A Reprieve For Net Radio?

Porsupah writes "The Register reports that "Rep. Jay Inslee (D-WA) and Rep. Don Manzullo (R-IL) have headed the 'Internet Radio Equality Act,' which aims to stop the controversial March 2 decision which puts royalty of a .08 cent per song per listener, retroactively from 2006 to 2010 on internet radio," as imposed by a recent decision from the Copyright Royalty Board. "If passed, today's bill would set new rates at 7.5 percent of the webcaster's revenue — the same rate paid by satellite radio.""

Comments

Good to Hear

[ror]

Well that's a result! Hopefully these guys will make good progress. In the end though with net radio streams getting higher and higher quality how long will it be before people use net radio as a content distribution mechanism with an excuse to get around copyright?

Re:Good to Hear

[oDDmON oUT]

What, like people weren't using FM radio as "an excuse to get around copyright" in the 60s and 70s?

Feh!

This "fear" that the great unwashed masses would somehow use netradio as a means to obtain "free" content is the same shibboleth trotted out by the *AAs to enforce unreasonable copyright extension and maintain an outmoded business model whose only design is to continue fattenning the coffers of middlemen and executives, not "The Artists".

Kudos to the representatives for showing a semblance of sanity, brickbats to the Copyright Royalty Board for being the sellouts that they are.

Skepticism

[Dr. Eggman]

"If passed, today's bill would set new rates at 7.5 percent of the webcaster's revenue -- the same rate paid by satellite radio." My first question would be "what were the rates/pay scheme before this whole mess with CRB's decision was imposed?" Are we really seeing a good decision, or are we seeing an attempt to dupe people into seeing a good decision while still getting some of the increase those who convinced the CRB, wanted to see?

Re:Skepticism

[ps236]

It sounds pretty much like what the webcasters wanted. They wanted a reasonable percentage of their revenue as the smaller webcasters have had previously. I can't remember exactly what it was previously but it was around the 6-10% mark IIRC.

The problem with the CRBs desire was that they wanted around 110% of the webcasters' revenue.... I looked at the figures, and although the royalty per 'performance' looked teeny, once you added it up it was pretty obvious there was no way that amount could be earned by advertising, the webcasters would have to either have a second method of income (as Yahoo, AOL etc do), or charge a quite large subscription ($20-ish per month)

Personally I don't have a problem with a royalty per performance, but it had to be at least an order of magnitude lower than the proposed royalty scheme. The problem (from RIAAs POV) with 'percentage of revenue' is that a webcaster who has a very low revenue (eg a hobbyist webcaster) essentially pays no royalties at all.

If this "percentage of revenue" proposal does go through, then I hope the RIAA learn (but doubt they will) and the next time this comes up they come up with something more reasonable and less greedy and manipulative. If they'd proposed a royalty per performance scheme of 1/10th their actual proposal, then the chances are most webcasters would have accepted it without much more than a grumble, and the RIAA would get more than they would with a 7.5% of revenue scheme..

Is there still time?

[jddj]

The new rates go into effect May 15 and are expected to instantly bankrupt most small web broadcasters (because they're retroactive to January, 2006).

In the mean time, this bill has to get out of committee, be voted on and passed by the house, get to the president's desk either on its own or tacked on to another bill, and then get signed.

That's a lot to get right fast. And the bill will no doubt face fierce lobbying opposition from the music industry suits trying to get internet radio shut down.

Props to these congressmen for setting up a bill on this, but...we're not there yet.

Re:What about Radio

[ps236]

They pay NO performance royalties at all - that's the problem.

Satellite pay 7.5% of revenue as performance royalties
The CRB wanted webcasters to pay around 100-125% of revenue as performance royalties
Radio stations pay 0% as performance royalties.

Let's run a litle calculation.

[LullySing]

--- a snip from savenetradio.org----
On March 2, 2007 the Copyright Royalty Board (CRB), which oversees sound recording royalties paid by Internet radio services, increased Internet radio's royalty burden between 300 and 1200 percent and thereby jeopardized the industry's future.

At the request of the Recording Industry Association of America, the CRB ignored the fact that Internet radio royalties were already double what satellite radio pays, and multiplied the royalties even further. The 2005 royalty rate was 7/100 of a penny per song streamed; the 2010 rate will be 19/100 of a penny per song streamed. And for small webcasters that were able to calculate royalties as a percentage of revenue in 2005 - that option was quashed by the CRB, so small webcasters' royalties will grow exponentially!

Before this ruling was handed down, the vast majority of webcasters were barely making ends meet as Internet radio advertising revenue is just beginning to develop. Without a doubt most Internet radio services will go bankrupt and cease webcasting if this royalty rate is not reversed by the Congress,
----- end snip-----

well, lemme give you an idea, ok ?

Say that you got a small internet radio channel that handles on average 150-200 users per hours ( approx user count for all 24 hours... peaks at 500ish, 10-15 users in the wee hours... so say, for all practical purposes you ot a constant 175 users, k?) . Because you're barely making any money off this thing ( say you're "making" $100-200ish a month after paying for equipment, band, coffee, ramen, etc etc) you had the exemption that made it you paid a fraction of your revenues to the RIAA. But hey, you're still making peanuts here, so it's all good.

Suddenly the rules change. Let's run a quick and dirty calculation on what you suddenly owe the RIAA here...
175 users * 8 songs and hour * 0.0018 $ ( that's per song streamed) = 2.52$ So that's 2 bucks fifty an hour.
multiply by 24 hours, times the number of days in a month ( say 30) and you get.... 1814,40$ that you owe to the RIAA... PER MONTH.

Can you say ouch ? for a guy that was barely making ends meet, and making just enough to take out his girlfriend to a fancy dinner once in a while ( if nothing breaks) you went down to actually owning money for running a small net radio station.

Now you understand why the "percentage of revenues" is something small webcasters want.

retroactively??

[nurb432]

The whole idea of changing the rules then penalizing you from actions in the past should be banned.

How the hell are you supposed to predict when congress will get a burr up its butt add that to your future business plan so you don't get put out of business ( or goto jail )?