Internet radio stung by new royalty fees

Author: Brett Thomas
Published: 18th April 2007
Comments (17) Stumble
New RIAA royalty demands may kill free-to-air Internet radio

New RIAA royalty demands may kill free-to-air Internet radio

Many people are fans of Internet radio - whatever your favourite flavour of music, odds are you can find it streaming from some site or another. Much like regular radio, Internet radio is often free to listen to, paid for by advertisers or out of the pockets of its hosts simply to help fill a gap or build a brand.

If you don't listen to Internet radio yet, don't feel too out of touch - it's still a pretty youth culture thing, and has only been picking up enough steam to get noticed in recent months.

Yep, it's just starting to pick up steam - so, obviously it's time to start fee-charging it to death. And that's exactly what's about to happen.

Since Internet radio is starting to pick up speed, the RIAA has requested (of course, on behalf of its absolutely starving artists) that copyright fees for the nascent practice be increased. Currently, an Internet radio station (which can operate on a considerably lower overall budget than a regular radio station) in the USA pays a flat annual fee plus 12% of its net profits to appease copyright holders.

Now, the RIAA wants those fees increased to a per-song cost, along with the annual fee and the profit percentage. The fee will be collected by a non-profit agency known as SoundExchange for the benefits of the copyright holders - but this agency functions as nothing but a facade for the RIAA. Most rights to songs are owned by record labels, not by artists (who receive a small fraction of what the label receives), so the group will do little aside from collect the money and pass it on, taking its small cut of operating expenses in the process.

The request was approved by the Copyright Royalty Board (CRB) a couple months ago. The CRB is responsible for hearing and making decisions on whether royalties that are requested by a copyright holder are fair. At the time, the decision was appealed by a group of Internet broadcasters.

The board has declined to hear the appeal now, which was made by such names as AOL, Yahoo!, and National Public Radio. The CRB said that the groups offered no new evidence that was not already considered in its last hearing on the matter. Therefore, it saw no reason to overturn its previous decision.

Of course, those involved in the service would beg to differ -- webcasting radio reaches smaller listening pools, which provides less advertising revenue. The hope of webcasting was that it could provide a listener with any fare he or she wanted without having to turn down the same ten stations owned by the same one company. With smaller bills and a royalty based on profits, it was possible to offer a large variety of music to audiences who otherwise may not listen to radio at all, while providing a great way to reach very targeted advertising demographics.

The new fees will be liable to put most internet radio broadcasters out of business immediately, as they won't bring in as much money per day as they owe in royalties for the songs they played. AccuRadio.com has explained its own financial situation. For the $400,000 in profits the company made, it paid $48,000 (a license fee of 5% to the artists and then 12% to the RIAA through SoundExchange). Under the new computation, which would retroactively apply to 2006, the bill would be a staggering $600,000 -- enough to bankrupt the company.

The decision is already getting a lot of bad press both in the US and in the UK. In order to stop the fees, a campaign has been also started at SaveNetRadio.org petitioning the US Congress to intervene. They'd better move fast, though -- the new fees will start levying as of May 15th of this year and be retroactively applied to 2006.

Have you got a thought on the Internet radio debacle? Sing us your song in our forums. If we've heard it before, you can leave ten pence in the basket, please...
Quote mmorgue 18th April 2007, 11:23
Ludicrous... It's stints like this that will only enamour more and more people to hop onto alt.*.mp3.* to amass, plunder and pilage... Arr!

Christ, the RIAA have fuct up their business models so badly that they simply cannot come up with a realistic, logical model that meets the consumer market given the rapidly changing desire from physical media to stream/net based.

Nothing they [RIAA] can do now apart from stand back with their hands up will salvage any respect or confidence in them. Sad...
Quote bilbothebaggins 18th April 2007, 11:27
Quote:
... and be retroactively applied to 2006.

Interesting contracts they have, allowing for increasing fees after the fact.

Quote HandMadeAndroid 18th April 2007, 11:42
~These A holes are killing art, they are the art mafia, they are a tax on creativity! Does this affect all mumu, or could an independent radio station get away with playing independent-mu?
Quote Dr. Strangelove 18th April 2007, 12:15
Wonder how many of these radio stations will suddenly move to be streamed from russia...:D
Quote r4tch3t 18th April 2007, 12:46
So does the RIAA actually benefit anyone? The artists have to put subliminal messages in their songs, the consumer gets slapped repeatedly in the face with a large fish, and the RIAA gets a fat paycheck for doing a job no one wants them to do, and the assassins wont target them as they would be taxed for listening to the music on the way to the job.
If it weren't for the bodyguards, and the Atlantic ocean between us, I would go directly to the artists and buy their album straight from them.
Quote mmorgue 18th April 2007, 12:53
Quote:
Originally Posted by r4tch3t
So does the RIAA actually benefit anyone? [snip] ... I would go directly to the artists and buy their album straight from them.


