Net Radio Wins Partial Reprieve

Joren writes "Just a few hours after our last discussion on this topic, Wired News is reporting that Internet radio broadcasters have won a temporary reprieve from the new rates. Apparently the details are still being worked out. 'A coalition of webcasters have worked out a deal with the recording industry that could temporarily stave off a portion of crippling net radio royalties set to take effect Sunday, according to people familiar with the negotiations ... For now, the parties involved in what's described as ongoing negotiations have agreed to waive at least temporarily the minimum charge of $6,000 per channel required under a scheme created by the Copyright Royalty Board, or CRB. The deal, brokered late Thursday, is not final and could change. One person involved in the talks described the situation as a reprieve, and said that internet radio won't be saved until a workable royalty rate is set.'"

Comments

Would you really trust the Recording Industry

[IndustrialComplex]

to maintain a 'temporary' reprieve?

Re:Would you really trust the Recording Industry

[Anonymous Coward]

yes

Re:Would you really trust the Recording Industry

[Anonymous Coward]

yes Who would have thought that one of the top 500 recording artists in America would post on here as an Anonymous Coward? Lars Ulrich, go back to wallowing in your huge piles of money!

Re:Would you really trust the Recording Industry

[fallungus]

They've still got us by the balls, they're just not going to squeeze so hard for right now..

SoundExchange changed its mind?

[InvisblePinkUnicorn]

SoundExchange had previously said the new royalty rates are "etched in stone". Are they finally feeling the pressure from critics and lobbyists, or is this only a temporary setback for them?

Re:SoundExchange changed its mind?

[R2.0]

This is a delaying tactic until Congress is out of session. Just keep in mind that their real goal is to accomplish exactly what is feared - eliminating internet radio. While Congress is in session, there is a chance they will intervene. Wait a few weeks, the reprieve will be over, bills will go out, then it's "lights out" and Congress will be too busy pocketing contributions from the folks back home to notice.

Re:SoundExchange changed its mind?

[rm999]

Perhaps, alternatively, they aren't trying to shut it down, but they are trying to extract maximum profits out of it. They must know, at a certain level, that internet radio is good for them.

Instead, they are using what I have heard called the "Soviet negotiation model," in which you make an unreasonable first demand; Then it seems a lot more reasonable when you lower it a little. It works quite well, especially when you have the upperhand to begin with.

When soundexchange halves their demands, they'll look like heroes to congress and the public, and still be making a lot more money. Genius...

Re:SoundExchange changed its mind?

[R2.0]

"They must know, at a certain level, that internet radio is good for them."

Really? heard a saying a numbetr of years ago, which I shall paraphrase: "Never underestimate the power of a human being to stare at reality full on and yet still ignore it". I dont' believe for one minute that the people who pull the strings for SoundExchange see the internet as anything but a threat, which they either need to eliminate or control. The reality of internet music distribution may have been explained to them ad nauseam, but that doesn't mean they will believe it.

Re:SoundExchange changed its mind?

[kid_oliva]

This is a delaying tactic until Congress is out of session.

I have to sort of agree here. If it is not this than it is a publicity stunt to not seem as harsh or to force some other compromise that favors Sound Exchange.

Re:SoundExchange changed its mind?

[InvisblePinkUnicorn]

"they are trying to extract maximum profits out of it."

They are poor businessmen if they think the way to get the most profits is to scare everyone out of the business with ridiculous fees. They'd profit more from small fees and reinvestments, helping the community grow in the process, which in turn increases their profits. Or maybe they're not in it for the long-run.

Re:SoundExchange changed its mind?

[MBraynard]

This is all business. Maybe it's time to stop looking at either side as evil or stupid and simply consider the upsides of any potential outcomes.

First, consider SoundExchange's (SE) position. They represent the mainstream creators (MSC). Now while there are many layers between SE and the MSC, ultimately SE does represent the MSC. Their concern with the streaming is that they consider it an easy way for listeners to capture, digitally, the audio that is being streamed. It can then easily be moved onto a digital player. Additionally, they see many of the internet radio stations making money off of their artist's work - with their content - and they want a piece of the action. You may say that the terrestrial and extra-terrestrial radio don't have to pay these fees, but that is a different model and a much different market - and what SE and the law decide for these radios doesn't really matter to the topic at hand.

So - consider that the SE decides to charge WAY TOO MUCH for the music for it's artist, forcing a lot of non-profitable or barely profitable streamers off the net. What will the consumers of that music do now? Will they just bring a radio to work? Buy an Ipod? Or maybe they will find streamers out there who play totally independant music that isn't part of SE.

So consider the upside here - if you are a MSC hater, a DRM hater, then this may breathe life into the indy bands out there by forcing MSC off of streamers and introducing those who prefer their music through the tubes to these new bands. Rather than villifying SE, maybe you should cheer them. Because - if you are REALLY sure that MSC sucks and it's being forced down people's throats and they only listen because they have no alternative, then the audiences for the streamers will grow, not shrink, when they switch over.

Re:SoundExchange changed its mind?

