Latest Salvos in the Ongoing Battle Of Webcasting

detroitindustrial writes "The Register reports on a backroom deal that screws small webcasters. The Voice of Webcasters, working with the RIAA, negotiated a deal that Congress is trying to make into a law. These rates give big discounts to the largest webcasters, while leaving around 96% of the smaller webcasters to suffer and die under the CARP rate. This is being done through the bill H.R. 5469, the Small Webcaster Amendment Act of 2002. It was originally a one paragraph bill to delay the CARP rates for 6 months, and was widely supported in its original form by the webcasting community. After the RIAA rewrote it, it turned into 30-page monstrosity that had no relation to the original bill. It has already passed in the House. Ann Gabriel, who was on the International Webcasting Associaion legislative committee, recently resigned in disgust over this sell out." It appears that the Register article misrepresents a few of the issues. Rusty Hodge, of SomaFM, has more on the actual effects of HR 5469... This is an email from Rusty Hodge, SomaFM's head honcho, which was sent to the Pho emailing list. Reprinted with permission:

Date: Mon, 14 Oct 2002 01:26:57 -0700
From: Rusty Hodge

The RIAA seems to have managed to really get a rift going in the
webcasting community.

I'll tell you all I know.

"Somebody shine a light of truth into the nature of these proceedings. You have many friends on pho list. Speak up. This is another dirty deal."
-- [ quote from The Register article ]

This article is based on a lot of incorrect information. What appears
to have happened was that someone on the carp@voiceofwebcasters.org
mailing list forwarded a bunch of messages from that list to the
author. (Nevermind that the mailing list messages have a disclaimer
which say that they are confidential and not for publication without
prior consent). I am annoyed that I was quoted out of context in the
article.

Tthe headline is based on one message that someone who opposed HR5469
posted, a message which is not accurate. The 96% number came from a
person who opposed all webcasting royalties and based his
calculations on the Shoutcast.com directory. It did not take into
account the broadcasters who operate via Live365 (which includes
thousands of broadcasters), the Windows Media radio directory,
Real.com, etc. It also assumed that all stations listed in the
Shoutcast.com directory are actually accessible. Because of the way
that the shoutcast automated directory works, even if you setup a
shoutcast server to privately distribute audio in your house or
within an office, by default it will appear in the shoutcast.com
directory. So will stations that do not have the network bandwidth to
reliably stream to a single listener. Anyone can run the Shoutcast
software on a DSL line, yet can't sustain a single listener because
of bandwidth limitations. And the statistic does not take into
account that many of those Shoutcast broadcasters are not based in
the US nor does this take into account where the listeners are.
(Remember, the DMCA/CARP fees only apply to listeners in the US.)

Now the current CARP rates - if you broadcast 12 songs an hour, and 7
average concurrent listeners, you'll be paying $516.50 a year. If you
only look at stations with more than 7 concurrent listeners on
average, or 5040 hours for the 30 day sample period, you get about
320 stations, and those stations represent 98% of the shoutcast
audience (based on listener numbers)!!! The remaining 2700 "stations"
are fighting for about 400 listener.

Of that 3000+ shoutcast stations listed who will be "screwed", more
than half of them do not have any listeners. If you have sampled
some of those near the bottom of the rating stations, you'll find
that many of them are either broadcasting silence, or their stream is
technically unlistenable (more dropouts than audio or you can't
connect to the stream at all).

(http://shoutcast.com/ttsl.html - has a rolling 30 day statistic
snapshot, which these numbers are based off)

HR5469 grants a lot more relief to a larger body of webcasters than
you'd think from reading that one mailing list. To the rest, HR5469
DOESN'T CHANGE ANYTHING. If it passes or fails, nothing changes for
the smallest webcasters.

(By the way, Live365 is neither harmed or hindered by this bill.
Their statement is here:

http://www.live365.com/carp/hr5469statement.html

Live365 is also represented ONLY by DiMA. Additionally, Live365 covers
the royalties for their member broadcasters, their member broadcasters
are not directly affected by this.)

Any webcaster with an average of more than about 25 concurrent
listeners is better off under this deal than the previous CARP
ruling. Beneath that limit, there is no difference.