Pay the artists directly for their work?! Sheer madness... ;)
Quote Lazarus Dark 18th April 2007, 16:05
this is stupid. I actually listen to a couple internet radio stations on occation. they have turned me onto a couple bands that I would not have heard on the local clearchannel stations (for you guys across the pond, Clear Channel owns half of all US radio stations now and has made them all play the exact same songs.) I then bought cd's from those bands. This greedy move will only lower profits as only large stations playing the same damn songs will be able to afford to keep running. And then why would I use my bandwidth to listen to the same songs I can hear on my radio?

BTW, the two internet radio stations that I listen to, I checked their sites and both say they will have to shut down if this is not overturned. I really, really, f'in hate the riaa.

I wonder, do the stations that shut down still have to pay for 2006? Because that could put a few people in bankruptcy and really f up their lives financially.
Quote cyrilthefish 18th April 2007, 20:08
Very shocked to hear about this...
if this goes ahead it will mean me simply stopping listening to new music altogether. I haven't brought a CD in years, except for a few bands i discovered on internet radio. I have internet radio on most of the time when at home, i only have MP3's for my PDA/Phone for when walking to work, but those are mostly recorded internet radio streams too

Heres a pretty good read about the issue, bear in mind this is one of the larger internet radio stations, the smaller the station is, the more crippling these fees are
http://www.di.fm/blog/read/2007/03/new-music-royalty-rates-are-about-to.html
Quote:
SaveTheStreams.org has sample calculations here on what it means to stream to 10,000 concurrent listeners on average, if you are interested in the fine details. And keep in mind that Digitally Imported has far more listeners than in that example. We are talking about rates which are hundreds of % more than the revenues webcasters generate, even before any expenses for things such as wages, resources, hardware, and so on. How judges can come up with such numbers is beyond me. What we do know is that Digitally Imported was part of a collective of small commercial broadcasters which presented its arguments in court proceedings. Yet the judges completely threw virtually all of our arguments aside in making their decision.
Quote DXR_13KE 18th April 2007, 20:10
if idiocy could be measured this would measure infinite.
Quote dire_wolf 18th April 2007, 20:49
nooooooo more Pandora :'(

If this gets passed i'll be a sad kitten
Quote Bladestorm 18th April 2007, 21:25
Utterly ridiculous, I can't even understand how an organization that in theory should not be in the RIAA's back pockets can agree to fees to be paid retroactively when just introducing them at all will likely bankrupt most of those involved anyhow ? it boggles the mind.
Quote ralph.pickering 18th April 2007, 23:17
Un-f*****g-believable. You know, I've been watching Jericho lately (check it out if you haven't already) and it does make me think, would it be all that bad if a couple of dozen nukes took out the US? Then I remember the friends I have in the US who aren't actually clueless ass-munchers and I think, pity no-one's developed a selective nuke... just takes out the idiots in an area. Or maybe somebody did, but unfortunately they were an idiot and didn't realise it, and so got incinerated by their own weapon.
Quote Constructacon 18th April 2007, 23:44
I'd like the RIAA to name 1 other business that can get away with charging someone more for a product or service they paid for a year ago without getting bitchslapped. They're living in a world of pure fantasy.

What were there arguments of how this actually helps the artists?
Quote eddtox 20th April 2007, 09:53
I have the solution! We form a huge army of geeks and shut down the RIAA!! :D Who's in?
Quote r4tch3t 20th April 2007, 13:24
I'm in.
Quote pendragon 20th April 2007, 14:29
this is pretty f'ed up.. i was looking at the DI.fm post the other day (ive listened to them for years) and I was sorely tempted to email my government representatives over this crap :( ...and I still might
Quote specofdust 20th April 2007, 14:33
Tbh, a far more accurate title for this thread would be "Internet Radio Decimated By New Royalty Fees". The vast majority of net radio stations, from the big hitters like Soma and Di.Fm, to the tiny stations that only have a few hundred listeners and barely broke even each year, are going to go under here. This sucks.
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