Slashdot Mirror

← Back to Stories (view on slashdot.org)

RIAA and Net Radio Broadcasters Reach Agreement

Posted by samzenpus on from the pay-up dept.

An anonymous reader writes "The RIAA and internet web broadcasters have reached a royalty agreement. Instead of facing massive increases per song played, they will be generally charged 10.5% of their yearly revenue."

20 of 284 comments (clear)

  1. This is unheard of, but... by dada21 · · Score: 5, Insightful

    ...it's also a sign that the RIAA knows it is outdated and is only grasping at the few straws remaining.

    If you're thinking of starting a business venture, there are two words for you: supply and demand.

    No amount of laws or regulations can overcome supply and demand in the long run. The RIAA relied on preferential laws and regulations to maintain their control over distribution. Recorded music has a near-infinite supply in terms of distribution online. Hence the price of it should fall to nearly zero (yes, some people who see value in compensating the artist will never believe the price should be zero).

    The RIAA is screwed, no matter how you look at it. Most monopolistic corporation unions who rely on legislation and not on supply and demand are just as screwed.

    1. Re:This is unheard of, but... by WTF+Chuck · · Score: 5, Insightful

      100% of nothing is nothing. If you are going to charge your distributors more for your "product" than your they will make selling that "product", then you get the full 100% of nothing. On the other hand, if you see that they will walk away and find some other line of work if you insist on the full 100%, then you know it's time to come to somewhat more reasonable prices.

      --
      Note - Liberal use of <sarcasm> tags may or may not need to be applied.
    2. Re:This is unheard of, but... by Cyberax · · Score: 5, Funny

      Or compress it to sound louder...

    3. Re:This is unheard of, but... by vux984 · · Score: 5, Insightful

      That's fine if you are Gordon Lightfoot and still have the stamina and the talent to fill the 3000+ seat Shea's Buffalo at age 69.

      A tile setter won't have the stamina at age 69 either. That trade is deservedly considered to be 'back breaking'. Do the users of bathrooms he tiled in his prime pay him a royalty?

      Maybe not so fine if your burn out from the rigors of a full concert tour at a much younger age.

      Maybe they'll need to find new jobs when they age? Its how the rest of society copes with the fact that they can't do the jobs they did when they were younger.

      --- or you know that you are never in your professional career going to see a booking at a first, second or even third tier concert venue.

      And?

      Most models passing through expensive modelling schools never even earn enough at modelling jobs to pay back what it cost to go through 'school' and keep their portfolio maintained. The VAST majority never do better than a department store catalog job. And as they age and become less marketable... long before that, in most cases, they find another job.

      So most musicians won't be successful enough to live off concert revenue, so what? They can get jobs like everyone else, and can join the ranks of: most poets, most authors, most fencers, most basketball players, most playwrights, most actors, most open source contributors...

    4. Re:This is unheard of, but... by electrictroy · · Score: 5, Informative

      The Slashdot summary is wrong. (Surprise.) It's 10.5% for places that allow the user to pick his/her songs. But broadcast internet radio, where the DJ controls the music, is still unresolved. They are still paying the "per play" royalty fee.

      So places like Shoutcast are still in danger of going bankrupt due to the tyrannic fees imposed from above.

      --
      The government is not your daddy. Its purpose is not to raid middle-class neighbors' wallets and give it to you.
    5. Re:This is unheard of, but... by shark72 · · Score: 5, Informative

      "Yes, but 0.1% of something really large is still a significant number. I agree that the price can't go to zero for buying a song online, but I fail to see how it couldn't go down to say $0.10 per song."

      The laws would have to change for this to happen. Mechanical royalties (we're talking downloads, not the new interactive streaming model discussed in TFA) are around $0.08 by law. The lyricist and the composer of the music each get their own mechanicals, and this doesn't include performance royalties -- the per-track royalty that the performer negotiates with the label.

      There are exemptions and other tricks that the labels use to lower the mechanical royalties, but for a track that, say, has music written by Joe, lyrics written by Fred, and is performed by Lindsay who's negotiated $0.05 per track, the royalties are liable to be more than $0.20. Record companies can't hold back mechanicals to pay for production costs, but even if they hold back Lindsay's $0.05 because the record hasn't yet made money (which is the case for most records), the record label still owes the mechanicals.

      There's also a big disagreement about the true costs of producing a track. Many Slashdotters believe that production costs are next to nothing, and that record companies don't have significant costs for marketing, salaries or overhead. This helps foster the notion that each download is cost-free to the record label. The popularly understanding among people who are familiar with business is that record labels do indeed often have significant costs, and those costs are amortized into the cost of sale.

