The US killed independent internet radio today

Great Debates
1

A few months ago, I discovered internet radio. “Hey, wow!” I thought to myself. “Here’s a legal alternative to downloading music, where I can listen to interesting and innovative programming, and decide what I like enough to go buy!”

So I tuned into Spinner for a while, and then discovered even better sources, like RadioParadise and Radioio. I was in heaven; here were stations playing the latest Tom Waits, Josh Rouse, Sam Philips, and introducing me to new bands and artists I had never heard of. Radio as I always thought it should be.

And now, the RIAA has killed internet radio in the US. Killed it dead.

Basically, the Library of Congress has just ratified a fee of .07 cents per song, per listener, retroactive to 1998. It’s a fee that’s imposed on Internet broadcasters only; actual radio stations don’t have to pay.

That comes out to more than the total revenue brought in by most small and mid-sized internet radio stations. It’s going to spell the end for independent stations. The only ones who can afford to keep broadcasting, interestingly, are the corporate-sponsored behemoths.

The reason that radio is exempt from this fee is that it has recognized promotional value. I believe that internet radio has even more promotional value, as it can effectively address niche audiences that conventional radio ignores.

A valuable means of expression, the only means of exposure available to many artists, is in grave danger of dying out. I’m appalled at the government’s behavior in service to the short-sighted, money-grubbing RIAA. The law that this is all based on, the DMCA, assumes that the digital music being broadcast is a perfect copy of the original; it is nowhere close. It’s almost as good as a clear FM signal.

Here is a brief summary of the story.

For more information on the subject, please see these links:

http://saveinternetradio.org/

http://www.kurthanson.com/

A good article from the San Francisco Chronicle.

The internet radio broadcasters have been more than willing to collaborate with the RIAA and the government to establish a fee based on a percentage of their revenue. But the proposed fees will be, in most cases, several times the stations’ total income.

Our government is collaborating with the recording industry to severely curtail a legitimate means of expression. The recording industry is shooting itself in the foot by cutting off a valuable avenue of promotion.

The DMCA has turned the US government into the attack dogs for the recording industry. This whole thing is despicable.

2

The above post is for anyone who ever thought that the public actually owned the airwaves.

Of course, there’s always XM radio, right?

3

I agree that it is completely outrageous. The ideas behind copyright have shifted from their constitutional purpose (to promote the advancement of the useful arts) to monopolistic moneygrubbing that hinders innovation of all kinds. This is not what our constitution meant. This is not what is good for our nation. I don’t understand why our government continues to be an accomplise in keeping the outdated dinosaur of the music industry unchanged.

4

Likely involves the fact that the music industry has more money than digital rights champions. And far more influence, and a clearer message. Celebrities have somehow become part of culture, and carry far more weight than they really should.

5

Internet radio wasn’t legal before this law was passed; it was simply ignoring laws that weren’t being enforced. Broadcast radio stations pay royalties for the songs they play and have been doing so all along. I’ll admit I don’t know if it’s more or less than the fees you mentioned.

Internet radio broadcasts may have some promotional value. But it’s up to the copyright holders to decide if that value is enough to offset the lost royalties. If I get caught shoplifting at Sam Goodies, I don’t think the judge is going to be interested in me telling him I was planning to advise my friends to buy copies of the CD’s I stole so my theft should be excused as a promotional service.

6

You may note in the articles I linked to that the Internet radio stations were, for the most part, willingly paying the same fees as conventional radio stations. Fees based on a percentage of their income. Now the internet stations have to pay additional fees, based on per-play statistics, which the conventional stations are not required to pay, as they have proven promotional value for the record companies.

And streaming audio, which isn’t a perfect copy of the original, and is difficult to capture permanently, while showing your audience the artist, album title, and track title, isn’t even vaguely equivalent to shoplifting. It seems to me that it has even more potential for promotional value than conventional radio.

But now we’ll never know, unless someone strikes down this absurd law.

And… what lost royalties? I’ve bought at least a dozen albums in the last four months that I’d never have heard of if not for Radioio. If I hadn’t been listening to them, I’d probably have been listening to some of the four hundred CDs already in my collection, and wouldn’t have been motivated to buy anything new, because I dislike what gets played on conventional radio.

Where are they losing royalties? And why does the same model of fee not apply to both broadcast media?

7

MrVisible, are you sure broadcast radio is exempt? I have always heard they paid royalties.

8

Simulpost! You owe me a beer!

I think I answered that above. Let me know if I can clarify it at all.

9

What’s to keep all the Internet radio “broadcasters” from moving their base of operations to a different country? It’s not like the Internet has a limited “broadcast range” the way regular radio transmitters do.

10

And since the post concerns broadcasters who broadcast solely over Internet connections, it has nothing to do with the airwaves whatsoever.

11

Okay, I’ll admit I hadn’t checked out the links when I wrote my original post. I have a lousy connection and hitting links often crashs it. In my defense, I’ll note that most of the posts in this thread seem to be implying support for the idea that broadcasting should be free. But that’s no excuse for me shooting from the hip.

I have now checked the facts as presented in the links provided. It appears that over-the-air radio stations have been paying a fee of 3% of their revenue to the composers and nothing to the recoding companies or artists (except the theoretical promotional value). The internet broadcasters apparently have been paying nothing, but made an agreement in 1998 that a fee would eventually be set and made retroactive back to that date.

