Web radio, music industry reach agreement on royalties
Tim Westergren
(Credit: CNET News)Internet radio got a break Tuesday when the sector reached an agreement on streaming-music royalty rates with SoundExchange, the group that collects royalties on behalf of artists and labels.
The two sides announced the deal, which comes after more than two years of negotiations, political maneuvering, and fans pleading with lawmakers to save Webcasting. It should be noted, however, that Webcasters are still at a disadvantage when competing with traditional broadcast radio. Over-the-air stations aren't required to pay royalty rates to artists or labels.
Steve Marks, an executive vice president for the Recording Industry Association of America and one of the people who helped close the deal, said the settlement is proof that the music industry wants to partner with technology firms.
"Supporting new business models through innovative licensing agreements is critical to the future of our industry," Marks said. "We are pleased to have found an alternative in the hope of avoiding costly litigation in favor of building partnerships."
The agreement calls for large ad-supported radio services, such as Pandora, to either share 25 percent of revenue with the music industry or pay a per-stream rate of 0.08 cent retroactive to 2006, whichever is greater. That rate will increase until reaching 0.14 cent in 2015.
Sites that generate less than $1.25 million in revenue must pay 12 percent to 14 percent of sales for streaming rights.
Lower rates were vital to the survival of Internet radio stations, Tim Westergren, Pandora's founder, said in September. The Copyright Royalty Board set a performance rate at 0.19 cent but Webcasters argued that the rates would drive them out of business.
But here's the rub: Pandora's heaviest users will now have to pay, according to a story in the blog All Things Digital.
CNET News Poll
Westergren told the blog that Pandora will begin charging listeners who use the service for 40 hours a month to pay $0.99 to hear more music after hitting that mark.
"There's a very small percent of listeners who are using it a ton," Westergren told the blog. "That's great, except when you're paying per song."
As for why Webcasters must pay these royalties and traditional broadcasters do not, that is at the center of a struggle going on now on Capitol Hill. The music industry is trying to get the Performance Rights Act passed in Congress, which would force over-the-air broadcasters to pay the fees, while the National Association of Broadcasters is pushing its own legislation designed to shield it from the royalties.
Dennis Wharton, an NAB spokesman, said that the Webcasters are subscription services that are trying to get people to pay, just as Pandora is doing now. He also says that traditional radio is a huge promotional tool for the major music labels and Web radio's following is still tiny.
"I think there is big recognition that the sheer number of people who listen to over-the-air radio generates a massive amount of revenue for the record labels and artists," Wharton said. "If you added up the competition, say Pandora, or Live365, we would dwarf them."
Greg Sandoval covers media and digital entertainment for CNET News. He is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at http://twitter.com/sandoCNET. 
I'm on it. I'll get that info if it exists. Give me 20 mins.
http://www.copyright.gov/licensing/notice-use-2008-5-29.pdf
This list no doubt has most likely either grown or shrunk in 2009, or disappeared.
http://tinyurl.com/nmgcvp
SiriusXM has to decided to just send out an email without any explanation that royalties have to be paid and starting immediately they will be. And screw the lowest possible price; instead they use it as a money grab and gouge the customer charging many more times the royalty rate.
Every month Sirius is losing listeners. And every months businesses like Pandora (and others) are gaining listeners... gee I wonder why.
Hey, FCC I understand you allowed SiriusXM to charge back to its customers the royalty rates; thats fine. But, why is it that they are charging $2.00 for rates that only cost them about $0.60?
I just canceled my subscription to Sirius, and within a week daily calls trying to get me back started. The first day I told them to not call me again, but it didn't matter.
Any site that has the RIAA's hands in it can only mean trouble.
I'd rather listen to somebody plunkin on a rubberband then to give the RIAA one penny.
The music industry thinks sales are poor now; just wait until there are less stations to play music. I, for one, only buy music that I have heard. I have been burned too many times on albums with only one hit song.
The last time I checked, SoundExchange was not the government.
