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ARSCLIST  June 2007

ARSCLIST June 2007

Subject:

Re: Fw: WAMU 88.5 to Join Webcasters in "Day of Silence" June 26

From:

Dismuke <[log in to unmask]>

Reply-To:

Association for Recorded Sound Discussion List <[log in to unmask]>

Date:

Fri, 22 Jun 2007 00:32:30 -0700

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (163 lines)

--- Bob Olhsson <[log in to unmask]> wrote:

>
> These new "royalties" are only a 6% increase in the
> CAP ON NEGOTIATED
> ROYALTIES. They only come into play when the parties
> can't reach an
> agreement and a webcaster wants to go ahead and play
> an artist's music
> without an agreement.


I do not wish to be impolite - but what planet have
you been on?  The old statutory royalties for large
commercial webcasters previously were .007 cents per
song per listener.   The new rates from 2006 to 2010
are as follows:  $0.0008, $0.0011, $0.0014, $0.0018,
and $0.0019, respectively, representing an increase
over the existing rate ($0.000762) of 5%, 44%, 84%,
136%, and 149%, respectively, and a year-over-year
increase of 5%, 38%, 27%, 29%, and 6%, respectively.

Yes, somewhere in those numbers you can point to a 6%
increase - but to do so is to evade context in a
horrendously massive way.

And the rate increases do not end there.  That is only
for large commercial webcasters who were already
paying a per song per listener rate.  Under the old
Small Webcaster Settlement Act, small webcasters paid
a percentage of revenue so long as their total revenue
was under a certain amount.   The new rates abolish
the percentage of revenue and subject small stations
to the per song per listener model.  There were
several independently licensed broadcasters whose
streams were carried by Live 365 who had been paying
the $2,000 minimum per year license based on the fact
that they had no revenue.  They knew that they would
have a rate increase in 2006 - but they expected it to
be an increase of the minimum annual fee by a certain
percentage.  Suddenly, these webcasters, because of
their listenership and the new per song per listener
rates are looking at RETROACTIVE royalty rates of
$40,000 and even up to $100,000 for their streams for
just last year.   That is a heck of a lot more than 6%
How would YOU like some organization that you do
business with at $2,000 per year to suddenly hand you
a bill of that size on a bill you had already paid
LAST YEAR?   And how would you feel if the whole
purpose of the endeavor was to throw you out of
business in order to protect the technologically and
economically obsolete rear ends of those in charge of
that company on grounds that you represent a potential
competitive threat?

Furthermore, the CRB rates also call for a $500
minimum fee PER CHANNEL on all webcasters. 
SoundExchange claims that this fee is necessary to
cover "administration expenses."  Let's put that in
context:  Live 365 has THOUSANDS of channels as what
it does is aggregates thousands of small stations into
its network.  Other services such as Pandora and
Rhapsody also offer their listeners thousands of
highly personalized channels.  With that $500 per
channel fee, four of the larger webcasters, Live 365,
Rhapsody, Yahoo and Pandora will end up having to pay
a combined $1 BILLION in such fees - and that is on
top of the per song per listener royalties.  By
contrast, last year, SoundExchange collected a measly
$20 million in royalties from ALL Internet radio
stations combined.  So SoundExchange needs $1 BILLION
in order to administer $20 million in royalties? 
Heck, even the Federal Government is more efficient
than that.

This is the sort of outrageous absurdity that you are
actually trying to justify and defend.  I am sorry -
but the rates are nothing short of INSANE.

>
> NOBODY was paying the old cap rate and there's no
> reason to believe anybody
> is likely to be paying the new cap, especially if,
> like you say, it would
> bankrupt them.

Large webcasters WERE paying the full statutory
royalty rates.  Smaller and non-commercial webcasters
got a break last time around only because enough loyal
listeners put up a loud enough stink on Capital Hill. 
The new rates do away with those breaks.  


> In many cases webcasters can get
> permission to pay no
> royalties at all when it is to the promotional
> advantage of an artist.


Well, it is true that webcasters do have the option of
negotiating agreements with copyright holders directly
- and there are a handful of stations that do that and
avoid paying royalties.  But for the vast majority of
stations, that is simply impossible. There are over
10,000 record labels out there.  Tracking down and
getting all of the necessary paperwork is a HUGE task
and a royal pain.  Few webcasters are going to even
attempt it - they will shut down first which is
EXACTLY what the RIAA wants.

The reason Performance Rights Organizations are
necessary in the first place is because of the
difficulties and impracticality of dealing with
thousands of copyright holders individually - assuming
that one can even make contact with them.

The only serious talk of negotiated rates is in the
context of very large webcasters possibly negotiating
a deal with the major RIAA labels at say 55% of the
statutory rate.  That would be a HORRIBLE thing for
artists because, under such a negotiation, artists
would not be eligible for a cut as they are under the
statutory rates which the record labels must split
50/50.  This would also be a horrible thing for small
labels as they would not be in on such a deal - and
webcasters who wanted to give their recordings airplay
would ether have to pay the outrageous statutory rates
or else negotiate on a label by label basis.  In
practice, this would mean that only RIAA material gets
preformed on the web - which, of course, is what all
this is about.


>
> If you really like the new music you hear on
> commercial radio, by all means
> fight for a lower royalty cap. Bankrupting
> independent new music is a sure
> way to perpetuate lots more of the same.
>     


This is so exactly opposite to the truth.

At the very expensive rate of .019 cents per song per
listener, the ONLY music that webcasters can afford to
stream will be music that is WORTH .019 cents per song
per listener in terms of attracting a large audience. 
In other words, only the lowest common denominator
type music will have a chance of getting played.  I
can guarantee you that it will not be economically
viable for a webcaster to stream Ukrainian folk music
to a few dozen people at .019 cents per song per
listener - it cannot attract a large enough audience
to make it work.   That is why one does not find
stations devoted to Ukrainian folk music on the FM
band - the price of buying a station is too high for
it to be viable.   The purpose of the high royalty
rates is to artificially create the same sort of high
cost environment on the Internet that exists on FM -
an environment on which the RIAA labels depend in
order to maintain their advantage over emerging competitors.

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