Copyright Royalty Board Releases Decision - Rates are Going Up Significantly
The Copyright Royalty Board decision on the royalties for to be paid by Internet Radio stations for streaming music during the years 2006-2010 was released to the participants in the proceeding today. And the rates are going up significantly over the next few years. More importantly, especially for smaller entities, there are no royalty rates based on a percentage of revenue as were in effect for small webcasters under the Small Webcasters Settlement Act. Instead, all royalties are given as a per performance number, i.e. a payment for each song every time a listener hears that song
In a 100 page decision, the Board essentially adopted the royalty rate advanced by SoundExchange (the collective that receives the royalties and distributes the money to copyright holders and performers) in the litigation. It denied all proposals for a percentage of revenue royalty (including a proposal that SoundExchange itself advanced). The Board also rejected any premium for streams received by a wireless service, as SoundExchange had suggested.
The rates set by the Board for commercial webcasters, including broadcasters retransmitting their over-the-air signals on the Internet, are as follows:
2006 - $.0008 per performance
2007 - $.0011 per performance
2008 - $.0014 per performance
2009 - $.0018 per performance
2010 - $.0019 per performance
The minimum fee is $500 per channel per year. There is no clear definition of what a "channel" is for services that make up individualized playlists for listeners.
For noncommercial webcasters, the fee will be $500 per channel, for up to 159,140 Aggregate Tuning Hours (one listener listening for an hour) per month. Noncommercial webcasters who exceed that level pay at the commercial rate for all listening in excess of that limit.
The decision is subject to Motions that confidential information be redacted to the public, so it is not yet released for public review. A request for rehearing of this decision can be made by any party to the case within 15 days. The Board can also make technical corrections to the decision (not affecting the rate). The decision is to be published in the Federal Register within 60 days. Appeals may be filed with the US Court of AppeaIs in Washington, DC within 30 days of Federal Register publication. As this decision may well significantly impact webcasters, large and small, there is no doubt that more will be heard on this decision in coming months. We'll have more details on this decision in coming days.
(Update: For more information on this topic, see my update, here)
This is scary. I would rise from $140 a month combined in a group license to $1,500 a month to Soundexchange alone! NO breaks for small webcasters! Uggg. And retro-active.
There is no doubt that this will inevitably shutter most if not all webcasting operations in their jurisdiction and the problem is SoundExchange who's members only include record labels.
The public has been misinformed for years that the RIAA represents the music and those who create it. If you look at the RIAA membership it does not include one single musician, artist or composer and never has. Therefore the RIAA has no business in collecting massive royalties that only go to the record labels while the artists and creators of the actual music never see a dime of it. The Copyright Royalty Board needs to elimiate SoundExchange and elect a new royalty collection organization that has no ties to the RIAA.
This is a sham and I think the more the public knows about it the more they'll agree. As a webcasting operator myself I barely make ends meet with the current royalty structure with nearly 90% of all royalties I pay going to SoundExchange (the record labels) and the final 10% going to the artists, composers and musicians. Something's wrong when the people who create the music get little to nothing and those who profit in the billions of dollars off the music already profit even more.
It needs to stop.
My company Digital Audio Tracks has produced a new PSA for internet radio in it's fight against the new RIAA rates ruling. Please review it at http://www.wzfb.com/savenetradio and if you feel inclined to pass along the info in your blog, we'd be very appreciative.
Our very best to you,
Dave
Digital Audio Tracks
www.DigitalAudioTracks.com
While Robert's observations about the likely effect of the rate is no doubt true, actually, SoundExchange theoretically represents both the labels and the performers. SoundExchange was created by the RIAA, and testimony in the CRB proceeding indicated that the SoundExchange committee in charge of the royalty litigation and settlement negotiations was principally made up of record label representatives. However, the Board of SoundExchange itself has artist representatives, and the Company could in theory operate independently of the labels.
The royalties collected by SoundExchange first pay the expenses of the CRB litigation (one reason that SoundExchange has an advantage in the litigation - its litigation costs are funded out of royalties, while webcasters have to fund those costs out of their own pocketbooks)and the costs of administering SoundExchange itself. Then, the royalties are split 50/50 - half going to the copyright holder in the sound recording (usually the label) and the other half to the artists (45% to the feature artist, and 5% to other artists who appear on the recording).
Hi David:
What is to prevent webcasters from moving jurisdictions, paying fees into a foreign royalty group, and broadcasting back into the USA? Most of the stations worldwide (excluding only those in the UK and possibly Iran/North Korea/other rogue states) are not in the USA but still allow listeners in the USA to tune in.
Thanks,
John Galt
So what?
The reason I listen to net radio is to avoid the RIAA crap on the regular radio.
In response to John Galt's question above, these rates apply to all transmissions made to US residents - regardless of from where they originate. Obviously, for a real foreign webcaster with no US contacts, there might be jurisdictional issues about trying to collect those royalties (though SoundExchange is working on reciprocal collection agreements with collection agencies in other countries). For a US webcaster who simply puts their servers off shore but then continues to program from the US and sell advertising here, there wouldn't be such jurisdictional issues.
