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April 18, 2007

Web radio clobbered again: David Byrne explains the irrational royalty mess

Thumbnail: At PC World Monday, Internet Radio on Life Support Again:

The Copyright Review Board dealt a serious blow to Internet Radio today, when it denied a request to reconsider its March ruling that would greatly increase fees broadcasters pay to copyright holders. The original ruling called for a serious escalation of fees, to the point where most small, medium, and even large Internet radio broadcasters would not be able to afford to continue broadcasting...

This makes no sense to blogger Eric Dahl:

While broadcasters form groups like SaveNetRadio and the appeal process gets under way, I'm left with more questions than answers. Internet radio and sites like Pandora and Last.fm have become popular, useful tools for finding new music. So why are SoundExchange and the RIAA pushing for a structure that would shut them down?

Net radio stations are barely solvent as it is, so I can't imagine how this would be a negotiating tactic to get more money out of them. Seriously, what's the endgame here? Are they trying to force broadcasters to band together and negotiate their own license agreements in groups? Is that added degree of control actually worth the effort?

An alleged beneficiary balks: RISD dropout and Talking Head David Byrne begins an excellent explanatory post (Your Government Working for You) with a mention of how he -- and public radio -- would be affected:

... My own streaming web radio would be affected, and since I derive no income from it, that, among other things, makes this an issue of personal interest.

Check out his lucid explanation of why this makes no sense, especially if you're not clear on how this royalty-rate stuff works. Here's the crux of it, without the numbers:

With streaming web radio, information on the exact number of listeners accessing the stream at any given moment or period is available, and easy to obtain, unlike broadcast radio which is just out there and no one knows how many people are listening (so how do they determine ad rates?) The more listeners you have the more you pay in hard costs — some server’s gotta host the stream....Of course stations like mine and the network of NPR stations that have no commercial revenue eventually run into a financial wall once that audience figure reaches a certain amount.

...While traditional terrestrial radio does pay songwriter/publishing royalties for the musical work itself, in the U.S. they don’t pay performance royalties for the sound recording under the rationale that airplay promotes the songs, which benefits the copyright holders. (This determination was mostly due to the radio industry lobbying congress not to collect these royalties.) Web radio, however, along with satellite and cable services, does pay performance royalties — these are the rates that are being raised now. (If this discrepancy sounds illogical, it’s because it is.) ...

...With the proposed changes the royalties can no longer be based on a percentage of revenue, but on a fee for each listening hour — how many folks are listening and for how long — and there will be a minimum fee per radio “channel”. Also, above a certain aggregate listening hour amount, non-profits have to pay the same per-listening hour rates as commercial broadcasters.

Catch 22: Web radio pays more royalties than commercial AM or FM radio. The more listeners Web radio has, the more it costs. The new rules further penalize listening. To keep costs down, Webcasters should turn away listeners. If this sounds nutty, it is.

Taking the oath of their new office from Librarian James H. Billington on Jan. 11, 2006 are Copyright Royalty Board judges, from left, Stanley Wisniewski, James S. Sledge, and William J. Roberts.

Three judges ruling: Byrne also raises the delicate question of just where this blackball is coming from:

Who is this agency that is proposing making this change? They are not an elected body — the Copyright Royalty Board is made up of a few people appointed by the Library of Congress Copyright Office. They used to be a group of arbitrators but since 2004 they are a group of judges. (I wonder if Gonzales, Cheney etc. have any pals in there?)

Members of Congress on both sides of the aisle like music, and it's no easier for them to find music they like than it is for you and me. And most would find this disturbing -- okay, make it stupid --: Success could make a nonprofit public radio station go broke. Think Nancy Pelosi and Harry Reid would read David Byrne? Who else? Would some of you reading this care to find out?

Political asides aside, Byrne points to a petition at SaveTheStreams.org, sponsored by many of the streaming stations, large and small, who would be affected. More info there.

But what about the music? Mike Felten, owner of the Record Emporium record store in Chicago, writes at his very personal site, Weaselworld:

Searching, I keep stumbling onto awful quotes from the record industry..

"The exec who eventually signed Britney Spears, Jive Records' Jeff Fenster, said he based the decision not on a song in particular, but on a picture of the then-teenage Spears. She was sitting on a picnic blanket, wearing cutoffs and cuddling a puppy, Fenster said. "She looked like the sweet, All-American girl that you just wanted to defile and do bad things to, and that appealed to me."