There is another quote that is very misleading in the article:

``And privately, even members who support HR.5469 agree that it will
"seal the fate of this industry to be dominated by big webcasters,"
according to correspondence seen by The Register. ``

Actually, the quote "seal the fate of this industry to be dominated
by big webcasters" came from Kevin Shively (also fellow pho) of
Beethoven.com, on 9 Oct 2002. Kevin has stated many times that he
does not support the version of 5469 that was passed.

The Register should have attributed this quote because it completely
changes the meaning of it. Beethoven.com, a 14-employee company, is
owned by Marlin Broadcasting, a company that owns several FCC
licensed over the air stations. Kevin does not support HR5469 because
he believes that it sets the definition of small webcaster at too low
of a level. But I'll leave it to him to tell you what he thinks about
the bill. Kevin has been a driving force in lobbying for fairness for
small webcasters, and ironically, HR5469 would probably not have
passed without him, and it is very saddening that he will not benefit
from it. Kevin will hopefully post his concerns with the bill (I
recall it is Section 4 that he has problems with).

For the record, SomaFM feels that 5469 is far from a perfect bill.
However, we think it is a good starting point. Kevin has expressed
concerns in this bill setting precedents that will harm many
mid-sized webcasters. I believe that NAB is not supporting the bill
for the same reason.

``But the compromised Bill has some surprising backers. SomaFM and
KPIG are urging listeners to support the revised, RIAA-negotiated
venture.``

I was quoted somewhat out of context talking about advertising. I was
talking about a variety of options available for small webcasters,
one of which was advertising. However HR5469 extends the definition
of non-commercial webcasters to any non-profit organization, not just
FCC licensed non-commercial broadcast stations. That rate is less
than a third of the rate that commercial webcasters pay under the
current CARP fees ($0.0002 vs $0.0007). This I believe is a big win
for non-commercial internet only webcasters.

I was also pointing out that $500 a year minimum, vs the small
webcasters demand for $250 a year minimum, was negligible. I was also
pointing out that as they grew, and hit the $2000 minimum under the
new plan, that they would have an audience of over 25 average
concurrent listeners and at that point should have not trouble
obtaining advertising. They could bill up to $20k a year and have an
unlimited audience size.

SomaFM is listener supported and commercial free. We are not a
501(c)3 non-profit. Under the CARP rates, we would have to pay $500 a
DAY - over $180,000 a year in royalties. We generate about $20,000 a
year in donations now, which has covered about 85% of our costs
EXCLUDING the CARP FEES, and was on its way to covering all our
costs. (The cost that isn't covered is the cost of all the CDs I have
to buy!) SomaFM operates bare bones, our studios are in my garage.
We believe that we can generate enough additional donations to keep
us on the air with the rate proposed in HR5469. For us, it's
$2000-5000 a year instead of more than 10 times that under the old
CARP rates. So it's a no brainer for us to support this.


Another inaccurate quote:

"Many webcasters have already resigned in protest from the body
that's supposed to represent them: the Internet Webcasters'
Association. "

One person, Ann Gabriel, resigned. And Ann Gabriel was not a
webcaster, she produces live web events. She is not liable for past
CARP fees. In her open letter (which I've included below) she seems
to imply that IWA and VOW are the same.

Voice of Webcasters and the International Webcasting Association are
two separate entities.

The International Webcasting Association or IWA (which SomaFM is a
member), is not a lobby group on behalf of small webcasters. However,
since the IWA dues are far less than the other webcasting-related
trade group, DiMA, it has many more small webcasters than does DiMA.
As I recall, DiMA dues are $20k a year, IWA dues $300 a year. DiMA
represents bigger companies like Microsoft, AOL, Yahoo and smaller
guys like Live365. Jon Potter can tell you more about DiMA's goals.


