SoundExchange Only Cares About the Labels?

Are SoundExchange and RIAA trying to screw the artists and only interested in (re)building a business for the 4 major record labels? I can't say for sure, but Kurt Hanson lays out a very interesting theory. Below is just an excerpt... I recommend you read the whole thing...

RAIN: Radio And Internet Newsletter: "If webcasters had in fact accepted SoundExchange's proposed 'solution' from last week, what soundexelse could AOL Radio do in 2008 but accept? They'd be looking at bankruptcy otherwise... and they'd be prevented from going to Congress for help!

So in offering to discount AOL Radio's royalty obligation from $66 million to $24 million, the big four labels could not only get increased airplay for their priority acts, but they could actually increase their royalty take an additional 20%! Sweet!

But because it's not a statutory license, the artists would GET NOTHING!

And as for the independent labels, most of them want airplay. If this scenario plays out as I've hypothesized, the conditions that the major labels impose on webcasters might leave little room on station playlists for indie-label product anyway,riaa so I would bet that the indies would eventually start offering waivers — i.e., 'Play our music and we won't charge you any royalties.' In that event, they would also GET NOTHING!"

Couple of Things...

A handful of interesting tidbits early this week...

1.) Yahoo is shutting down Webjay by the end of next month

2.) Pandora announced "Pandora Everywhere" which includes availability on a number of Sprint handsets and on the Sonos digital home audio system - also included... a redesign Pandora.com

3.) SoundExchange is offering relief in the new proposed royalty rates for "small webcasters"

4.) RocketSurgeon has a review of Audiobaba

Senate to House - "We see your bill to save Internet Radio, and raise you"

Now we are talking... momentum is building in Congress to save Internet Radio. Check out savenetradio.org for all the latest news and how you can help, but things are looking up...

Listening Post - Wired Blogs: "Washington, D.C. – U.S. Senators Ron Wyden (D-OR) and Sam Brownback (R-KS) today proposed legislation to keep Internet radio alive by vacating a Copyright Royalty Board (CRB) decision that could increase Internet radio sound recording royalties by 300 percent to 1,200 percent."

The "raise" I alluded to in the post title is that while this bill is virtually identical to the bill being introduced in the House, the Senate bill adds a stipulation that SoundExchange would have to reimburse webcasters under the new rates if they're overturned by appeal or Congressional intervention.

I'm sure it was total coincidence, but the day after I called my Congressman he signed on as a co-sponsor on the House bill. If nothing else, it makes me a tad less disenfranchised with the state of our political system...

Breaking News: New Streaming Radio Legislation Being Introduced

Hot off the presses at RAIN...

The Internet Radio Equality Act (.pdf) has just been introduced (in mid-afternoon) by Representative Jay Inslee (D-WA, pictured right) and eight cosponsors, with more cosponsors on the bill expected shortly.

The bill has five major provisions:

* Nullifies the recent decision of the CRB judges

* Changes the royalty rate-setting standard that applies to Internet radio royalty arbitrations in the future so that it is the same standard that applies to satellite radio royalty arbitrations -- the 801(b)(1) standard that balances the needs of copyright owners, copyright users, and the public (rather than "willing buyer / willing seller"). (For more detail on this point, read the recent RAIN issue on "Copyright law," here.)

* Instructs future CRBs that the minimum annual royalty per service may be set no higher than $500.

* Establishes a "transitional" royalty rate, until the 2011-15 CRB hearing is held, of either .33 cents per listener hour, or 7.5% of annual revenues, as selected by the provider for that year. Those rates would be applied retroactively to January 1, 2006. (The logic behind this rate, incidentally, is an attempt to match the royalty rate that satellite radio pays for this royalty -- thus the name of the bill.)

* Expands the Copyright Act’s Section 118 musical work license for noncommercial webcasters to enable noncomms to also perform sound recordings over Internet radio at royalty rates designed for noncommercial entities, and sets an transition royalty at 150% of the royalty amount paid by each webcaster in 2004 for their "musical works" royalty (i.e., to ASCAP, BMI, and SESAC).

Now that the bill has been introduced, the SaveNetRadio.org "call to action" is specific and direct: The site is now asking listeners to call their Representative and ask him/her to "cosponsor the Internet Radio Equality Act, introduced by Representative Jay Inslee." Once listeners click the "Call Your Representatives" button on the site and enter their zip code, they are given their Representative's House office phone number and a list of "talking points" to emphasize.

A copy of the bill in its current form (without an "H.R. ____" number attached to it yet), in .pdf form, is available here. More details tomorrow in RAIN.