[MrNiceguy_KS]

You may say that the terrestrial and extra-terrestrial radio don't have to pay these fees, but that is a different model and a much different market - and what SE and the law decide for these radios doesn't really matter to the topic at hand.

I'm very curious as to why you see terrestrial and satellite radio as different? Particularly satellite. Both provide service worldwide. Both provide "digital broadcast" - the justification originally given for charging performance royalties for internet radio when terrestrial radio doesn't pay them. Ease of copying doesn't fly with me - I think the average person would find it just as easy to run a cable from their sat. radio to the computer as setting up a stream ripper. Based on the quality of most net radio feeds, you'd probably get better sound with the cable, even with the analog conversion.

The only real differences I see between satellite radio and net radio is that sat radio is subscription based while most net radio stations aren't, and you can install sat radio in your car but not net radio. I don't see either of these differences as justifying higher rates for net radio.

Additionally, they see many of the internet radio stations making money off of their artist's work - with their content - and they want a piece of the action

And they've been getting it. Webcasters have been paying royalties for some time now. This isn't about whether webcasters should have to pay royalties. This is about an insane increase in royalties that requires webcasters to pay many times the fees of other formats. The old royalty schedule allowed for small webcasters to pay a percentage of revenue - a "piece of the action". The new schedule requires payment per-listener, per-song. Not in itself a bad thing, except that the rates are ridiculously high. If the new rates were applied to terrestrial radio, Clear Channel's royalties would be more than their entire operating budget.

Nobody's asking for internet radio to play for free. But I think it's reasonable for them to charge the same rates as satellite radio. That's what would result from the Internet Radio Equality Act (HR.2060 and S.1353) I've written my congressmen - two responded with form letters, but letters that at least indicate they are familiar with the issue. I haven't heard from the third, but as he is the co-sponsor of the Senate bill, I already know where he stands.

Re:SoundExchange changed its mind?

[glwtta]

They are poor businessmen if they think the way to get the most profits is to scare everyone out of the business with ridiculous fees.

Let's see, they are making money hand over fist providing a service that is no longer needed, and at the same time have managed to cultivate an image of tragic victims of scary Internet Piracy while their profits are rising.

I'd say they know what they are doing.

Re:SoundExchange changed its mind?

[MBraynard]

I'll respond with two points:

I'm very curious as to why you see terrestrial and satellite radio as different?

Because SE decides to treat them differently, that's why. There doesn't need to be any other reason. It's pointless to compare them - especially as an outsider. It doesn't matter.

But I think it's reasonable for them to charge the same rates as satellite radio. That's what would result from the Internet Radio Equality Act (HR.2060 and S.1353) I've written my congressmen - two responded with form letters, but letters that at least indicate they are familiar with the issue.

Unlike terrestrial radio where there is some public regulation due to the fact that radio bands are a limited resources, it's really none of Congress's business what happens on the net. Gee, I wish I could get congress to regulate the price of things I buy, too - and when they do, they inevitably screw it up. Like cable TV prices.

So I posed a lot of questions in my first post. Do you have any answers?

Re:SoundExchange changed its mind?

[pregister]

Maybe I'm not understanding what happened here. The Copyright Royalty Board set new rates for webcasters. They appear to be a branch of the library of congress with statutory authority to set royalty rates, etc http://www.loc.gov/crb/laws/. The webcasters appealed / petitioned to a judge and were denied. So, the rate increase is supposed to go in effect soon.

The webcasters reached a deal with the recording industry to get some temporary relief.

What?

If the Copyright Royalty Board set a new rate, how in the hell can the recording industry strike a deal with anyone to decrease what the webcasters have to pay? If the recording industry is actually able to make an agreement like this and the government or the Copyright Royalty Board just goes along with it can there be any question how far our congress and other politicians have been corrupted by the RIAA influence and lobbying? As part of the government, the CRB shouldn't be a mediator between copyright holders and any other party (or worse, just a puppet of the RIAA). They should be setting public policy that benefits the public. If the board truly believed the rates were fair (which, IMO, they are obviously not) then they have set the policy and any outside agreement should be meaningless.

The fact that the recording industry is willing to make any temporary deals simply means they know the rates are too high and fear repercussions or, as others have mentioned, are just giving a reprieve until Congress is out of session and the public outcry has run its course.

The fact that the CRB would allow outside agreements to nullify the rates they set simply means that the CRB is not attempting to benefit the public interest but is just a bought-and-sold arm of the recording industry.

Re:SoundExchange changed its mind?

[Ohreally_factor]

The only real differences I see between satellite radio and net radio is that sat radio is subscription based Bingo. The music business likes subscription models. Really, really likes them.

Saved?

[Elsan]

[...]that internet radio won't be saved until a workable royalty rate is set. Well, I believe it can be saved maybe but at what price(please don't say the royalty)? Internet radio should not have any royalty just for having a channel.

This isn't a reprive-its a feint

[VidEdit]

This "reprieve" is just an attempt by the RIAA controlled Sound Exchange to stave off legislation that would return the royalty rates to a sane number. Once the momentum for the legislation wanes, Sound Exchange can crank the fees back up without worrying that Congress will have the fortitude to try legislation again.