Here's Ann's letter. I'm only forwarding it because it says it's an
open letter to the streaming community and the press, which i believe
describes many here on pho:

>Date: Wed, 09 Oct 2002 20:24:40 -0400
>From: Annmgabriel@aol.com
>Subject: [carplist] HR 5469
>
>Open Letter to the IWA Board of Directors, The IWA Legislative
>Committee, David Oxenford at Shaw-Pittman, CARP-List Members,
>Members at large of the Streaming Media Community and the Press:
>
>On October 1, 2002, at 12:00 pm Pacific Time, I began a 10-hour per
>day live broadcast with the intent to draw attention to the plight
>of Internet Radio broadcasters and raise money to benefit the IWA
>Legal Defense Fund.
>
>I did this based on the belief I was working to support HR 5469 as
>it was originally introduced into Congress; a bill calling for a
>stay in the rates imposed by the Librarian of Congress and due on
>October 20, 2002; and because I believed that Shaw-Pittman, the law
>firm involved in negotiating the deal with the RIAA was working on
>behalf of the International Webcasting Association (IWA).
>
>I am appalled, outraged and disgusted by the turn of events I have
>witnessed over the last week and will no longer sit and watch the
>blood, sweat and tears of the many be drown out by the disingenuous
>hue and cry of the few.
>
>I will NOT support HR 5469 as it was introduced and passed on the
>floor of Congress on October 6, 2002, nor will I encourage anyone
>who asks me to support it. I will immediately turn my attention to
>contacting every Senator I can, both by telephone and by fax, to let
>them know about the grave injustice that has been carried out in the
>name of the small webcasting community.
>
>Regardless of the stand the IWA takes on this issue, I, today,
>resign my membership in the IWA. I cannot stand by and continue to
>support an organization that allows its members to be bullied into
>accepting legislation that was negotiated one, under duress and two,
>by a team which originally set out to negotiate a private deal for
>themselves with the RIAA.
>
>I call on the members-at-large of the webcasting community to ask
>themselves why the press release about the deal on HR 5469 was done
>in the name of the RIAA and the Voice of Webcasters. I contend that
>the IWA was not represented here and its members are not responsible
>for the legal bills incurred by Shaw-Pittman. It is my belief that
>this was not a deal negotiated on behalf of the IWA or all of its
>members.
>
>I have been asked by many in the webcasting community how this could
>have happened. I think it is time for me to respond, and to let the
>webcasting community know all the facts about how HR 5469 could
>change from one paragraph as it was originally introduced, to a
>30-plus page bill serving only the RIAA and a few on the negotiating
>team.
>
>I believe I have an obligation to tell the truth NOW, as I know it,
>to the many who have banded together to fight for a common cause.
>They have seen their hopes go up in smoke because of a backroom deal
>negotiated under duress by a team that did not set out to represent
>webcasters at large and does not accept that the RIAA has a complete
>lack of respect for the webcasting community and never intended to
>deal fairly, honestly or forthrightly with the issues facing
>webcasters today.
>
>I wish you all the best of luck moving forward in a very difficult time.
>
>Sincerely,
>Ann Gabriel

SomaFM was not involved with negotiating this deal, although we did
sign a letter in support of it.

If you think my support is wrong, I'd like to hear the reasons why.

--Rusty Hodge
SomaFM.com

Comments

Suppor the Bill!

[theBraindonor]

Who cares what the news reporters are saying! Go visit your favorite webcasters, and see what they have to say. I guarantee that they have been crunching the numbers on this bill--they don't want to go bankrupt.

My favorite webcaster, Digitally Imported, fully supports the bill.

Again...before you start ranting away and listening to the FUD, check what your local webcaster has to say!

Re:Suppor the Bill!

[Anonymous Coward]

Greetings, I am actually the founder of Digitally Imported Radio (Ari Shohat).

I can tell you that we did and DO still support both versions of the bill, except that the old one doesn't apply anymore.

Many misunderstand the government procedures on this, and I would be very confused as well if I wasn't in the middle of it... As I have explained to others elsewhere...

We DID Support the original bill as well!
Rep. Sensenbrenner, the top Republican on the House Judiciary Committee, introduced the 1-sentence Stay bill on Thurs. Sept. 26. At the time it seemed bipartisan and noncontroverisal.

On Monday Sept. 30 the artist and label "spin" machine pulled into high gear. Rep. John Conyers, the top Democrat on House Judiciary, circulated a letter to all House offices, claiming a 6-month stay would "rip up the paychecks of working musicians, vocalists and artists."

