Comments on: Why Web radio faces another crisis

A deal with the recording industry that was supposed to enable popular services like Pandora to survive never got signed. Did Webcasters fumble a golden opportunity?

[thelemurking]

We just shut down our stream for our main station due to the increased fees. The cost of running the stream began to far exceed the revenue that the stream was generating. We tried to bundle it with traditional radio sales, tried to sell it as it's on package with the embedded ads in the Liquid Compass player and right when it was about to break even, fees increased. Since sales are down across the board, we had a meeting and agreed that taking the stream down was the right thing to do. At a time when everyone is rushing to make cost cutting changes... SoundExchange wants more money.

It baffles me that a radio station cannot even stream their station online... one would think that the music industry would want this. We're already playing the same content over the air, so why should we have to pay again to play it over the internet?

But what can you expect from an industry that sues 11 year old girls and grandmothers they say are downloading gangsta rap?

[tremorfireheart]

I don't see how one can set retroactive rates on something. I can see changing the rates they will have to pay from hence forth. also 19 cents per song played per listener? someone can download the song for $0.90-$1.99. over the course of a week anyone who listened to any online station would probably cost the company enough on each song to pay for the consumers own copy of it.

[GeneralNazort]

It's .19 cents, not 19...

[BtmnHatesRbn]

Internet Radio can work pretty easily. Firstly, since reception isn't like AM/FM, stream at a low quality, like 16 kbps for things like sports and talk radio, and 32 kbps for music and other such artsy-fartsy things. Then, create radio players that use a person's cell phone to get onto a data cell phone network. So, true, Internet Radio may not work, say, in Bumsville, ID, or Biff, NV, but who knows, right? Secondly, ignore the "they" who think they control music rights. Just ignore them. Stage a protest. Oh, never mind. That makes sense, and people don't want to make sense in this world anymore. My bad.

[TV James]

Streamed music should be free or nearly free. When LaunchCast died last week, I checked out Pandora, but I haven't listened to it too much because I spent years customizing my LaunchCast playlist (which I gladly paid the yearly fee to receive commercial free - one of only two things online I find a value in paying for, the other being Flickr Pro) and I don't have the time/energy to start all over with Pandora.

But I did go to LaunchCast and write down all of the songs I had ranked really high and then went to iTunes and purchased a bunch of them. While the death of LaunchCast did motivate me to buy more music than I normally would have, over the years LaunchCast has introduced me to a bunch of new artists that I would have never otherwise learned about, artists whose music I've subsequently purchased. Mostly a song at a time, though a few times, an entire album.

I will not listen to terrestrial radio, online or over the air. I can't stand the commercials, I can't stand the inane blathering of DJs. I listen to my iPod in the car, iTunes (or occasionally MusicChoice from my TV provider) at home and streaming commercial-free music at work.

I realize I'm being "stealing" (yeah, I DVR TV shows as well and skip the commercials), but figure out a model that works. LaunchCast was an awesome piece of technology that put new music in front of people that would have never otherwise found it. (None of the radio stations here in Seattle that I'd consider listening to would play Australia's Missy Higgins or stuff from The Veronicas like the very catchy, very funny "I Always Thought You Were Gay.")

Short-term greed hurts everyone... hurts long-term profits, hurts artists' chance for exposure, hurts ordinary citizens' chances of being exposed to more than the typical 200 hot-at-the-moment mass-produced drivel that is force fed by the big studios.

Why do they still wrestle with the customer for control?

[thelemurking]

There's very few commercials terrestrial radio can play online due to more damn licensing fees. The only commercials we streamed at our station were the local ones that we produced. National advertising wants to be paid to play their commercials online despite the fact they pay to have them played over traditional radio. That's why when you listen to a lot of stations online and they go into their commercial break, they will play songs or some sort of PSA type spots. If the stations are focused on their online revenue, then they try to sell online commercials, which can be hard to do in most markets.

Any commercials played on terrestrial radio helps cover the cost of streaming. It's not free by a long shot. You have to pay for the bandwidth, the streaming service and then the whole per song/per listener fee. It's not like stations like to play commercials, but there are costs involved in running a station, both AM/FM and internet.

