    Terrestrial/land AM and FM radio stations already pay a blanket license fee to BMI, ASCAP, and SESAC for permission to play copyrighted audio recordings.

    Internet webcasting doesn’t really have a standard in place yet, hence all of this new legislation. Many (probably most) internet stations are just playing music with no financial accountability to anyone. (And this is why I don’t currently feature music on my podcasts and why they’re talk only).

    The kicker comes when an AM or FM station also simulcasts their signal on the internet. Should not the AM/FM stations already be covered by their existing ASCAP,BMI,SESAC license? Why make them pay double because they’re broadcasting on the web? If it’s the same programming, it has already been covered - at least in theory.

    I’m for royalties. Make the internet-only stations pay their share. AM and FM have been paying their share for years.

    If the law dictates that the licensing organizations “double-dip” AM and FM stations, you can guarantee that you will lose the ability to listen to your favorite AM/FM stations online.

    Again, just some thoughts from recent discussions within the radio industry. I know it is way more complicated than this.

    Oh, and the kicker, is that the studio engineers and CD manufacturers want to receive royalty checks now too…imposing their own separate licensing fees! It is no longer just the artist and songwriter to whom you’re paying residuals.

  3. DAND wrote:

    How in the world do studio engineers and CD manufacturers get in on this? They provide a service for which they are compensated directly. Songwriters/artists are only compensated when someone buys their music or performance royalties/fees are paid. What’s next? Shure and Mackie wanting paid royalties on every time one uses their microphones and speakers?

  4. CVH wrote:

    The CRB has the authority to impose rates based on federal regs given as part of the Communications Act and other FCC regs. The move for higher rates has come because of lobbying on the part of the RIAA (record industry). Yes, all broadcasters, broadcast or internet-only, pay royalty fees to the performance rights organizations, but those rates are not taking internet play into account. The proposed CRB rates are totally different. Webcasting is not covered by those agreements.

    The CRB’s proposed rate increases of anywhere from 300% to 1200% of the current rates would have a major impact on any AM or FM station that simulcasts online and would really hit entities that are solely internet broadcasters, since many of those are already non-profits that don’t have deep pockets. The RIAA and thus the CRB are really going after the big boys, Yahoo, AOL, etc., but in the process many small webcasters will be seriously affected if the rates are allowed to go into effect. Actually, the start date has been moved back to July 15 from next Tuesday which gives hope that some Congressional action may take place that will override or at least moderate the CRB’s ruling.

    I can say that as someone who works in the industry it’s extremely confusing and time consuming - in the last few months I’ve pored over literally hundreds of pages (in VERY fine print) reviewing the history of the situation, the Federal Register’s records, the appeals and review process and, finally, the most recent ruling. There are some exceptions (for some non-comms and educational outlets) but what it really does seem to come down to is the RIAA, losing millions of dollars a year because of the slump in CD sales and the impact on downloading, is trying to legislate additional revenues. The monies are supposed to be distributed among all parties but who knows how or if that will really work.

    The pending bill (see link below) gives hope but if it is unsuccessful, initially, AMs and FMs that simulcast will probably pull their signals, at least temporarily. There is usually little revenue associated with internet radio - it’s a convenience and more than anything a marketing tool. But if the expense outweighs the benefits, which will undoubtably be a different equation for each radio operation, there will be little incentive to continue it as it’s been. Internet-only stations will be in the toughest position; those that simulcast online will have to decide if it’s economically feasible to continue. Online radio is a growing but still small percentage of overall listenership and many listeners would not pay for the “convenience” of having it, especially in the case of commercial stations that play commercials and non-program content for up to 32 minutes per hour.

    Here’s a link for more info if you’re intersted: www.savenetradio.org/

  5. Trent wrote:

    So then we get down to the real question: If Joseph Habedank’s sermon is posted on this site, will Avery have to pay him royalties?

  6. quartet-man wrote:

    I don’t know alot about this either, but I do think that there should be a level playing field. What that doesn’t mean is that the internet has to pay more than radio. Unless they charge larger and further reaching stations more than small ones, internet should not be charged a higher rate. If radio stations are paying once, they shouldn’t have to pay again for making the same content available online.

    What this seems to come down to is that these music labels were used to making tons of money for years. Then they made tons of money on the same music by releasing the same stuff on CD again (in essence double dipping.)

    Although there have been attempts since then in newer formats, most people are sticking with CD’s. To make matters worse MP3’s came into play. They acted like that was costing them tons of money and went after people downloading. Apparently that wasn’t enough because people either still aren’t buying the material or are buying individual tracks.

    The labels no longer make the big bucks they used to. They are looking for any excuse to blame someone for that instead of realizing the model has changed and people are talking with their money. Many are no longer satisfied paying $15 for a CD with only a good song or two. There was a time that there wasn’t as much of a choice as there is now. Even so, many would just find other ways to get the music. (Legal or not.)

    Now the labels are gunning for internet radio. What they fail to realize is that if they put all of these stations out of business (as they are bound to do with the smaller stations) there is less chance of someone hearing their music. It is in their best interest for as many people as will to play their music and get the word out (without of course making a ton of profits themselves on their backs). Only then perhaps should the labels get a cut.

    Years ago Circuit City (I think) and some others tried to make Movies be on a format that you only got a few days to watch and then had to pay to get a code or whatever to watch the movie again. You never really owned it. They would love having people pay again and again, but people didn’t go for it and it failed.

    As with many jobs in the U.S. the whole market and model has changed. We don’t have to like it, but that doesn’t change it. We can gripe until the cows come home, but we either adapt or perish. Instead of using it as a challenge to come up with better music and other ways of doing things within the new era, the labels want to blame others. There apparently is no going back, so we have to deal. Too bad the music labels don’t get that.

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