      Your assertion that there's no reason that tracks won't go to $0.10 is hugely popular on Slashdot -- no doubt about that. I encourage everybody who truly believes this to start their own record label and sell music for $0.10 a track. Paraphrasing Gandhi, you can be the change in the music industry that you want to see.

      --
      Sitting in my day care, the art is decopainted.
    6. Re:This is unheard of, but... by shark72 · · Score: 5, Informative

      You've actually amplified my point. There's a huge difference between parts cost and actual cost per sale, and an essential difference between net margin and gross margin.

      That mouse you might see on sale for $19.99 might have less than a couple of bucks worth of plastic. But the cost sheet developed by Acme Mouse Incorporated might have a dozen line items consisting of R&D charges which are amortized into product costs based on forecasts. These are very real costs that can't be ignored. You're correct that they're paid upfront, but Acme needs to get the money, and if Acme is in the sole business of selling mice, then they recoup those costs one mouse at a time. The amortized overhead and development costs are as real and genuine as material costs in the eyes of accountants and investors. It's not play money; it's not "soft dollars." If the mouse has $2 in material costs and another $4 in burdened development costs, if they sell the product into distribution for less than $6, they're losing money.

      And record companies aren't much different than than mouse companies. Even with digital goods (and whether it's a song or a piece of software or a stock photo), up-front costs are amortized as a cost of sale. Record labels are primarily in the business of selling music, so it's the sales that must recoup the development costs.

      I know this may seem counterintuitive or even nonsensical for many Slashdotters. But it's a concept that folks in the retail industry understand all too well.

      Some folks have pointed out that if supply of digital goods is theoretically infinite, then amortized cost per sale should be a limit approaching zero. The issue here is that amortization applies to sold items. If you sell 10,000 instances of software and a metric squillion copies are pirated, you're only allowed to amortize your costs over those 10,000 sold. Taking the analogy to hard goods, Acme Mouse must amortize R&D costs over the forecast of units sold; even if they bury a million mice in the Arizona desert or shoot a billion into orbit via Space Shuttle missions.

      --
      Sitting in my day care, the art is decopainted.
  2. Re:10.5% of the yearly revenue? by fyoder · · Score: 5, Informative

    What about the radios that don't make any profit?

    Revenue is what they bring in total. Profit is what's left after expenses. In other words, they want 10.5% off the top, regardless. And the RIAA doesn't have a history of sympathy for the argument "But I wasn't making any money off of the music I was sharing," so while it would be nice if they'd give non-profits a break, it would be out of character.

    --
    Loose lips lose spit.
  3. Re:10.5% of the yearly revenue? by QuantumG · · Score: 5, Informative

    Strangely, being a "non-profit" does not mean you are not allowed to, or even that you typically dont, make a profit. Being a non-profit simply means that the stated goal of the organization is something other than profits, and so the directors of the organization do not have to justify their decisions in terms of how much profit it makes for the organization. There's also different accounting regulations, like publicly declaring the assets and expenditures, etc.. and in exchange they get a tax break.

    --
    How we know is more important than what we know.
  4. Turn their own tactics on to them... by Anonymous Coward · · Score: 5, Interesting

    We've all heard about RIAA tricks to scam the artists out of their fair share. Like taking a percentage of revenues for 'breakage' based on the rates of vinyl records breaking in shipping even though CDs are much more sturdy and MP3 downloads are impervious.

    So I suggest the radio stations change their business models to run revenue-free. Like becoming an ancilliary service that does not generate revenue under normal conditions - like you can pay a fee so outrageous for the radio service that no one in their right mind will pay it, or you can get it 'free' as part of membership (paid or advertising-supported, or some other scheme) with some other web-site or service provider. Let the free-radio and the revenue-generating service be subsidiaries of the same parent company and you are all set.

    Of course I am writing this without actually reading the details of the contracts - those MAFIAA lawyers are really good at putting together contracts that fuck the other guy in novel and unexpected ways, so anybody trying to fuck them back needs to pay real close attention to the details.

  5. About time by Auckerman · · Score: 5, Interesting

    Profit motive is a fascinating thing. It's not in the RIAA's best interest for web radio stations to go offline, because they generate no money from web radio that way. Whatever they charge is going to be the highest possible without alienating their customer base, which is the web broadcasters. It took them long enough to finally admit that their pricing was extraordinary to say the least.

    I do find it fascinating that the major labels, via "Independent promotors" actually pay radio stations to broadcast specific songs, whereas they do no such thing for web radio services. I would think that something like the web radio in iTunes would be a perfect target for this.

