NationStates Jolt Archive

I open up Pandora today to find an odd little message asking me to call my Congressman and ask him to co-sponsor a House bill that will save Pandora and all of Internet radio. Having no idea what this was about, I did a little digging into this bill and found some interesting tidbits.

Back in March, a new decision by the Copyright Royalty Board changed the structure of royalty fees for American Internet radio stations from a percentage of revenue plan to a fee per song played. Right now, it is at $.08 a song, retroactive to 2006, and by 2010 it will increase to $.19 a song every time a song is streamed. CNN Article about the new royalty system. (http://money.cnn.com/2007/03/14/technology/radio_streaming/?postversion=2007031507)

Internet radio stations are very upset with this, estimating increases of 300% to 1200% in royalty fees, effectively bankrupting nonprofit stations. Pandora, for example, would be responsible for $20 million in fees. The radio stations have formed a group at http://www.savenetradio.org after an appeal to the new royalty structure was denied and are seeking another remedy. They got it recently in a House bill that would overturn this decision , the Internet Radio Equality Act (http://www.kurthanson.com/archive/news/042607b/index.shtml).

So, what do you think about all of this? Are Internet radio stations really in trouble, or are the fee increases fair?

Why is it free to have it on my car, but not my computer?

Many internet radio stations are in trouble, but it's really the record labels that are shooting themselves in the foot here by limiting the amount of outlets for their music.

But then, I could be really cynical and raise the possibility that said labels and their affiliates are planning to use their influence on this issue to eliminate the competition and corner the market for themselves. Yay capitalism! :)

A lot of independent label stuff will likely remain available through smaller niche stations, though.

Why is it free to have it on my car, but not my computer?

radio stations pay royalty fees.

Simple solution: block access to visitors from the US and find servers outside of the US.

No reason why the rest of the world should have to suffer any more than it already does for the US government's fuckwittery.

radio stations pay royalty fees.
I believe that radio stations are generally required to pay their royalties out of their total revenue amount rather than the amount of listeners (which is impossible to gauge correctly).

radio stations pay royalty fees.

But, those are paid by adds and sponsors, right? Why can't it be the same for the 'net?

radio stations pay royalty fees.

But, those are paid by adds and sponsors, right? Why can't it be the same for the 'net?

Simple solution: block access to visitors from the US and find servers outside of the US.

No reason why the rest of the world should have to suffer any more than it already does for the US government's fuckwittery.

Yeah, good idea. It's really pissing me off, starting from the point they effectively banned online guitar tablature.

But, those are paid by adds and sponsors, right? Why can't it be the same for the 'net?

because people don't want ads with their internet radio, and advertisers don't want to spend much money with it because they are unsure of the audience, with local radio you know who is listening and local businesses can advertise, with internet radio it's just not the same.

I believe that radio stations are generally required to pay their royalties out of their total revenue amount rather than the amount of listeners (which is impossible to gauge correctly).

I found this blog post by an Internet radio station manager, in charge of SomaFM:

I mean, you would think that AM/FM, Satellite and Internet radio stations would all pay the same kinds of royalties, right? But no! Due to DPRA and DMCA, digital transmission services (e.g. over the internet or digital satellite) are treated very differently. This is because back in the 90s, when the DMCA was passed, people equated "digital" with perfect, and the record labels were freaking out. After all, the labels thought that home taping was killing music... and that was just cassettes. Imagine, they though, what will happen when people can make unlimited perfect digital copies of our music!

So over the years, internet radio broadcasters have had to pay royalties to playback music that they don't otherwise have explicit permission from the copyright owner to play. This is called the "compulsory license", and it's paid to an organization that was spun out of the RIAA called SoundExchange. SoundExchange collects royalties and is supposed to distribute them to artists.

So far, so good. We've been paying 10% of our gross revenues. (10% for first $250,000; 12% in excess of that.) We feel a bit cheated because the over-the-air guys don't have to pay at all, and the satellite guys only pay about 7.5%. Still, we can work with it. Some smaller stations can't handle the minimum annual fee of $2000, so they join aggregators like LoudCity or Live365 to reduce their royalty costs.

In March of 2007, the CRB (Copyright Royalty Board) released the rates for 2006-2010. Not only have they have gone up drastically - by 2010, the rates will be 150% higher than the 2005 rates. In addition, and more problematic for independent web radio stations: the way royalties are computed has changed: stations can no longer pay based on our gross revenue but have to pay based "aggregate tuning hours". For SomaFM, this means our royalties for 2006 will be increased retroactively from about $20,000 to about $600,000. That's more than 3 times what we made in 2006. And our royalties for 2007, based on our current audience size, will be over $1 million dollars, and over $1.5 million by 2009. That's if our audience size stays the same.

Apparently, the royalty structure is completely different for satellite and internet as opposed to regular radio.

I believe that radio stations are generally required to pay their royalties out of their total revenue amount rather than the amount of listeners (which is impossible to gauge correctly).

yes.

this law sucks.

radio stations pay royalty fees.

But, those are paid by adds and sponsors, right? Why can't it be the same for the 'net?

because people don't want ads with their internet radio, and advertisers don't want to spend much money with it because they are unsure of the audience, with local radio you know who is listening and local businesses can advertise, with internet radio it's just not the same.

Ahh, good point.

But, those are paid by adds and sponsors, right? Why can't it be the same for the 'net?

There is advertising on internet radio. Live365 has ads as well as offering a subscription service if you want to opt out of advertising. In addition, advertising can be placed on the home pages and players (again, Live365's pop ups that accompany its player, doesn't happen when done through iTunes, so that's second hand.).

However, the internet radio casters are being asked to pay a much higher rate than traditional broadcasters.

There is the blog that was quoted that offers some explination. The other thing that comes to mind is that independent broadcasters can no way afford something like this, but traditional and larger media companies can. I wouldn't be that surprised if that is a little of what's behind something like this. This really does stink just a little of quelling independent voice.

Internet radio is such a good thing. I would hate to see it go away. It encourages me to buy more music. At least once a day I hear something new and interesting on last.fm and I immediately go to iTunes and dl it.

The great thing about Last.fm and Pandora is the radio is custom tailored. I really hope something happens.

May 16th is when the new rules are supposed to be applied. I've visited every internet radio site that I frequent, and all of them say the same thing. We cant afford to continue providing this service. It's a crying shame.

May 16th is when the new rules are supposed to be applied. I've visited every internet radio site that I frequent, and all of them say the same thing. We cant afford to continue providing this service. It's a crying shame.
Last.fm isn't saying anything about it. I guess it's silly to hope that they are somehow immune.:(

Edit: Although it has just gone completely insane.

I actually do believe I saw something on last.fm as soon as the ruling was handed down.

I actually do believe I saw something on last.fm as soon as the ruling was handed down.

Uh oh. I wonder what will happen to my subscription.

Edit: I hate the RIAA.:mad:

Edit #2: I just looked thru all the articles you linked to. Last.fm seems to be absent (at least as far as I can tell). Hmm... I didn't think it was that obscure.

Uh oh. I wonder what will happen to my subscription.

Edit: I hate the RIAA.:mad:

Edit #2: I just looked thru all the articles you linked to. Last.fm seems to be absent (at least as far as I can tell). Hmm... I didn't think it was that obscure.

I didn't read anything about last.fm myself, but it may have enough support from a parent company like Yahoo to afford the fees. Don't know if last.fm has a parent comapny, though, so they may be SOL like the other radio stations.

Edit: Just checked the site, it's London-based. This fee hike will only affect American-based stations, so last.fm is safe.