Major Webcasters to face billions in new fees?
We already know that Webcasters small and large are outraged at the prospect of having to pay higher royalty fees to the music industry, particularly when compared with what is required of their satellite and terrestrial radio counterparts.
But the heightened royalty rates enacted by the U.S. Copyright Royalty Board earlier this year and scheduled to take effect July 15 are not the only thing that's firing up leading Internet radio industry companies like RealNetworks, Yahoo, Pandora and Live365.
In letters distributed to various Capitol Hill offices on Thursday morning, the four companies' CEOs argue that the music industry will also be forcing collection of more than $1 billion per year from three services alone--Yahoo, RealNetworks and Pandora--in the name of covering so-called administrative costs.
Here's how they say they derived that figure: When the CRB decided earlier this year to change the rules for Internet broadcasters, it also decided to levy a $500 minimum annual fee per Internet radio "channel." SoundExchange, the non-profit music industry entity that collects the royalty and other fees on behalf of record labels, says that minimum payment is supposed to cover administrative costs.
But since some of the larger Internet radio services potentially offer their listeners hundreds of thousands of unique "channels" (RealNetworks' Rhapsody offered more than 400,000 in 2006 alone, according to a company spokesman), the companies view the ruling as forcing them to multiply that mandatory minimum payment accordingly (for Real, that would amount to $200 million).
Such an amount would far outpace the $20 million in total royalty fees collected by SoundExchange from the Internet radio industry last year, the CEOs note in their letter. And besides, it's not even clear that those payments would go to artists, as royalty payments do, the companies argue.
"While we don't imagine SoundExchange would keep this $1 billion all to itself, this lack of clarity is absurd," RealNetworks spokesman Matt Graves told CNET News.com.
SoundExchange did not respond to requests for comment.
Thursday's letter is just the latest step by the Internet radio industry to combat the CRB ruling. An alliance of commercial Webcasters and National Public Radio has already asked a federal appeals court for an emergency halt to the CRB's decision, which is currently scheduled to take effect July 15. They're hoping politicians will move quickly to enact legislation that would overturn the new requirements and level Internet radio royalty rates with those required of satellite radio providers.
they ask to continue to receive the choices they provide, if that
would help them and their broadcasters to stay in business. So I
wrote to my senators and congressman.
Senator Bennett's reply was the most detailed, but also seemed
to say that the Copyright Royalty Judges had made a decision
based on a free market theory. Quoting from Bennett's reply,
"This new rate structure does not provide special provisions for
the 'small' webcasters who were previously addressed in the
SWSA. The rationale behind the current decision was made
based on the 'willing buyer/willing seller' standard. This
standard determines the rate based on what a willing buyer and
willing seller would agree upon in an open marketplace."
This does not address at all the situation described in the
current article, where the 500 dollar per year fee goes to Sound
Exchange and adds up to much more than 10 times their
administrative costs. It is probably the fee more than the
anomolously high per listener-hour royalty that threatens to
shut down the small broadcasters.
I doubt that the out-of-the-mainstream artists would be "willing
sellers" in a system that threatens to put their only distribution
channels out of business. And the "willing buyers", the small
broadcasters who provide those channels more as a hobby than
as a business, would not be willing to dig deeper into their their
own pockets more than they probably already are.
Senator Bennett did not say he would be voting against the relief
legislation, rather that he would review it with my views in mind,
but did say he was "convinced of the efficiency of the free
market" in his letter to me.
The "free market" is hardly efficient or even fair to most people and small companies. I think we need a change!
If you're interested in staying on top of this issue with the latest news, go to http://www.kurthanson.com/archive/news/060607/index.shtml.
Thank you once again.
fuzoid
http://www.live365.com/stations/fuzoid
- Webcasting for free is dead, just forget it.
- by georgescott June 26, 2007 12:34 PM PDT
- It was a fun hobby but webcasting music represented by SoundExchange is a dumb thing to do unless if you are going to be able to cover there fees, your own, and pull a profit. The fees will only go up, including the "per channel" extortion fee.
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(9 Comments)MP3's will live on for podcasting. Since there is "free expression" I don't believe anything stopping you from putting out your own work on MP3 will ever exist. If a service network that sends out the MP3's changes to a different format, a new service network will pop up to service your MP3's I am sure. If there is a market someone will come in the fill the market with a product.