Are we looking at the end of Internet radio? (including Pandora)

I just found out about this madness, but I’m too stunned to Pit it, plus, a lot of people might not see it in the Pit. Mods, please feel free to move it if things get heated. If there’s already been a thread I apologise. I searched for both RIAA and Internet radio and didn’t find anything.
The United States Copyright Royalty Board (no doubt pressured by the RIAA) has released new royalty rates for webcasters. These rates are retroactive for all of 2006, and increase every year until 2010. The rates are based on one song stream to one listener.

According to Wired’s Listening Post:

There’s a pretty good overview here:

Pandora’s a goner if this thing stands. According to the RAIN (Radio and Internet Newsletter) page of March 6, Pandora could end up owing over 2 BILLION dollars for 2006 alone!

This is going to destroy small internet radio stations such as Radio Paradise. The owner Bill Goldsmith writes how it will affect him in this blog and other places:

Live365 will probably disappear too.

I’m still reading around and trying to figure this all out. One of the questions I haven’t seen answered is if a streaming radio station starts using non-RIAA music, will they be exempt from these charges? For instance, if a station plays Podsafe music, from, say, the Podcast Music Network, can they thumb their noses at the RIAA? What if they played artists like Happy Rhodes, who has 10 albums and not a one of them in the clutches of the RIAA? Of course, podcast music is usually of a much lower audio quality than playing CDs directly, so there needs to be a central clearing house where artists such as Happy can upload very high quality versions of their podsafe songs. The Podsafe Music Network only allows 15 songs to be uploaded, and I don’t think they allow high bitrate mp3s. Someone has to do something to give webcasters a choice other than RIAA music, Happy or not. The insanity holding back technological advances like Internet radio has to stop. The Internet is not the enemy.

I got this email from SomaFM this morning:

I’ll be very sad if Soma has to close, but a million bucks a year is a lot for them to pay. They get by (just!) at the moment on donations. I don’t really need another T-shirt from them, but I’ll just have to I guess.

I heard this on the radio on the way to work.

I don’t understand how they can legally make rates retroactive.

I don’t either. Probably the same logic that says that broadcast stations don’t have to pay the performance fees, but Internet stations do. My god I hate the RIAA.

I’m one of those fools who actually buys CDs. I even tell myself, upon discovering a new artist, “I should buy their CD so someone will actually pay them to produce a second album.” I’ve recently been relying on Pandora to help me find new artists (new to me, anyway) whom I wind up enjoying and… wait for it… buy their CDs.

It’s crap like this that makes me wonder why I bother. I feel for the artists but the RIAA seems hell-bent to make sure every consumer is filled with a seething hatred for them.

Don’t stop buying CDs from indie artists, just stop buying them from major labels. The RIAA is their attack dog.

Aren’t online petitions pretty much worth the paper they’re printed on? You should email SomaFM back and tell them to encourage their US listeners to wrtie to their representatives individually, not waste time on an online petition.

Oh totally agree. Rusty at SomaFM has been through the lobbying Congress thing before, so I guess he’ll actually be doing something more constructive than an online petition. I hope so anyway!

This needs to go the pit.

I hate these ****ers so much!

Me three. Crap like this is going to lead to the Second American Revolution.

Looks like Internet radio will soon morph into a virtual clone of the over-the-air stations (and
who knows what the Sirius/XM merger will do for satellite radio). Ain’t capitalism great?
The tyranny of the majority continues to rule.

How does this effect steaming webcasts of already terrestrial stations? Do they suddenly have to pay the fees/royalties for being an FM/AM station AND being an internet station? Believe it or not there are actually a few decent over-the-air station left that aren’t owned by large corporations like ClearChannel, and a few of those have webcasts.

I can’t help but think that this is all tied into the $12.5M USD fine that the big four broadcasters were just handed. And I’m not normally prone to believing in conspiracies.

Can I be allowed to toot my own horn for a second? Hey thanks!

It’s a PDF, as you’ve probably figured out from the link’s end. Page 43 - 52. It was my first published article, back in 2003. Even at that point, webcasting royalty rates had been hotly debated for years and no one could agree on proper rates or even how the law should be interpreted.

Now, I’m not claiming to be an expert on this area, nor have I kept up on everything that’s occurred in the law since the article was published. I can attempt to answer a few questions that have been addressed, however.

The reason broadcasters who play stuff over the airwaves are exempt has to do with the language of the law regarding “non subscription broadcast station” and how it’s been ruled to not apply to over the air broadcasts within 150 miles of the station tower. You can agree or disagree with the law (and personally I disagree) it is what it is.

Second, I don’t yet believe that the .0008/song/listener should break a webcasting station. Take the 16 songs per hour (which seems a bit much as 3.5 minutes a song takes 56 minutes if played back to back). Assume 10000 listeners per hour on average. That’s 1.1 million which sounds HUGE but it’s really $128 an hour. That’s not unreasonable given that ads can be $100 per spot for a 60 second hit. Radio stations with just four minutes to spare can make $400 in advertisements that way. We can play around with the numbers all day but my conclusion is that, while I disagree with the actual amount and think the RIAA are greedy bastards full of shit (a legal opinion of course), the amount as stated is not insurmountable.