The same issue has already arisen in reverse. Many of the large webcasters have stopped offering their streams to non-US IP addresses to avoid having to pay royalties to the collection agencies in those countries. The agency from the UK has even contacted a number of US small US webcasters asking for royalties for performances to UK residents.
And you may remember a few years ago, the RIAA made most ISPs block access to a Chinese site offering virtually free downloads - and no doubt they would do that to if a large off-shore webcaster paying no US royalties were to develop. And remember what the government did to the off-shore gambling sites. So I don't think that locating off shore is any real solution
In response to Ugly American - this decision most certainly applies to net radio and, if it stands, may very well mean that your only choice is the programs of regular radio - on your regular radio. No more free net radio to listen to. So you most assuredly should care.
I think big brother is doing it again...
I guess pay or no play... We should all picket the industry and let them know that we have rights also.... Fair America Bull Crap.. If you got bucks it is fair America.... Maybe I will go on welfare and let them pay for it..
Peace
Tommy R.
Typical clueless behaviour from the industry. Very sad as I purchase so much more music by listening to internet radio that by any other format. I find the type of music I like to listen to via internet radio, hear an artist I like, then buy at least 2-3 songs from that artist. With internet radio I do this 4 to 5 times per week. Listening to regular FM radio, zero times, and no explanation needed as to why this is.
I think more people would go back to listen to cd's and tapes, like i did for along time before i started to listen to internet radio where i hear more music i never hear on local radio. i think they need to have a wakeup call themself and put better music on local radio or suffer hugh losses of people going to cd's or tapes.
Okay okay, from what I can... there is alot of opinions flooding around from "who the hell do they think they are" to "yea people need to get paid for the work that they do." I can see 3 out comes for most companys, which starts with the big boys. AOL, Itunes, and the like. First, they will simply pay them. They have enough income from other sales fronts to easly "out last" everyone else, making them even bigger and in the long run, making more money. I also see a lot of the smaller companies going either out of what ever buisness they had to start with, or going more underground which equals less listeners. And the thrid outcome is going to be with alot of companies moving their servers out of the country to avoid laws, taxs and all that other crap. If I'm not mistaken, the laws governing internet usage surrounds mostly with where the information is. Sense internet radio is a broadcast, nothing is really saved on the end users system therefor there is nothing for the record industry to tax/fine. Honeslty, i just see a shift to overseas companies. Which promotes overseas markets nor US markets... but thats what you get when you force people out.
Another example of the corporate music machine trying to dominate artists and listers at the same time. Very sad.
Music is created for marketing pleasure - But hiking rates is like killing the goose laying golden eggs. It is short sighted - to benifit a few but detrimental to many. Audience listening to Internet radio generate such GOOD WILL that will have more value than the money one get by hiking the rates
Well, if you're making agreements with indie bands to stream their music for free, and they're not a part of the Major Labels, I don't see why this can't be done. Why should a broadcaster have to pay Sound Exchange if none of their artists are represented by them. How can Sound Exchange claim to represent artists they've never even heard of?
In response to the comment from Krishna, if a streaming service gets permission from a band to stream their recording without any charge, and the band holds the copyright in their own recording, then there is no fee to be paid to SoundExchange. Some webcasters have talked of this as being an alternative to SoundExchange royalties if the royalties aren't adjusted. A webcaster could create its streams using nothing but songs from bands that have given permission for their songs to be played at no or reduced royalties. If the webcaster had permission for everything that it played, it would have no SoundExchange liability. Even getting permission for only some of its songs could reduce the copyright obligation of the webcasting service.
David
Do you know what the prior rates were?
Thx
The old copyright rates, and a description of the royalty scheme, can be found in our memo that can be found at http://www.dwt.com/practc/broadcast/bulletins/08-06_InternetRadio.htm
Hey, I just like to listen to the muic. I don't know what to tell my congressman/woman when I write him/her a letter. Is there an approximate form someone knowledgeable can come up with?
I am shocked. I would have never purchased half of the songs I have on my MP3 player had it not been for internet radio. Short sighted and sad....poor millionaires.
David, would it be feasible for artists to set up an alternative to RIAA to deal outside of the CRB rules? To elminate the need for webcasters to hold agreements with individual artists. If so, it would be great to see a group of "name" artists supporting this concept ... cutting out the middleman, so to speak -- which the Web is so good at doing.
Is there anyway to get around this legally?.... Especially if you listen and do not copy the music illegally and potentially then buy it after listening
I would hope attorneys could find a loophole in this... Since it is not to benefit artists at all
I know our Government S---S right now but is there some type of pressure a mass mailing of signatures could do?