SaveNetRadio

Savenetradio.org: "Listeners, Broadcasters, and interested parties - Sign the Petition - Support Internet Radio

Recent government action has dramatically increased the fees internet radio companies must pay to play the music you enjoy and threatens the future of internet radio. You can help, let your voice be heard."




Dear [recipient name was inserted here],

As a fan of Internet radio, I was alarmed to learn that the Copyright Royalty Board has decided to raise music royalty rates by 300 to 1200 percent. For most webcasters the new royalties exceed their revenue and they simply will go bankrupt and stop webcasting.

The silencing of Internet radio would be a blow to listeners like me who enjoy the wide variety of choices only available via Internet radio. This will kill the great diversity of music that I hear over the Internet and all the independent artists who have a difficult time breaking through on other forms of radio.

I respectfully request that Congress look into this matter and take action to prevent it. Please understand that time is of the essence since the new royalty rates are retroactive to January 1, 2006 so they will cause immediate bankruptcies if they become effective for even one day. Please don't let the music die.

Have you signed yet?

Net radio operators lose a round | News.blog | CNET News.com

Sigh...

Net radio operators lose a round News.blog CNET News.com: "In a potential blow to Internet radio services, a federal copyright panel on Monday largely upheld a contentious decision that would elevate royalty fees Webcasters must pay to record labels. "

I'm not sure when the Copyright Royalty Board and the RIAA will realize this, but after spending years trying to encourage legal and royalty paying music services, they are very close to succesfully killing most of them.

When users can no longer get free, ad-supported, music guess where they are going to turn?! Free "gray" services that don't generate a dime for the labels or their artists.... now they just get a bigger piece of the incredible shrinking pie.

iRack

Speaking of Apple and Steve Jobs, someone forwarded me this spoof today from MadTV. Enjoy....

Interview: Jon Potter (DiMA)

Here's an interesting interview between Phil Leigh (Inside Digital Media) and Jon Potter, Executive Director of DiMA (Digital Media Association) on the state of the internet radio industry.

Some good background on the radio industry in general, and the inequities between the rates terrestrial, satellite and internet radio pay.

Why do the Record Labels Hate Us?

I, like most people, don't understand the major record labels. The latest thing that baffles me.... Universal and Sony's insistence that certain artist's songs be blocked from being shared via Zune's (already flacid) wi-fi sharing capabilities. We are talking about a three-play/three-day sharing model.... this is hardly the opening of Pandora's box. What are they worried about, that they are losing out on the gigantic market of people who will buy a song to only listen to it a couple of times - then never want to hear it again?

To me it appears like the labels have become the exact opposite of what they were founded to be. Back in the day, the biggest draw of a major label to an artist was the fact that they would promote them, get them radio airplay, get their music distributed. Now? Well, now they spend there time and effort making sure there artists *can't* be heard. How does that pitch go to an up-and-coming artist?? "If you sign with us, we'll make sure that everyone knows who you are, but no one has actually heard you!" Brilliant!

Yes, the amount I don't know about the inner working of a major label could fill the internet's "series of tubes". But, the labels have fallen prey to what many other companies have.... they have forgotten to look at the business from the consumer-perspective. Create a great consumer experience, then optimize for profit after that. So many today have it backwards.

I was just thinking about the newspaper business as an analogy to the music business. What helped them become so successful decades ago? They made it easy to consume their product. You could get it anywhere, easily. The delivered it to your door. Is it easy to steal newspapers? Absolutely, but most don't - because it is easier to NOT steal it. Guess what... if my Sunday newspaper wasn't legible half the time, or the newspaper box on the corner made me jump through hoops to validate I was who I said I was, then it would be easier for me to just swipe one from outside 7-11. Can I share my newspaper? Absolutely. Does that hurt the newspaper's bottom-line in any substantial way? Highly doubtful. Because people don't want to just read the same newspaper over and over again. If they do, then let them... they are not your real consumer base anyways.

The labels are suing the satellite radio guys for introducing devices that can record content. The Home Audio Act of 1992 established that recording something off of radio was covered under Fair Use. Why is this not? Well, the quote I saw from the suit was "it is manifestly apparent that the use of a radio-cassette player to record songs played over free radio does not threaten the market for copyrighted works as does the use of a recorder which stores songs from private radio broadcasts on a subscription fee basis.” That is a scary statement, and a slippery slope for consumer's rights. What's next, my TiVo won't be able to record movies off HBO?

Note to the major labels: Love your consumers, and they will love you back. Treat us like criminals and we will go elsewhere for our love.