One of the biggest problems that I’ve never seen adressed anywhere else is this: the laws are on the books regarding copyright royalty rates. Who should they be applied to? Under what circumstances? How often? The rates themselves are based off the findings of the Copyright Arbitration Royalty Panel (CARP), which was created by the Legislature as a group within the Library of Congress. The Library of Congress is NOT part of the judicial branch which means CARP isn’t as well. Yet CARP’s role is the interpretation of the law, which is held firmly by the Judicial Branch. So we have the Legislative Branch creating an organization outside the Judicial Branch to interpret laws. More importantly is this: courts back in 2000 actually refused to decide on these very issues precisely BECAUSE of the creation of CARP. It’s a separation of powers issue and, in my mind, unconstitutional.

I gotta get to court. I’ll be interested to see how this thread develops later today.

Agreed. According to the RAIN web article you linked, Last FM (which I listen to a lot more than Pandora) may come out of this fairly intact since it’s based in the UK (at least until they try to apply this royalty scheme internationally). However, I also listen to (a former terrestial station that now broadcasts exclusively on the web), KUT (a terrestial public radio station out of Austin, Texas that also broadcasts on the web), and KEXP. KUT is publicly funded and KEXP has enough of Paul Allen’s money behind it for both to maybe stay on the net but I can’t imagine WOXY surviving under this plan (especially since even now it’s starved for money).

It’s stuff like this that makes me wonder if there’s not some type of conspiracy out there involving Clear Channel (which at least seems to be in the process of being sold off and broken up), the big record companies, and their paid lackies in Washington D.C. to eliminate any type of music that’s interesting and make us all listen to the same bland pablum whether we like it or not.

What kind of power does the RIAA have over internet stations that are from other countries? Would it be possible for the void to just be filled with stations from other places?

I heard an interview with one of the guys who started up one of the first internet radio stations, way back in the 1990s. One of his big complaints is that they tried to work out a payment deal with the labels, etc., but couldn’t get anywhere with them since they didn’t think that the internet was anything important. Then, years later, they got a nasty letter from the RIAA saying that they were going to sue them back into the stone ages.

The RIAA’s a bunch of mindless jerks who’ll be the first up against the wall when the revolution comes. The only way they’re able to get away with 99% of the shit that they do is that they’ve not pissed off anyone with enough bank to fight them in court (yet). Forget the whole issue of whether or not file sharing and the like is stealing, that’ll be hashed out for years to come, but look at the things that they do now which if any other industry tried to pull that crap, they’d be tarred, feather, and rode out of down with a rail shoved up their ass. A portion of the price for every Zune goes to the RIAA. Why? Because the Zune might at some point have content on it that is in violation of copyright. This is like book and magazine publishers getting a kickback from the sale of every copier out there since they might be used for copyright violations. Or part of the sale price of every car going to the government (in addition to any taxes) because it’s highly likely that the driver of the car will speed and not get caught, at least once. Or, a portion of the sales price from every imported car going to a domestic manufacturer, since if the imports weren’t available you’d have to buy a domestic make.

Also, how much of the money collect by the RIAA “on behalf” of the artists actually ends up in the pockets of the artists? I’ve not heard of any artists saying that a portion of their income comes from payments to RIAA. Think that union members would continue paying dues if they’d didn’t get anything from the union when they needed it (like say, during a strike)?

Internet radio was never gonna take off anyway. It was something that happened in the paradigm shift betweeen analogue and digital distribution.

Let me expand. Having worked in radio for almost 30 years (come november), the USP of radio is that it’s cheap. It’s cheap to produce, it costs virtually nothing to distribute. Very few people actually pay for radio. They get some kind of sound device and end up listening to radio. It’s been estimated that over 80 per cent of radio listening is done on equipment costing 20 bucks or less.

The great thing about radio is that it’s free and you can take it everywhere. At this point in history, globally, it’s still the #1 media outllet in the world.

When listeners need to buy expensive equipment, carry around a lot of stuff, pay for the service - well, radio ain’t all that hot, but for a few people.

Radio died in the U.S. when consolidation happened at the same time the digital programming took over, making it posible for a few big companies to buy up a lot of station, and program them centrally. A few listeners switched to other forms of distribution, but here’s the catch: notwithstanding riaa, distibuting audio over the www and making money is simply not possible. Streaming costs a lot and what one can get from advertising or subscription will never cover cost.

The RIAA are sharks, but they’re not to blame. It was never gonna last anyway. The future in radio lies with cell phone technology.

So how is having music streamed to my cellphone (assuming I’m willing to pay for both the equipment and the service, which I’m not) different than having it streamed to my PC? :dubious:

Quite a lot. Internet radio needs two way communication, beaming it to your cell only one way, i.e. half the bandwidth and distribution cost. Also, every stream you put out (the minimum being at 32kbs (or is that kBs?)), is gonna cost you money. The idea of broadcasting is that every new consumer is not gonna cost more. There’s production (fixed cost), transmitter/distribution (fixed cost) and the more listeners, the more it’s possible to charge for ads. Cell phone distribution cuts down on distibution, as compared to internet. XM and Sirius have a fixed cost for distribution, but the cost of receiving is too high for Joe Public, so it’s difficult to make profit.
OTOH, everyone wants a cell phone, so the investment in hardware is already there. Getting radio for a minimal fee is not gonna bother Joe Public. Espcially if it’s commercial free.