Re:This isn't a reprive-its a feint

[Novae D'Arx]

That is possible - the other possibility I see is that these wanks are using oil company tactics: Crank the prices sky-high, let everyone get scared and angry, then back off 9/10 of the original increase. The consumers and stations feel as if they've won and that their activism has made a difference, but really they've just bent over a little further.

Re:This isn't a reprive-its a feint

[TheRaven64]

One thing I haven't heard is what the indie labels are doing. I listen to Radio Paradise a lot, and with the Dashboard Widget in the corner of my screen, I often click to find more information about the tracks I am currently listening to. All of the ones I've liked enough to look up have, so far, been from indie labels.

As I recall, the SoundExchange system means you have to only pay royalties to SoundExchange if you play any music that you don't have a separate license for. If the indie labels, en bloc, offered the existing terms to webcasters, then a large number of Internet Radio stations would be able to just say to the RIAA 'you give us the old terms, or we never play your music ever again, and never give you any money.' It would put them in a much stronger bargaining position.

Re:Net radio business plan

[Anonymous Coward]

2. Sounds like Google will be soon after Net Radio channels.

no surprise there

[starbuckr0x]

This really shouldn't come as a surprise to anyone. If the "axe" as we're calling it is so close, then these companies are really going to need time to adjust accordingly. Those who can't afford to play ball with the RIAA are going to start looking at their other options (if they haven't already done so!), such as memberships, commercial partnerships, etc.

I can actually see this dragging out longer. Can you imagine the amount of paperwork they're burried in?

Wha?

[Anonymous Coward]

So, here we have a guy promising before congress that SoundExchange will not enforce the new rates.

A promise? Real encouraging. That's like the RIAA promising they will stop suing college students.

Respones:

[Neil Blender]

Correct: That was nice how we could get all that stuff for free and much more conveniently. I mourn it's impending doom but understand that not everything can be free because it costs someone money to provide such things. Once again, I am happy that it was free for as long as it was.

Incorrect: Birthright! Damn gubberment! Me want freebies!

Re:Respones:

[orclevegam]

Once again, I am happy that it was free for as long as it was.

Free to you maybe, but the internet radio stations have always payed a licensing fee. The big change here is that in the past internet radio had the same basic fee structure as a traditional broadcast radio station, in which the station paid a flat rate for a blanket license to play music from the RIAA's catalog (don't remember, but I think it may have been a small per song charge). The change is that they want to go to a payment system that charges not only per song, but per listener, which will grossly inflate the fees these stations will need to pay. Never mind the technical feasibility of tracking the number of unique listeners to any given station, but simply multiplying the .8 cent fee per song by even a thousand listeners brings the cost per song to 8 dollars, and there's no way these small broadcasters can recoup that cost in advertising fees. The RIAA actually knows this, but they don't care, they want control of the whole thing, so they've set it up where only a few companies can actually afford to provide internet radio, and they're just fine with that, less chance for anyone not already under the RIAA's thumb to get any sort of air time.

Re:Respones:

[CrashPoint]

Also incorrect: False dichotomies.

Re:Respones:

[iminplaya]

Me want freebies!

You already have them... In spades.

The goal IS to eliminate internet radio

[spazmonkey]

Now that Congress is interested, stalling until it is out of session is as much of a "reprieve" as we are going to get. The entire goal is to permanently quash alternative music distribution forms and independent labels through a two-pronged attack, this just being one of them, the right to now collect royalties on all NON-RIAA music being the other(which allows them to control access and distribution of it same as they are doing to internet radio). This while they exert more control on real radio and other traditional distribution channels eventually gives them an actual, not just virtual, control of all music period. The entire goal is to kill all non-RIAA controlled access to music. When there is no other alternative, no matter how bad their products or stupid the pricing, it will be RIAA supplied crap or silence.

Re:The goal IS to eliminate internet radio

[CodeBuster]

it will be RIAA supplied crap or silence.

or revolt and open warfare on the encrypted and onion routed P2P networks...they cannot track down and bust every last one of us after all.

Re:The goal IS to eliminate internet radio

[Adambomb]

Or grab an instrument and start torturing it until music comes out.

Music is a lot older than technology or corporations. I somehow doubt that the choice would EVER be reduced to RIAA crap or silence, but more RIAA crap or that local dude who is really into his work.

Re:The goal IS to eliminate internet radio

[redneckHippe]

They'll have to take my guitar from my cold, dead hands.

Re:The goal IS to eliminate internet radio

[Anonymous Coward]

They'll have to take my guitar from my cold, dead hands.

Your proposal is acceptable.

Re:The goal IS to eliminate internet radio

[redneckHippe]

Gee Thanx. I'd mod you up if I had mod points (and hadn't posted to this thread}.

Adversity Leads to Innovation

[MutualDisdain]

SoundExchange may force internet radio as we know it off the air, but it will swiftly be replaced by a system that does not pay royalties. I am speaking of course of overseas broadcasting, and P2P radio networks.

