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-- NEWS RELEASE --
FOR IMMEDIATE RELEASE: CONTACT: RICHARD ADES OR
APRIL 30, 2007 202-640-5894
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Royalty Statistics Disprove “Sky Is Falling”
Claims of CRB Critics
Facts Show Webcasters Dominated by 10 Large Companies; Small
Webcasters Used as Smokescreen to Promote Rate Rollback
WASHINGTON, D.C. – A review of royalty payment statistics shows that the
webcasting music business is dominated by 10 large, highly-profitable companies.
The review of 2006 royalty payments conducted by SoundExchange demonstrates that,
through Savenetradio, the big webcasters are painting a highly distorted picture in an
effort to maintain extremely low rates and high profit margins.
These facts are contrary to alarmist claims by opponents of the Copyright Royalty Board
(CRB) who say that rates are too high. Further, the review shows that webcasting is
“Now that Savenetradio’s Jake Ward has publicly admitted that Savenetradio is a front
for large webcasters and was launched by the Digital Music Association (DiMA), the
organization that represents mega-corporate interests like Yahoo! and AOL, the veil has
been lifted and the real beneficiaries of recently introduced legislation have been
confirmed,” said John Simson, Executive Director of SoundExchange.
Opponents of the CRB rate decision paint a picture of a webcaster industry made of
small, largely non-commercial webcasters who will be forced out of business by the new
CRB royalty rates even going so far as to say the music will "die." While webcasters say
they support the interests of performing artists, an objective analysis convincingly
demonstrates that their claims are highly distorted.
“There’s no question that these statistics show that critics of the CRB decision are
playing a game of ‘Chicken Little,’” said Barrie Kessler, SoundExchange’s Chief
Operating Officer who conducted the analysis. “They are definitely claiming ‘the sky is
falling’ but the facts show absolutely that it’s blue skies ahead for webcasters, artists and
The review of 2006 webcasting royalties paid SoundExchange shows that 82 percent of
royalties were paid by the 10 largest webcasters, which make up 4 percent of all paying
services. In contrast, small webcasters paid less than 2 percent of all royalties paid
“Not only is Internet radio not going to die,” said Simson, “it’s going to continue to
flourish. The statistics show it is a vigorous business dominated by large businesses that
can easily pay fair market rates while also having room for small webcasters and niche
services. In fact, these same large services stream in the United Kingdom and Europe
where current rates are nearly identical to the rate set by the CRB for 2007.”
Under a bill introduced by Reps. Jay Inslee (D-WA) and Don Manzullo (R-IL), large
commercial services like Clear Channel and Microsoft would experience a windfall in
excess of $10 million a year that otherwise would be paid to artists and labels.
Under a statutory license, webcasting services, large and small, have been given the
opportunity to play millions of sound recordings released in the United States without
seeking permission from anyone – not the performer, not the copyright owner, not the
composer. “Unfortunately, viable, financially-profitable webcasters seem to feel they
should be able to play music, making a healthy profit, without fairly compensating
performers or record labels. That’s just plain wrong,” said Simson.
Add to that the fact that webcasting is growing dramatically and it becomes
unconscionable that these huge businesses are not willing to pay artists and labels their
fare share for the product that is the engine behind their businesses.
During all of 1998, Arbitron reported that only 6 percent of all Americans listened to
Internet radio. In January, 2007 alone, Arbitron reported that 20 percent of Americans 12
years and older listened to online radio, a total of 49 million Americans.
In fact, in a blatant attempt to derail the growing movement to secure fair royalty
payments for performers in all types of media, the National Association of Broadcasters
recently added to the disinformation campaign with the absurd characterization of
webcasting as “a fledgling audio platform.”
“It just goes to show that big corporate webcasters will go to any length to protect their
outsized profits and unfairly low artists’ payments,” said Simson. Using misinformation
and blatantly false statistics, they are trying to recruit small webcasters and even some
artists to front for them, but their secret is out.”
Since 2004 there has been a major jump in paying services – growing from 430 distinct
webcasting services registered and paying royalties in 2004 to 989 in 2006,
demonstrating a huge jump in listeners and exposure for these businesses.
• Webcaster royalty rates have essentially remained flat since 1998.
• Despite webcaster claims to the contrary, the CRB’s decision reflects a modest
increase over time.
For 2006, the increase is only a 5 percent increase over the earlier rate.
The rate for 2010 reflects only an 8 percent annualized increase in rates
• The CRB set a “per stream” rate for 2007 at $0.0011. Thus, a consumer who
listens 40 hours a month to one channel playing 15 songs an hour will cost the
webcaster 66 cents a month in royalties – a sum far less than what some
webcasters charge listeners for subscriptions or can recoup through other means
such as advertising or merchandising.
In an analysis published in Royalty Week, Ben Newhouse, working from a recent
Bridge Ratings report showing Internet radio users average 473.2 hours of music per
year, and that based on 2006 rates, the “royalty bill for a webcaster is $6.49 per
listener per year.”
• This most certainly is not a matter of big hit artists and major record companies
getting rich off the backs of small business webcasters.
Two-thirds of total royalties collected by SoundExchange go to artists and
The average each artist earned from webcasting royalties in 2006 was
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