The death knell for any chance that the 6-month stay version of H.R. 5469 had in the House came later in the day on Sept. 30, when the AFL-CIO (on behalf of artist unions AFM and AFTRA) came
out with a statement condemning it.

So the original Bill had no chance of getting through, so to go through with some negotiated deal was the only option save for death of stations.

What happened here though is, the same bill number was used, as I am guessing is a standard practice in US. I really didn't know that. I couldn't understand why they used the same HR5469, but that's the way it works. That's how it became something else. There was NO SWICHEROO, if that's what the accusation is, you'd have to ask the goverment how they make things work on this one.

In addition, I agree to everything Rusty from SomaFM said above. And I want you people to be aware of something... This bill, if goes through, is an Additional Option to the already existing rates. It doesn't push anyone out of business, it doesn't change previous rates, it only allows more people to be saved. The only companies (such as live365) that would not benefit are those that are too large to go under this deal. Note I said do not benefit, because they are also Not harmed explicitly by it in any way.

If the bill doesn't get passed, 96% of stations that support 96% of listenrs roughly might just shut down this week. The author of register article obviously seems uneducated about the trends and realities of small commecial webcasters.

About Digitally Imported Radio: We are a hobby station for almost 3 years. We are not a non-profit legally, but we don't yet make anything for ourselves. We run it as a hobby, and the only money we get is used right back into the station. We only get donations from listeners, and a tiny amount from banner ads (ha!). We just happen to have a lot of listeners who enjoy our FREE service fo the last few years, maybe that fact alone isn't sitting nice with a few webcasters who don't like this bill.

Re:Suppor the Bill!

[Anonymous Coward]

Ari here again to reply:

>>>>
You fail to mention that the lower rates (and rate structure based on expenses/revenue rather than listener count) were achieved at the cost of higher minimum payments.

This has the effect of locking the (true) small webcasters out of this deal, and delivering all the benifit of the new rate structure to the big time webcasters (who would have to pay the minimum anyway based on their revenue/expenses)

It is dishonest to reply that the (true) small webcasters can still have the old deal. You yourself admit that the old deal would shut down 96% of the stations this week.

It is clear what happened. The big-time webcaster (and wannabe big-time webcasters) got their deal, and to hell with everyone else.
>You fail to mention that the lower rates (and rate structure based on expenses/revenue rather than listener count) were achieved at the cost of higher minimum payments.

Exactly! But that doesn't apply for hobbyists because they will still be able to use the old CARP fee with $500 minimum, instead of the new $2000. I tried to say, again and again, the old CARP fees are still good if you wish to use them, this is an Addition, a choice.

So in your scenerio, 4% of small hobbyists (who mind you don't really serve almost anyone anyway) do survive if this bill doesn't get passed. What WIll they do when go BEYOND their 20 concurrent listeners, when they actually CAN support more listeners? THEY WILL BE FORCEd TO CLOSE JUST THE SAME. Such short-sightedness, unbelievable.

If you like simple words here:

a) this deal sucks, but would let those who want to live anotehr day to continue to fight this live on.
b) If you get 20 or less concurrent listeners, you use the existing CARP rates which is minimum of $500 a year.
c) if you grow beyond that, you can switch to $2000 minimum under this deal which will make more sense for you.

I don't see why you are complaining, many misunderstand this as removing existing deal, which it does not. You can't pay $500 a year even with listener donations for a hobby? Then you shouldn't be talking because that means you got No Listeners! Besides, time and time again, this is a small-commercial webcaster deal, not "hobby", not "college webcasting", not "broadcasting webcasting".. so if you fall under those, you shouldn't be talking either, you got the wrong group. But even so, this bill does something for non-commercials. It drops the existing rate by like 2/3rd, if they so choose to use it.

What exactly do you object, people haven't pointed out a single thing other than they refuse to pay anything to RIAA (then don't pay, there are already appeals going on this. This bill will let webcasters live and go on with the appeals). So other than that, there's nothing concrete in anyone's complaint as of yet.

Ari
Digitally Imported
www.di.fm

i think what bothers me most ...

[dlasley]

is FUD has spread to the Register, which i usually associate with something pretty close to reality in an information source. bummer.

more info and yet another point of view at Bill's RadioParadise (scroll down to the comments section).