Consumers want to hear streaming music on the internet without annoying commercials. If there exists no legal, cost-effective way to do it, then the black market will find a way. It's time for the industry to wake up and realize that alienating the consumer base does not equal more profits.

Re:Adversity Leads to Innovation

[oyenstikker]

"Consumers want to hear streaming music on the internet without annoying commercials."

Consumers want stuff for free. That does not justify any means of getting it.

If you want to try to stop the RIAA from silencing non-RIAA music, that is great. But once you tie it to rationalizing copyright violation, nobody will take you seriously.

Re:Adversity Leads to Innovation

[MutualDisdain]

It is true that there is no free lunch, but it is also true that consumers prefer their lunches prepared in a certain way. The RIAA continues to ignore what the customers want, which ultimately leads to customer dissatisfaction and fewer profits.

Raising the rates of internet streams above that of traditional radio in order to change consumer habits will not work. My point is that by ignoring what the customers want, the RIAA is in effect creating another Napster. This is almost just like the way the music industry missed the boat with digital downloads. They are once again shunning a potential profit avenue. The music industry should be utilizing internet radio instead of destroying it.

[unrelated]The industry seems hell bent on clinging to a model that force feeds "the next best artist" on the public, instead of allowing the public to decide who that artist is. That is why they are ultimately going to lose in this endeavor. The Internet has changed everything.

Re:Adversity Leads to Innovation

[oyenstikker]

The RIAA is not in effect creating another Napster. People who are willing to break the law create another Napster. Everybody is perfectly capable of simply refusing to buy the RIAA's product. But, as you see, enough people are happy enough with their product to buy it.

I don't blame the RIAA for fighting illegal behavior that hurts their business. I blame people for their illegal behavior. If everybody refused to buy their music for even 2 years, that would be the end of the RIAA. But you'd rather continue with your illegal behavior, and buy music from them to keep them running.

Re:Adversity Leads to Innovation

[MutualDisdain]

The RIAA members are the sole source of popular music in mainstream culture. I could believe the "if you don't like the product don't buy it," argument if there was a competitor from which to buy music with equal talent and production quality.

Because there is no other option, the RIAA can force the standard for what types of music are popular, and on what formats it is available. In the case of Napster the consumer wanted an easy way to download individual songs they liked from CDs, without having to go to the store and buy the entire CD. The RIAA refused to switch to the new medium, and consequently the black market stepped in to provide that service.

Now the RIAA is attempting to control a new format, internet streaming. I believe that they are making this rate change in order to kill not-for-profit and donation based stations. The reasoning seems to be that under the old rates structure, stations only have to pay a percentage of their profits to SoundExchange. This means that a commercial for-profit station will always generate more revenue than a not-for-profit station.

The problem is that the consumer prefers to listen to the commercial free stations. This means that there are less for-profit internet stations out there, which in turn meant less profits for the industry. (when paying a percentage of income to SoundExchange)

Instead of embracing the idea of commercial free radio and cultivating in a way that would generate more music sales, the industry has embraced a model that the consumer does not want. The current not-for-profit stations will most likely just go overseas, the consumer will continue to listen to them, and the industry will lose any chance of revenue.

What the industry should do is work with internet radio to generate sales, yet instead they have chosen path that will only lose them more money and further alienate the customer.

Re:Adversity Leads to Innovation

[mastermemorex]

Do you really believe that they will allow to Internet radio to continue overseas. Sooner or later, we would get messages like this. "This server has been filtered by the copyright regulation. To take access to the contents of this provider is a copyright infringemen that can be punished by feeds or jail. If you need to get access this server please contact your Internet provider for a special autorization provided by th RIAA."

Re:Adversity Leads to Innovation

[vertinox]

Consumers want stuff for free. That does not justify any means of getting it.

Of course not, but morality sometimes has nothing to do with the free market.

A realist will look at things like prohibition, piracy, and the war on drugs and go "Hey, the reason why there is so much crime and a hideous black market was because the market wants those things regardless of morality!"

People want music and they want it as cheap and convenient as possible. Sometimes this means free, but often more than not it just means they want a convenient yet cheap place to download them for a small fee. If the power that be refuse to allow such things through laws and other means, then the market simply creates a black market making the issue a moot point.

Re:Adversity Leads to Innovation

[oyenstikker]

Main-stream music is _not_ a necessity. You don't have to buy it.

People want something (free access to RIAA controlled music) that they have no inherent right to. That doesn't mean it is okay for you to (illegally) give it to them. Nor does it mean that it isn't okay for the RIAA to go after people who are illegally violating their copyrights (so long as they do it legally, which is a completely separate issue).

The RIAA has chosen their business model. If you don't like it, don't buy from them. But you don't have the right to their product in a different format, nor do they have an obligation to provide it in a different format.

It may be to their financial advantage to do so, but they don't realize it. That does not justify illegal behavior on anybody else's part.

Just boycott them. You can live without their music.

Net radio will just offshore.

[HornWumpus]

Granted some businesses will fail but in the end the record companies will learn yet again that they are SOL.

The record companies only think they have an upper hand. They'll be broke soon enough.

Re:Net radio will just offshore.