    --

    Burn Hollywood Burn
  6. 10.5% of yearly revenue... by SupremoMan · · Score: 5, Funny

    Is that their monthly fee?

  7. Re:Supply and demand, indeed by akirapill · · Score: 5, Insightful

    It's an expensive habit, most of us are just trying to break even.

  8. Only for on-demand services by Anonymous Coward · · Score: 5, Insightful

    Sorry for posting as AC but I just would like to point out that this agreement is only for On-Demand services and not pre-programmed web radio services (which most web radio stations are).

    So for most stations this does not change anything and the insane royalty rates that threatens the whole web radio industry is still very much in place.

  9. Re:10.5% of the yearly revenue? by Apple+Acolyte · · Score: 5, Insightful

    I had to do a double take when I read 10.5% of yearly revenue. 10.5% of profits sounds excessive, but 10.5% off the top is outrageous.

    --
    Part of the hardcore faithful who believed in Apple long before it was cool again to do so
  10. RIAA or MAFIA? by TheCybernator · · Score: 5, Insightful

    Seriously. RIAA is acting like a mafia. Asking for a flat cut as protection money. Civilized extortion.

    --
    Eclipse PDE and Me
  11. Re:Supply and demand, indeed by BlueStrat · · Score: 5, Insightful

    It's an expensive habit,...

    Yeah, I think that statement should be in the running for some sort of award for "Most massive understatement in a /. post".

    most of us are just trying to break even.

    Anything that's music-related...instruments, amps, etc...is extremely pricey. A decent brand-name USA-made professional-quality electric guitar will set you back $2,000-$3,000, and the same with an amp (thinking of an example of a new Gibson Les Paul and a 50 watt Marshall half-stack). That's the best part of $10,000 for just *ONE* guitar players' personal rig in an average good-quality bar/club cover band!!

    That's not counting effects pedals and/or rackmount effects/processors, cabling, strings, picks, stands, microphones ($100-$150 each), PA gear, and the maintenance costs of keeping all the equipment (which can be quirky) and the instruments in shape. Heck, just a new set of tubes for a guitar amp can easily run $200-$300! That's just for starters. Then there's transportation and storage costs for all the equipment, and personal transportation and lodging plus food costs, and even laundry for those on the road, on top of that for all the band members.

    Most average bar/club bands don't come anywhere near to paying even ongoing expenses, never mind also recovering their investment in the equipment and instruments when you factor in all the costs. Most bars only pay a band $350-$500, many even less. Many times a band will get stiffed altogether by shady bar owners. These guys do what they do because they love playing and entertaining. Please keep this in mind the next time you go to a bar or club and see a tip jar at the edge of the stage.

    Cheers!

    Strat

    --
    Progressivism (aka US 'Liberalism'): Ideas so good they need a police/surveillance-state to enforce.
  12. Mod Parent Up by rsmith-mac · · Score: 5, Informative

    He's spot-on. This agreement only covers services such as Imeem, Last.fm, and Napster, which are based on streaming individual songs. It does not cover services such as Pandora, AOL Radio, or Digitally Imported, which stream pre-programed/tailored stations like a meatspace radio station does. Those guys are still fighting to avoid having to pay the massive $0.0019/user/song that the Copyright Royalty Board passed down last year. Generally when people are talking about internet radio they are talking about these services, so internet radio is not saved.

  13. Re:Supply and demand, indeed by fprintf · · Score: 5, Insightful

    The thing is, hobbies are expensive. The fact that you have an opportunity to make some money on it is just an extra bonus. Think the guy who is into sailing moans about the $10-$200K he has in gear, and how "the man" (e.g. the Coast Guard) makes all these laws conspiring against him earning some income off his investment? Or how about the airplane pilot, with $200,000 sunk into his private plane that cannot take private passengers for hire?

    What makes musicians so special and whiney? It is a hobby, albeit an expensive one, that if you are really really good at, you can get paid to do. Same with pilots. Same with boat captains. No one owes anyone an income from their hobby.

    --
    This post brought to you by your friendly neighborhood MBA.
  14. 10.5% sounds like a protection racket to me by DragonTHC · · Score: 5, Insightful

    How much of that will go to artists? apparently none since no one is keeping track of the artists whose music is played.

    Nope, this is more payola. Fat Tony wants 10.5% of the take for your continued ability to play music without issue.

    Notice, it says 10.5% of the yearly revenue. Not yearly profit.

    Yep, this is bad for artists and bad for consumers and bad for everyone except the RIAAfia

    --
    They're using their grammar skills there.