[taphilo]

Even at $0.0008 per song per person, it is uneconimical. That means if a thousand people listen to a station, that plays just 15 songs in an hour (45 minutes), that station would owe the Soundexchange company $12.00. Scale that up to some big companies getting 100,000 POSSIBLE liseners it could easily get to $1,200.00 AN HOUR to be "on the web". That would mean that ads on those stations would have to be around $200 A MINUTE for those 15 minutes of non music time them to even have a CHANCE at making a profit. Doa 24x7 operation and the small fry people have no possibility of ever staying up - just too darn expensive.
The Copyright board who set the rates are appointed - and likely an all the inside the beltway crowd so are professional board memebers who do not run a business and do not have to know math - thus the rates they set are out of reality with facts on the ground - and any appointed -- it seems they are SES posistion at $125,000 a year plus). Thus, they set arbitraty rates - and no appeal it seems - based on who they know and ignore facts and business principles - ie - they opeate like most of the Federal Government making up rules that never impacts themselves but only others and they wipe their hands of any problems they cause.
If this idea of per person per song stands, then they should do the same for all types of over the air / over the wire media - pay for each possible person who could watch it / hear it and wipe out all sound and visual media in a few years.
Tom philo

[GeneralNazort]

The ads would have to generate $20 per minute, not $200...

[wxdata]

Another fine example of greed.

[thelemurking]

Exactly... the rich want to get richer!

It's not like Metallica is living in a trailer park working hard just so they can eat and pay their bills. Madonna had to pay something like 10 million to Guy Richie during their divorce... so I don't think web streaming and illegal downloading are going to put her out on the streets and force her to a life of prostitution. I bet all the record execs and the RIAA live in nice little mansions with a fantastic view... probably have things like multiple vacation homes across the world and they are fighting for a few percentages of a cent for each listener. Greed plain and simple!

[caseycontrarian]

Keep in mind that the performance right for online broadcasts also pay the performing artists (directly), and not just the sound copyright owner (usually the label). So it represents a new and important revenue stream, especially for indie artists who are more likely to be webcast than be spun on over-the-air commercial radio. The breakdown is 45 percent for the copyright owner, 45 percent for the featured performer and 5 percent for the backup performers. This money for the artist doesn't go to the label first to be held against recoupables, so in that regard it represents a step forward for artist compensation.

[justawebcaster]

Also keep in mind that the CRB rates are unsustainable. GeneralNazort seems to like math. So crunch these numbers.

15 songs per hour X $0.0019 per song per listener (2010 rate) = $0.0285 per hour per listener
24 hours in a day, 365 days in a year...
$0.0285 x 24 x 365 = $249.66 per listener per year.

So a small internet station with 1,000 listeners avg 24/7 would owe almost a quarter of a million dollars a year to SoundExchange? Get real.

$250,000 annual royalties to artists and labels for 1000 people to listen to a radio online! It's absurd.

Add to that the cost of bandwidth, and royalties to BMI, SESAC, ASCAP and it's obviously not a good business proposition to run an online radio station any more.

The result? No royalties to artists, because those who pay them are now out of business....

[podwerx]

You know. It occurs to me that (with all the inherent costs associated with Web Radio) the bigger players (Apple, Real, Yahoo, AOL, Live365, and Pandora) all stand to benefit from the short term inconvenience of excessive rates. It culls the population of the smaller competitors who can compete for ears. And with the economic clout these large players carry I'm sure they intend to renegotiate once they have enough of the market cornered and listenership locked.

Take iTunes. It's the world's worst economic model for the artist AND the customer, but it's near ubiquitous on the desktop and that is good for a decent percentage of "convenience" sales at the very worst. The big guys can plan for the long view since, in all cases, Web Radio is not their primary source of income.

I hate to say it, but we may be looking at the death of the independent broadcaster online as yet another market falls to corporate marginalization. And the incontrovertible entropy of all things inherently "free".

[ckani]

It should be the other way around. In what other industries do you have to pay to advertise someone elses wares?

[CC9999]

Just started using an ARIR200 Internet Clock Radio. No static. Music companies = all static. Don't listen to broadcast, don't listen to satellite. Thousands of streams - most from other countries. Time for US copyright, music industry to change! I hope local stations find a way to stream, but am not hopeful. That's a shame.....

[Kainchild]

You got to bear in mind, these media companies already own massive percentage in payed radio stations like Sirrus and cable companies also have their own radio stations that they provide for "free" for the time being to their customers. If they can knock off these smaller radio stations, they can force people to their services.

No doubt people like Microsoft who already made under the table deals with some of these companies will get the first picks of being a provider of such services.