Re:Time for Peercast?

[RefriedBean]

When you first launch peercast, it only accepts connections from localhost, allowing you to set up a password, and your preferences. Only after a password has been set it will accept connection from outside.

Re:US controls the internet (?!?)

[CrimsonDeath]

That's just it ... they don't.

If you had read anything about it, you would know that this only applies to US-based stations, and then even only for their listeners in the US.

It's just like stations on the borders -- they don't count listeners on the other side in the royalty calculations.

Fax Fax Fax. Tie up your senitors Fax machine

[Anonymous Coward]

You can fax your senitor from http://www.ruf.rice.edu/%7Ewillr/cb/sos/
It has a nice letter and everything. All you do is enter your zip code, name and it plugs everything else in.

PLUG UP THEIR FAX MACHINES!!!!!!

Re:Use the market, Luke

[anonicon]

CDBaby.com sells nothing but independent music by artists who've chosen to remain independent instead of signing away their music to an RIAA label.

I'm working with them now to make things better and easier for the public. We will make the RIAA irrelevant, but not today. Stay tuned!

Re:Bait And Switch

[rustman]

Bit of clarification here:

1. Live365 had chosen to work with DiMA, whose other members are at odds with what Live365 wants as a deal. Other DiMA members (Yahoo, AOL) do not want a percent of revenue deals like Live365 wants, so DiMA isn't pushing for a precentage of revenue deal, and hence Live365 is screwed.

1a. The RIAA refused to include Live365 in a "small webcaster" deal. Because even though the broadcasters on Live365 are small, Live365 is one of the largest webcasters in terms of their aggregate.

2. The original version of the bill was just a delay for 6 months, to see how the courts dealt with the appeals that have been filed. It just postponed things, it didn't solve problems.

3. The original version of the bill was tabled. That is, it was dead in its original form. The bill's sponsors (e.g. House Judiciary Committee Chairman James Sensenbrenner's legislative team.)

4. The gang of bigwigs isn't a gang of bigwigs at all if you're talking about the webcasters who are supporting this bill. It's a gang of despearate webcasters who have a lot to personally lose. Actually, the rewrite of the bill was crafted by the bills original sponsors in conjunction with the RIAA. David Oxenford, a lawyer/lobbyist representing small webcasters, was also involved trying to make the best deal for webcasters. (Like, getting the retroactives down to $2000 a year from $5000 a year.)

Here is a list of the people who support HR5469 and have publicly signed a letter to the Senate in support of it:

3WK L.L.C. - Jim and Wanda Atkinson, Owners
http://www.3wk.com - St. Louis, Missouri

Boomer Radio , Ron Rubin, President and CEO
www.boomerradio.com - Boalsburg, Pennsylvania

Classical Music Detroit, L.L.C - Robert F. Ottaway, Founder
www.ClassicalMusicDetroit.com, Detroit, Michigan

Carol Hess, Chatmasters Streaming Network
Lewisville, TX

Freshwater Radio, Michael Anderson
http://www.freshwater-radio.com, Great Falls, MT 59404

Houndogradio, Frank Coon, Owner
http://www.houndogradio.com, Stone Mountain, Georgia

KPIG, Bill Goldsmith, Online Operations Manager
Santa Cruz County, California

Montpelier Communications L.L.C., Onion River Radio
Frank R. Schliemann/Founder
http://www.onionriverradio.com - Montpelier, Vermont

Radioio, Mike Roe, Owner
http://www.radioio.com , Jacksonville, Florida

RadioParadise, Bill Goldsmith, Owner
http://www.radioparadise.com, Butte County, California

Radiostorm.com, Inc., Michael Donahue
http://www.radiostorm.com , Sudbury, Massachusetts

SomaFM, LLC, Rusty Hodge
http://www.SomaFM.com - San Francisco, CA 94110

Ultimate 80s - Dave Landis, Founder
http://www.ultimate-80s.com - Los Angeles, California

WebMedia Consulting, Inc. (Digitally Imported Radio)
http://www.digitallyimported.com - Staten Island, New York

Wolf FM - Steve Wolf, Owner
http://www.wolffm.com - Nashville, Tennessee