The internet broadcasters have been arguing that they should be paying approximately the same 3% revenue fee as radio broadcasters. The recording companies were asking for a fee based on 15% of revenue. Unlike radio broadcasters, half of whatever fees the internet broadcasters paid would go to the recording companies.

With the two sides unable to reach an agreement, an independent arbitration panel was set. It based its decision on a deal that had been made between an internet broadcaster and a record company and set the royalty rate at .14 per song per listener. The government rejected that rate as being to high and set it at .07 for commercial broadcasters and $.02 for non-commercial broadcasters.

The internet broadcasters are now saying that the deal the arbitrators based their decision on was very atypical of the business and shouldn’t have been used as an example. They also argue that the government set rate will end up being substantially higher than the 15% revenue rate the recording companies had been asking for.

So here we are. Based on what I have now read (and it should be noted that what I have read has all been from sources openly siding with the internet broadcasters) it apperas that the internet broadcasters do have a case. While they have apparently not been paying royalties, they have agreed that the free ride is over and they will pay royalties. What is being argued about is the price. It does seem that the argument that they should pay a royalty fee similar to radio broadcasters has merit; I’m surprised the arbitrators didn’t follow that precedent. But at the same time I’ll note that the government has shown a willingness to listen to the broadcasters and move things substantially in their favor.

12

[D’oh!]I forgot the adjust my figures to compensate for my lack of a cent sign key. The numbers I discussed should be .0014, .0007, and $.0002.[/D’oh!]

13

One of these days, with its attacks on internet radio, used CDs, and mp3 file-sharing, the record industry will alienate every single one of its customers. People will stop buying CDs, all the labels will go broke, and pop music as a current art form will cease to exist.

As I sit back and laugh and listen to my Doors CDs…

14

[blink]

Someone changed their opinion on an issue because of a post I made to Great Debates?

Thank you, Little Nemo. I can now die a happy man.

I’ve been trying to find out whether internet radio stations have been paying royalties up until this point, however. The following quote, from
Business Week Online seems to indicate that the same royalty structure has applied to both conventional and internet radio since 1995:

Can anybody find any evidence that webcasters have or haven’t been paying royalties to date?

But I did find, in my wanderings, this article, which has another interesting overview of the issues involved.

15

tracer, I’d not be surprised to find our famous “free trade” agreements involved in obliging foreign countries to make sure that webcasters based within their borders pony up the same ruinous royalties. Fast track anyone?

Mr.V., this is depressing but not surprising. It sounds as though the policy will favor the entertainment industry behemoths who have long been searching for a way to rein in the Internet and make it profitable for them.

16

I wonder if congress will ever realize that this is more of an attack on independent record labels, which are taking far more of the share of business since the inception of the internet than any piracy or illusion of piracy. Internet radio benefitted independent labels a great deal more than it did the behemoths that are part of the RIAA. I also wonder when the Justice Department will realize that the RIAA is a trust, nothing more.

Ahh well.

Erek

17

Excellent point, mswas. That’s exactly what’s going on.

The RIAA and the MPAA are similar beasts, and both of them are frantically lobbying the government to have their own (monopolistic) means of distribution and control protected by law. To do so, they are spending more money on campaign contributions than any other special interest, they are trying to scare the public with tales of disaster, and they are making up phony statistics and using other despicable techniques to hang onto their own markets and keep competition out. It’s sickening.

This latest ruling is only one in a long line of pending congressional actions that threaten to turn the entire electronics industry into a minefield of special protections and encryption technologies that force consumers into the hands of established protected interests. They’re killing innovation, putting up barriers to entry in the marketplace, and forcing all of us to play their game with the aid of the government.

In the meantime, Eminem’s new CD is setting new sales records, despite the fact that its audience is largely the same people who are most like to use file sharing networks. The MPAA is screaming that millions of people are stealing ‘Spiderman’, and yet it’s on a pace to be one of the biggest movies of all time. The idiots in the suits just don’t understand that file sharing and movie downloading is ADVERTISING. The only people who are going to download Spiderman and watch it on their monitors are the same people who have already seen the movie, probably several times.

18

I am chiming with Sam Stone’s post. Right now, the threat isn’t piracy, it’s competition. The internet threatens to make large parts of several companies obsolete, and these companies realize that. At this point, I believe that they’re overreaching enough that the entire infastructure they’re building will collapse, but not until far, far more time passes than needs to. And I must ask, what exactly do recording companies DO to deserve royalties for internet radios? As opposed to artists/composers?

19

you know its funny how many NEW bands/artists I find when I listen to winamps shoutcast stations. some of those stations not only play music by people I have NEVER heard of, they dont play music by ANYONE I have EVER heard of.
so the recording industry makes money when I buy those records.

the recording industry has money right? would it be fair (if a bit crude) to say that they have Assloads of money?

if it was my business I would have dropped a couple bucks on a t1 line or 4 and some servers and set up netcast stations for every music type my label produced, and been fucking ECSTATIC THAT IT WAS FREE TO RUN!!!

I mean come on we are talking about Massive amounts of virtually free advertising, even better. find stations online that play music like “somebandofguys” and email the owner of said station telling him you will send him FREE copies of “somebandofguys” and it gets even cheaper.

what planet are these guys from that dirt cheap advertising of your product to a self targeting market is an idea so bad that you need to get laws passed to stop it?

20

All right. People here and in other places are seeing the light shine on the RIAA’s true colors, even the artists they purport to protect.