It seems that the RIAA has no intention of helping the artists since most of the collected royalty money goes to the record companies and publishers who control most of the rights the artists have. The NAB should pay as well as they do the same thing we do as far as broadcasting is concerned.
A lot of commercial over-the-air-stations are pre-programmed for the day, week, month, etc., so they are similar to most internet radio stations as far daily operations go.
Great country, though. If you have the $$$ and the foot soldiers you can get what you want. Otherwise, enjoy the crumbs.
As they specifically asked in reason for leaving if paying extra for online, best of, and increasing royalties were factors in my cancelling.
Of course with as desperate as they are for money I don't expect them to change, or be around in a few years for that matter.
As for radio I find it more annoying when compared to the ease of shuffling through my music library I compiled legally by ripping my 100's of previously purchased CD's. So suck it RIAA, I have already paid you enough..... Keep your popcrap radio feeding the insanity of drugged up marginally talented **********.
As far a pirating goes, when one of my buds bought a cassette or CD, if any of us wanted a copy it was passed around for anyone who wanted it to copy or record.
It was just what good friends did.
Soon the RIAA will be suing people for playing their CD's within earshot range of others.
- by BigAl35540 July 22, 2009 11:13 PM PDT
- Live365 & Pandora? These sites simply put are LAME!!! Real internet radio is stations like Groove Salad, [SOMA-FM], Bluemars, Bluemars, Mixing of Particulate Solids 1-3, BUZZOUTROOM, These are in my favorite types of music, Ambient, Downtempo & Chill, but there are examples like it in almost any other music genre on the Internet. Just go on Shoutcast.com and you'll see what I mean! You don't need a PROPRIETARY PLAYER like at Live365 to play them! These MP3U and AAC+ streams all run fine in my Winamp media player which handles ALL of my music reproduction on the computer. I have my favorite stations bookmarked so I can switch easily between them. It's a pain-in-the-ass to change streams on Live365, one of the reasons I DROPPED them five years ago! ALL of the sites I can tune in to on my Winamp player have NO COMMERCIAL ADVERTISING and no fees necessary to be paid to listen to a reasonably good quality stream, (sorry Live365!). They all "narrowcast" but are very diversified within the music genre. The stream speeds of 128 Kbps and above also produce near compact disc audio quality so BOTH of my computers are connected directly to main audio systems with high quality floor speakers that blow away that dinky small stuff designed for computer reproduction. It is then that you can truly appreciate the quality of audio these sites transmit! Particularly if you decode the stream to a 24-bit sound field instead of a 16-bit! That's UNMATCHED by the proprietary players of these two big websites. Live365 outputs at 1/2 compact disc sampling rate and the loss of definition is striking compared to internal players like Winamp! CONSEQUENTLY,THESE SMALL INDEPENDENT SITES SPREAD ALL OVER THE WORLD ARE WHAT I AND MANY OTHERS WISH TO PROTECT!! Not Live365 and Pandora! Right now because broadcast radio is totally wireless, they still have an advantage, but once the Internet becomes wireless and available anywhere, broadcast radio's days are pretty much done! Right now whenever I get access to a wireless network on my laptop, my favorite sites are all there available to me! SoundExchange had better get used to this type of Internet Radio, because it's what's happening and the trend, not Live365 and Pandora! I've noticed on the Internet that "big" companies are frequently non competitive because they can't THINK CREATIVELY and that makes all the difference in the world on the Internet! Such is the case with both Live365 and Pandora, both of which could disappear tomorrow and wouldn't cause me the slightest concern at all! I would highly suggest that you listen to REAL Internet Radio before writing anymore articles on this subject and also get the idea out of your head that a "big" company is better than a "small" one because on the Internet they're DEFINITELY NOT! By the way It's been OVER 3-YEARS since I listened to a broadcast radio station! The focus is on ADVERTISING and not the supposed "FORMAT"! As far as I am concerned, broadcast radio died when the 1970's radio revolution passed away. I am on the Internet now and not coming back to broadcast radio ever again! My FM tuner just sits there now!
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