-- Greg Kot, Chicago Tribune, reporting on Fenster's panel appearance at SXSW; in the archive now, but confirmed by Jaded Insider at Billboard.

And they did do bad things to her, didn't they? I never liked her Mickey Mouse music, but she went from a cute little kid to a slutty, cocktail waitress in rehab. Don't tell me it is the price of 'fame'...

Is it any wonder there's nothing to listen to on the radio, if airplay isn't actually about the music but about record execs' fantasies?

Here's the intro and a quote from The Day the Music Died, Part 118 by Mike Felten, this time at BigO:

" 'I often fantasize about a young Bob Dylan stepping out into an American Idol audition and watching the substitute bass player for Journey, Laker girl and Mr. Teletubby rip him apart. Springsteen would be singing She Bang on You-Tube. Even I can't imagine Hank Williams or Robert Johnson or Woody Guthrie making round one.' So says music fan and retailer Mike Felten, on how the music was chased out by the biz":

...It doesn't matter about downloading. It does matter if we do our job. The music buying public is lost in an American Idol wilderness. They are being told that this download sold 800,000 ringtones and it is what you should be listening too. A few ringtones later and they get up from the table bored.

Not in our name: Fred Wilhelms, an attorney for musicians and songwriters -- rock writer Dave Marsh once wrote that Fred "would be the (music) industry's ethicist-in-chief if the industry had ethics" -- writes A Rebuttal to SoundExchange: Why the New Royalty Rates Hurt Artists:

SAVE INTERNET RADIO!

We are recording artists.

Among us, we have quite a number of gold and platinum records and almost too many awards to count. Some of us have been recording for nearly 50 years. Many of us are recording today, but you wouldn't know it from AM or FM radio. At best, you might hear one or two of our old songs every once in a while on some Oldies station. You never hear our new stuff.

So we LOVE Internet radio. There are Internet stations that play our older stuff, which is great. Even better, there are Internet stations that play our new songs, and people who have heard them tell us we sound better than ever. Those stations are often run by fans who love the music as much as we do. They aren't in it to make money; they want to share what they love, and they are even willing to pay royalties out of their own pocket to webcast our music.

Now, many of those Internet stations that we love are in danger of being turned off forever...

Listen to nonprofit East Village Radio while you can. Or Pandora, SomaFM, or Radio Paradise, all of which the U.K. Guardian recommended Sunday. Or any of the other Web stations on the blogroll of SaveThe Streams, such as Folk Alley. Or pick your favorite NPR station. They're all sniffing death row.

There's another petition to sign, and Congresspeople to contact, at SaveNetRadio.org.

Bottom line: The public interest. There are a lot of bad things going on in America now that you can't do anything about. If you can educate your reps about the damage about to be done to the public culture by our own government, you might just be able to avert this one.

Later: Linux Journal editor and Cluetrain co-author Doc Searls links to this post (No stay of execution for Internet radio), and suggests an alternative: A Public Market for Public Music.

Sidebar: What it means to Live 365: Your favorite Live 365 stations may be silenced.

The ruling ignored webcasting community proposals and set out the SoundExchange proposed "per performance" rates (below) and a $500 minimum fee per channel per year. With around 10,000 stations playing over 250,000 artists each month, that would mean an additional $5 million per year for Live365 and our broadcasters.

Kurt Hanson, Radio & Internet Newsletter, has owned this story for years. He sees a ray of hope from Marketwatch (Copyright Royalty Board rejects appeals from Web broadcasters):

Jonathan Potter, the head of the Digital Media Association, which represents several large Webcasters including Yahoo, AOL and Microsoft Corp.'s MSN network, said his group was not currently in talks with SoundExchange but may be soon. He said his group and other Webcasters would be turning to Congress, where he said he sees "a lot of legislative support."

The next sentence -- a point that David Byrne strongly makes -- may have you scratching your head:

The royalties in question only cover digital transmissions of music, and don't apply to terrestrial radio stations, as traditional radio play is seen as a benefit for record labels by promoting sales of recorded music.

Live 365 and many other radio stations offer a link to download the music you're listening to at Amazon or iTunes. Doesn't that promote sales, especially instant impulse purchases? And especially sales of music you won't hear on commercial stations? Can we tear this up and start over?

Posted by Sheila Lennon  at 5:45 AM | Permalink