Net radio vs the RIAA
p2pnet news view | Radio:- Whether run by “scrappy start-ups” or “big media organizations,” Net radio stations have never found a way to make enough money from streaming music listeners expect to hear free, says the New York Times.
The comment comes in its story on how Vivendi Universal (France), Sony BMG (Japan and Germany), EMI (Britain), and Warner Music (US) may now allow, “Internet radio start-ups to eke out an existence for at least a little while longer”.
It’s all about royalties in a war which, “began in March 2007, when the federal Copyright Royalty Board changed the fees that Internet radio stations must pay to stream music,” says the story, going on »»»
Previously, bigger webcasters with significant advertising revenue paid 0.0762 cents a listener for each song, and smaller stations with less than $1.25 million in sales paid 10 percent to 12 percent of their revenue. The new policy requires that all stations pay a per-song fee that increases each year until 2010, when it will reach 0.19 cents. Until 2010, small stations can still pay a percentage of revenue.
Webcasters argue that the per-song fee is unfair, especially when compared with competitors. Satellite radio stations pay 6 percent of their revenue in royalties, with the rate rising to 8 percent in 2012. Broadcast stations pay nothing to artists and labels, under a longstanding agreement based on the notion that radio provides free promotion for their work.
“It is completely unaffordable for Internet webcasters,” said Tim Westergren, the founder of an Internet radio start-up, Pandora, who has become the de facto leader of webcasters fighting the royalty rates. He has said that the new rates would eat up $17 million of Pandora’s $24 million in revenue this year, forcing the company out of business, though he is now optimistic that a new royalty agreement will allow webcasters to pay less.
Enter SoundExchange, the “nonprofit organization” formerly run by Vivendi Universal, EMI, Warner Music and Sony BMG’s RIAA, and still packed with RIAA reps.
SoundExchange tries to come across as being separate organisation existing to serve and help musicians.
The reality, however, is: it always was and always will be nothing but a Big 4 foil.
Right now, according to SoundExchange spokesman Richard Ades, “webcasters are ‘basically giving the music away’,” says the NYT, adding »»»
If Web radio fades away, the biggest victims could be the independent musicians who are not played on most broadcast stations.
Josh Fix, a San Francisco musician who lived in his office for a while to save money, credits Pandora for raising his profile. He recently signed on with an independent label and will embark on a European tour in February to promote his album, “Free at Last.”
“It’s almost impossible to get on the radio,” he said. Online, though, “someone hears the music on Pandora, blogs about it and then others pick up on it.”
Same same for other artists and other Net radio stations.
Says the New York Times:
“The two sides have signaled that they are nearing a compromise that would lower the royalties that online radio stations pay artists and labels for the rights to stream songs to listeners. On Sept. 30, they jointly persuaded Congress to pass a bill that would put into effect any changes to the royalty rate to which the parties agree while lawmakers are out of session.
“Still, even if royalties decrease as expected, webcasters must [still] figure out how to bring in enough revenue to cover the costs.”Stay tuned.
New York Times – Even if Royalties for Web Radio Fall, Revenue Remains Elusive, October 26, 2008
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October 27th, 2008 at 11:02 am
one of the reasons im guessing the RIAA wants to oust internet radio start ups is not just because of competition with up and coming artists but the fact that anyone can record the sound/video output of their screen for free and then distribute it without their DRM BS. Meaning you dont even need to bother downloading full albums etc from bit torrent (or whatever/however you get music) you can simply listen to a song and save it at the same time for future listening (legal and free). Some internet radio stations let you select the song rather than listen to the pre-arranged playlist; or search the site for your artist of choice. Its virtually the same as recording am/fm radio except in some cases a much wider distribution world wide of free music :p and its unstoppable on the peer end.
My guess is that anti-p2p video and music industries are scared shitless of this fact. Unfortunately at this point its too little too late for them.
October 27th, 2008 at 12:07 pm
One solution for the net radio: Brodcast indies only and don’t bother about the RIAA shit.
We are not listening anyway so what the point?