[Verteiron]

Look for legislation that bans listening to non-US net radio stations in the near future. Or possibly an FCC ruling.

Re:Net radio will just offshore.

[3p1ph4ny]

Will that be kind of like the legislation banning online gambling, or movie and music piracy?

Re:Net radio will just offshore.

[a-zarkon!]

Maybe we can get a deal on content-filtering technology from the Chinese or Saudis. Not for stuff that's objectionable to the Gov't per se, just the stuff that's objectionable to RIAA. Well not objectionable, so much as those who don't pay whatever the going monthly rate is.

the EFF or such...

[dAzED1]

the EFF or such could/should help set up a coalition of independent artists, one that had an exceptionally small fee to sign up ($10 or so - enough to prevent people from spamming the records, but little enough to not be prohibitive to real artists), and then any internet radio stations could play any of those songs. If small-time artists actually had a choice, then hey. If artists agreed to allow their songs to be played for free (even if just for a set amount of time), then net radio stations could register with the service (for a fee that is actually low, like $20 or so) and hey...they have the license covered.

hell, I'd almost like to start some such thing myself. Might be more effective if I just give someone else money to do it though. There's certainly enough people who want such a thing...there's a market for it (if even just 1% of the anti-RIAA chickenhawks on /. actually donated to it, it would be viable).

And as someone who has played in clubs for years because I love playing, and has turned down a couple contracts because I didn't want that sort of life - yes, damnit, there are musicians that would give their songs away for free, or close to free. That's precisely what happened to almost all music for the history of mankind until just a few decades ago.

Re:the EFF or such...

[Anonymous Coward]

Grand idea, but ultimately then, you're becoming a label- just with a different view of the world. What's to prevent you, once you have a bunch of artists, from raising the fee to something nuts and then asking for royalties?

Re:the EFF or such...

[dAzED1]

bylaws, contracts, and license agreements. Never having the group own any licenses. That, and if the corp is started as a 501c3, it cannot hold property and make an actual profit off it anyway.

Have you never participated in an OSS project? Set it up the same way. If Xfree goes nuts, we could replace it too, right? Oh yeah, we already did that, ala X.org.

Re:the EFF or such...

[hitmanWilly1337]

Tell me when and where, I will gladly donate time/money to such a project. Also, if you offer downloads, make sure they're in ogg (vorbis or flac) or at least DRM free mp3. Do that, and this geek is in 110%.

They're just wearing us down

[digitect]

This is just a stall tactic. There will be several more edge-of-the-brink reprieves until the congress/general public are totally confused and the regular new outlets stop reporting. Then it will be as if millions of voices suddenly cried out in terror and were suddenly silenced, but only one person will have heard it.

Blood from a stone?

[bepolite]

Correct me if I'm wrong but it doesn't look like there is a lot of money in Internet Radio. So stations couldn't pay if they wanted to and if internet radio is effectively shutdown it would be a net loss for everyone artists, distributors, stations and listeners. So to me it looks like the only alternative is for internet radio to become very similar to FM radio (lots of ads) and fees paid.

Re:Blood from a stone?

[spazmonkey]

    It is a net loss for ALMOST everyone, but not quite everyone. The RIAA is losing out to more and more people going to independent labels and independent distribution. This is part of a larger concerted effort to gain legal "control" over, than shut down, any distribution of music that isn't theirs. It's not about money, its about information and access.
  Internet radio in particular espouses a lot of anti-RIAA sentiment and supports a lot of "indy" music forms not otherwise supported in the mainstream. Shutting it down is in essence destroying in one step one of the largest portions of independent musics infrastructure and communication.

  In short, the Empire just destroyed a major Rebel base.

Re:Blood from a stone?

[Cheerio Boy]

In short, the Empire just destroyed a major Rebel base.

It's funny that you say that because the first thing that came to mind after seeing this article was the line from The Empire Strikes Back:

"I've just made a deal that will keep the Empire out of here forever." - Lando Calrissian

The mafiaa is about as trustworthy as the Empire...

Re:Blood from a stone?

[MrNiceguy_KS]

So to me it looks like the only alternative is for internet radio to become very similar to FM radio (lots of ads) and fees paid.

Not much chance of that happening. Webcasters would be thrilled if they were subject to the same fee structure as FM. That's the major problem - webcasters are being subjected to a fee structure that would bankrupt any broadcaster. I've been googling for the source and can't find it, but I remember seeing an article saying that if the new royalty structure was applied to terrestrial radio as well, ClearChannel's royalty bill would be more than their yearly revenue. Anyone out there got a link?

Re:Blood from a stone?

[cgenman]

I don't know about ClearChannel, but one of the most successful radio stations in the country, KROQ, would face fees that are four times their yearly revenue, and would grow to twenty times yearly revenue by 2010.

http://www.idobi.com/news/?p=25408

A stupid law is a stupid law

[A beautiful mind]

I don't get why are they trying to bend over. There are plenty of ways to go on about this, like not paying any fees, protests, or just really going dark and see what effect that has.

Re:A stupid law is a stupid law

[mdm-adph]

Or going overseas? IANAL, and the RIAA cartel's arm does reach pretty far internationally, but I'd assume the RIAA wouldn't be able to do anything to them...

Why not just..

[Safiire Arrowny]

Why don't they just play music that the RIAA group of companies doesn't own.

Let them know their artists aren't so special and that even without them we'll get along with our music needs just fine.

Sure probably every one likes at least one artist they've got their stupid hands on, but there's tons of other people who have nothing to do with the RIAA waiting to take their place.

Acting like we need them is what gives them any power at all. If I make a radio station of a bunch of local bands, surely we don't have to pay per song/listener to play our stuff, right?

Re:Why not just..

[AcidTag]

Because what Congress and the CRB (Copyright Royalty Board) set up was a compulsory license, which means that SoundExchange represents and collects money for ALL artists/labels, regardless.

You have to pay SoundExchange a yearly membership as an artist/label to receive money they do collect and they don't say what they do with the money they collect for artists that have no label and dont sign up for membership, apparently this is free money for their coffers.

Re:Why not just..

[lone bear]

quick, un-researched answer...

Remembering from previous reading on this, the licensing agency has wording that all music has to pay. Independents who want their cut of the fees have to join the licensing org. and pay the full membership fee.

Re:Why not just..

[Safiire Arrowny]

Wow that's just crazy. That calls for civil disobedience I think.

Re:Why not just..

[dutchmonkey]

This is a really good point, but let's not forget that royalties still need to be fairly paid to other (non-RIAA) artists. All of the artists working hard and putting out music on indie labels do still deserve their royalties. So if your idea were to work then internet radio stations would need to work out deals with those independents, or with an organization like the a2im (http://a2im.org/), which is similar in function to the RIAA but working for smaller labels and without the thin coating of slime.

What's lost in the rhetoric coming from both sides is that artists and labels are deserving of fair payment for the use of their creative work. Most labels, even some small ones, are up in arms because SoundExchange is telling them that this is an issue of small broadcasters demanding to play their music for "nothing." And broadcasters are clearly incensed at nasty pricing and bullying tactics by SoundExchange. You notice a commonality?

If you take away the extreme cases of major RIAA artists and militant "I deserve to broadcast for free" internet radio outlets, the argument becomes simple really. Musicians, technicians, producers, designers, sales folks, production folks, and more spent time creating each release. They do deserve to be paid for the effort. Just like programmers, IT staff, management, sales folks, production folks, and more deserve to be paid for software they create and distribute. It's a matter of setting a fair price, which SoundExchange doesn't seem particularly interested in. And since they're collecting royalties for the whole industry, RIAA and non-RIAA alike, they're a bit of a fly in the ointment--to say the very utter absolute least.

Negotiating directly with indie labels would work to circumvent SoundExchange. The only other alternative is to broadcast works made by artists who are granting usage rights via creative commons or something similar. Which would be very nice.

Re:Why not just..

[MenTaLguY]

The one way around this as an independent artist is to release your music under a general license that explicitly allows broadcasting for free or at some rate (Creative Commons would work); explicit licenses take priority over the default compulsory license.

That doesn't mean SoundExchange won't necessarily harass you if you (as an internet radio station) play such music though, just that theoretically you don't legally owe them anything.

Re:Why not just..

[redneckHippe]

If they collect money from my music w/o my permission then they've commited fraud and they should have forfeit whatever they've collected.

Re:Why not just..

[MenTaLguY]

As far as I can tell, the current setup gives SoundExchange the legal right to collect all compulsory license fees, except where you have an explicit license in place which supersedes the default compulsory license.

Re:Why not just..

[redneckHippe]

Creative Commons work?

Why a rate at all?

[jshriverWVU]

I thought the RIAA received all of the money from record and online sales, plus merchandise etc. I was under the impression that old-school radio was actually PAID money to play songs every hour and received free music. Why would online be any different?

After all it's just free advertising for them.

Re:Why a rate at all?

[Anonymous Coward]

I believe that is correct - AM & FM radio do not pay royalties, but digital radio does. However, according to http://arstechnica.com/news.ars/post/20070522-riaa -radio-needs-to-pay-up.html/ there is a move afoot by the RIAA to correct that 'revenue gap' - just as with Internet Radio.

Re:Why a rate at all?

[Svartalf]

Heh... It's to KILL the technology and it's use- dead in it's tracks.

They can't control the consumer (and there's a BIG distinction there- they view us all that way, much like a Vampire views the living as cattle, to be fed off of...) and his access to the performers. They make their money via making an artificial, but extreme, scarcity of available content for us to listen to and watch for entertainment purposes. With Internet Radio, they DO NOT have a good way to control it like they do current Radio, TV, and Satellite services. Any single person could set up a "station" on the Internet with enough bandwidth to at least forward it to a streaming repeater server farm like they do with stuff like Live365, or to set up a P2P Streaming engine and do without most of that whole mess. The barriers to entry are nonexistent for someone- literally ANY performer can get their stuff out there through that medium, even ones that are not signed up with the Labels. They don't like that as it doesn't make them money and doesn't let them screw the consumers or the performers like they want to do. You see, with all the other, more traditional means of getting the stuff flipped about, you had to make a cash outlay of a million or more to get anything useful. Now? All you need is to have enough bandwidth on the Connected Internet to provide a stream that's reliable and a way to distribute it to more than one listener, also on the Internet. Pennies on the dollar or worse difference in expense to get it all started.

I would have less of a problem with this if I thought the people I listen to their performances would actually SEE the money in question. But, this isn't the case. It's a sham to kill the whole thing dead so they can go back to their cushy business model that's become waaay outmoded.

US only

[BlueParrot]

I think what many forget here is that while this may shut down people running internet radio from US servers and domain names, it is only a question of time for a foreign supply to take advantage of any vacuum that may result if the us pulls the plug. So rather than shutting down internet radio, this whole circus will move it abroad. The RIAA won't win, artists won't win, customers won't win and America won't win. Foreign ISPs will however win and the US will become a little less competitive on the global market. In short, the more the RIAA tightens their grip, the more will slip through to abroad where laws are different. In the long run this might just be what causes the RIAA's downfall. By crippling the American music industry they pave the way for competitors to take their place.

Re:US only

[gethoht]

I agree with this logic, it makes perfect sense. Internet radio can be streamed from anywhere. It's terribly easy to just move your operation to another country, and that's what I foresee happening.

I pray for the end of the RIAA and it's affiliates.

not to be a jerk but...

[Anonymous Coward]

what exactly does the riaa have to do with any of this. it seems that about half of all posters are blaming the riaa for something they have no parts of. it just seems kinda stupid to not know who your enemy is, at least that's what i think.

What is the big deal?

[PhysicsPhil]

I must confess I watch this issue with all the interest of grass growing.

This whole thing boils down to two interacting business groups, each of whom wants to maximize their profits. The music industry would like to be paid a massive amount of money in royalties. Clearly that isn't going to happen. The broadcasters would like to have zero royalties, or better yet be paid by the RIAA for playing the music. That's not going to happen either.

While the RIAA has temporary gotten a high royalty rate, the broadcasters are not going to be able to pay it, and the RIAA's profits will go down as a result. After a few quarter they'll wake up to this fact and get down to bargaining seriously on a reduced rate. Eventually they'll hammer out a rate somewhere in the middle that both sides can live with. Then they can get back to the more profitable business of screwing the consumer.

In the meantime, squawking and complaining don't cost anything so we get the joys of listening to both sides play for public sympathy in the hope that it will improve their bargaining position.

Re:What is the big deal?

[cgenman]

"While the RIAA has temporary gotten a high royalty rate, the broadcasters are not going to be able to pay it, and the RIAA's profits will go down as a result. After a few quarter they'll wake up to this fact and get down to bargaining seriously on a reduced rate. Eventually they'll hammer out a rate somewhere in the middle that both sides can live with. Then they can get back to the more profitable business of screwing the consumer."

The RIAA is not about profiting from internet radio. The RIAA is about profiting from ensuring people are only exposed to music from the 6 major labels. They make much more if they can ensure that people don't start looking elsewhere for their music. It doesn't matter if the problem is illegal file sharing or (what was) legal internet streaming, or even terrestrial radio playing music they don't approve of (which has led to the payola scandals).

The major labels profit from control. Internet radio is currently viewed as a threat to that control, and as such they want it shut down.

"The broadcasters would like to have zero royalties, or better yet be paid by the RIAA for playing the music. That's not going to happen either."

Ironically, the internet broadcasters are fighting for a royalty rate that is higher than the terrestrial one: satellite radio. For satellite radio, you pay a (rather high) percent of station profits. Terrestrial radio is much cheaper. Internet radio, on the other hand, is massively high in comparison, and is irrespective of profit margins.

Also, it's retroactive to the beginning of 2006, thus instantly bankrupting many broadcasters.

Ars Technica has a nice write up.

[twitter]

Linked here. They called it a "stay of execution" but underestimated the $6000 per channel fee as $500. The deal stinks no matter how much it costs because it forces participation and creates a government privileged middleman.

Re:Ars Technica has a nice write up.

[nospam007]

Linked here. They called it a "stay of execution" but underestimated the $6000 per channel fee as $500.
--
Can't they just all use servers in Belize or Tonga?

Like I said yesterday

[JohnnyGTO]

You all can survive 6 months (4 years for me) without a new CD.

DON'T FEED THE MACHINE IN ANY WAY!

Tell your friends.

Support independent artists.

Re:Like I said yesterday

[compro01]

unless the artist releases the music under an explicit license (creative commons or something) this STILL applies to their music, due to the statutory licencing, which is what this whole thing is about.

Re:Like I said yesterday

[JohnnyGTO]

You mean I've I decide to record my little girls made up song and then just share it with the world these bastards would demand a cut from anyone that plays it. Thats just fucking WRONG!

No, that is the basis of their existence.

[twitter]

They are poor businessmen if they think the way to get the most profits is to scare everyone out of the business with ridiculous fees.

The industry is based on the once high costs of recording, broadcast and physical distribution. Now that all of those things are cheap, they have to create expenses to maintain their position. In a free market, the value of recorded music will fall below that of a performance - in other words, you will be able to get it for a song. Perpetual copyright laws to control the history of music, antiquated spectrum allocation, and judicial extortion all create costs where none should exist. The measure of their success is that better than 90% of music is sold by two or three companies.

No, the artists are not rewarded.

yet another attempt

[iminplaya]

to keep this issue off the minds of the general public, who might not react too kindly to such atrocities. I'm sure it will work as planned. Good show!

Correction on the per channel minimum

[shanec]

For now, the parties involved in what's described as ongoing negotiations have agreed to waive at least temporarily the minimum charge of $6,000 per channel required under a scheme created by the Copyright Royalty Board, or CRB.

Ahm, thats $500/per channel. Now with the lack of definition of "what is a channel" from the CRB, an individual station / site could end up paying $6000 or MORE (ie: Pandora with it's 7 channels per user could end up paying BILLIONS).

Shane (General Manager, of the internet radio station Big Blue Swing.com)

No, it's subtrifuge.

[twitter]

This is a blatant attempt to quash the issue through confusion. Most people don't know about the Copyright Review Board or what a bad deal it's just created for everyone. What they are hearing is a mixed signal. What people need to hear is, "Streaming music from your computer is about to be expensive and/or illegal for the benefit of big publishers." Corporate media, even Slashdot, are blaring out "Internet Radio Royalty Hikes Delayed" as if the RIAA had force of law and this temporary reprieve had any meaning.

They might as well have that. The whole thing is so unAmerican, most have a hard time believing it when they do learn. That a group of unelected could make such a fundamental decision boggles the mind. How is it that legislation has to be passed to keep an arm of government from creating an all encompassing monster like SoundExchange?

The end game is the destruction of Internet Radio and the internet itself. They want to go back to 1911 where you and me were not part of popular culture.

Why indeed? Justify the harm.

[twitter]

Can't they just all use servers in Belize or Tonga?

Why should I go to Belize just so I can broadcast legal and free music over the internet? Why should the RIAA be allowed to charge people for internet use that has nothing to do with them? I don't have to justify my freedom, you have to justify taking it away.

Exacttly.

[Anonymous Coward]

It's all subtrifuge, I agree.

Don't Jump the Gun Quite Yet

[BanjoBob]

FAQ: Net radio's mixed signals
By Anne Broache
Staff Writer, CNET News.com
Published: July 13, 2007, 2:32 PDT
http://news.com.com/FAQ+Net+radios+mixed+signals/2 100-1027_3-6196666.html

SoundExchange Fueled By Coke, How Else To Explain?

[cmholm]

Per the DailyTech: Music artists and labels represented by SoundExchange say they are being treated unfairly, receiving less than a fair amount of money being generated by online radio stations.

If I'm not mistaken, the only income that internet radio is generating - if any - is via click-through ads. The revenue per click has been dropping for years, and unlike OTA radio, an i-station should be able to readily document just what the total listenership is. I think it's pretty clear that it ain't much on either count.

Therefore, the SoundExchange position on what a fair royalty rate is must be influenced by one or both of two factors:
1) a desire to demolish internet radio until the corporate members are able to put together their own services. They'll be paying themselves royalties, so the rate is unimportant.

2) at parties, SoundExchange players get to talking after doing a few lines, going on yet again how everything's on the net nowadays, wow look at Google's market cap, with the result that huge numbers tumbled out. More than a few people from the Library of Congress were obviously sharing the same mirror, or this whole idea would have been forgotten the next morning.

Re:Why indeed? Justify the harm.

[iminplaya]

I don't have to justify my freedom, you have to justify taking it away.

Here's all the justification I need. BANG! BANG! Who wants it next? There, your freedom is gone. Waddya gonna do about "justification" that comes out the end of a gun while the rest of the animals in the slaughterhouse stand by and watch you bleed to death?

Re:this is bad news

[iminplaya]

Who? Sound Exchange? or congress?

Re:SoundExchange Fueled By Coke, How Else To Expla

[Anonymous Coward]

Some stations, such as Digitally Imported ( http://di.fm/ ) allow users to purchase subscriptions for high bitrate streams and no commercials.

Re: This isn't a reprieve-its a feint

[cmarkn]

You haven't been keeping up with the discussion. SoundExchange will be "collecting royalties" for all artists, even the indies and the unsigned who are not part of the music cartel, and hold them until the artist...oh, who am I kidding? The artists will never see a penny of these royalties that SoundExchange will be collecting in their names.

Re: This isn't a reprieve-its a feint

[TheRaven64]

SoundExchange will be "collecting royalties" for all artists, even the indies and the unsigned who are not part of the music cartel Not quite true. If you play any songs for which you don't have a specific contract, then SoundExchange will collect royalties for all songs you play. If, however, you only play songs that you have a specific license for, then you do not have to pay anything to SoundExchange. If you run an indie-only station, you don't have to interact with SoundExchange at all, but if you run a mixed station then they will take their cut for everything. No, I can't see how it's legal either.