I feel really helpless here and feel all my rights are slowly being taken from me that the Internet so freely gives
Pandora gave me everything a person could really want with Internet Radio.. and none of the BS along with more and actual individual creative Program
Why are there people that feel we should all be one generic brand and try to force this type of lifestyle also on the Internet
I've been in radio for 35 years and consolidation wiped out most radio jobs and most creativity on the FM dial. Internet radio serves thousands of disgruntled music fans who can't find what they want or don't even know what they want until they hear it. It also helps hundreds of smaller record labels and labels owned by the artists themselves get there music exposed to a worldwide audience. Everyone should be concerned and you CAN do something about it. Go to one of the original and best Internet radio stations www.radioparadise.com and read more. How could the Copyright Royalty Board even keep a straight face by imposing these fees that would wipe out more than an industry. It would limit the variety of music that you could find and isn't that what Internet radio is all about? Write your congressman now and save Pandora, Radio Paradise and other unique webcasters. Thanks
I'm a huge fan of online music. I can't even quantify how much time I spend listening to Launchcast and Pandora.
I'd like to write my congressional representatives, but it's usually most helpful if there's a specific Bill number or proposal to point out in the letter. Could you please provide more specifics on which pieces of legislation I should ask them to vote against if I'm interested in preserving NetRadio with more freedoms?
Thanks,
Jason
Right now, there is no specific bill pending. If enough people let their Congressmen know that the Copyright Royalty Board decision threatens the existence of internet radio, then we will hopefully see some specific legislative proposals.
Once again the record companies think that they can get back some semblance of control over a situation that has been developing for a long time now.
I am a professional musician and producer, and Internet radio stations such as Pandora are a lifeline. When will big business realise that the days of ripping off the musician and their creative talents as well as the public to make vast sums of money are over.
Through listening to Pandora I have been exposed to an enormous amount of new music, a lot of which I have since gone and bought. Surely this is in the interests of musicians, the public and record companies.
If the industry continues to try to control everything in this suspicious and ever increasingly draconian way, then we will see ever increasing numbers of musicians turning away from the traditional route through the record companies, and instead doing it for themselves, and if that happens, the record companies will have finally lost out. We will then see the record companies resorting to producing an ever-increasing number of manufactured bands harbouring no real creativity, and who will loos out? The whole of society will loose out, because good music is a vital and necessary part of all our lives, if it weren’t then what have the profits of the record companies been relying on for the past 50 years?
I am not anti record company, I am just pro musician, and I was looking forward to using Pandora and other Internet stations to promote my own music, I suppose like countless thousands of others I will now have to find another way.
The thing that annoys me the most is when the industry tries to say that musicians are being ripped off, when in reality big business has been doing this for a long time.
I was recently told by a very well known and popular piece of software that I did not have permission to copy my own work onto a CD! We need to stop right now and look at the gross paranoia that is at work. Companies with vast sums of money tied up in the music business are obviously going to try to do anything within their power not to lose that power and money, when they start to have an influence over the way the law is made in their favour, we should all be very worried.
Give music back to the people, or soon there will be no music.
Even all my godd friends in italy adore pandora and it's philosophy of bringing you TO the music and musician and they are spreading the word as I type. Why do these bills always come out when there is much more to think about and to legislate about! geez.. I myself have discovered tons of music I couldn't be less aware of. And yet, here it comes..the royalties go up.
I co-own a small, yet growing station ar irock109.com and have a volunteer staff of 20 people that give their heart and soul just so we can get good Classic Rock out on the net. We are willing to pay royalties so we stay 100% legal, but it makes no sense for these governing bodies to bite the hand that feeds them. In the end, they could easily end up with nothing, and the only thing they would succeed in doing is keeping listeners from the cool music of the 60s, 70s and 80s, and telling 20 volunteers that what we are doing cannot be continued.
NO ONE WINS here...I can't believe the RIAA is blind to that. All they need to do is leave it alone and collect their fees. Instead, they are going to make us all dry up. I've done the math - we would not survive this rate at all.
Very sad...
Does anyone know how this new rate compares to the royalty rate for FM and Satelite radio for playing music?
I don't really listen to internet radio that much. However, I do listen to traditional radio a lot. Mostly I listen to talk radio and public radio. Every so often, the public radio has a pledge drive to fund their efforts, and the devoted listeners call in and pledge their support. They supply their own demand, and the station continues to exist. It seems to me that there's plenty of demanding going on here. Why are so many of you expecting your demands (not rights, mind you) to be supplied by someone else?
All you people forget the artist who deserve the revenue. It's their product to sell and if you play the music without paying you are stealing from them too.
In response to Don, no one is claiming that webcasters should pay no royalties -instead webcasters are only asking that the royalties are ones that are fair and allow them to continue to operate. Musicians get no revenue or promotional value from a webcaster who goes out of business.
in response to Mike and Don. Broadcast radio AM/FM do not pay royalties. There is a double standard for internet radio. However soundexchange and the RIAA are not limited to how they price their fees, they can charge outrageous fees at will. There needs to be new legislation passed to regulate them from shutting everyone out of business. This is how they control the market and leave the listener with fewer choices. Say goodbye to hearing indie artists on the internet if something doesn't get done! We need some congressional action.
There's a petition, hoping to get 50,000 signatures by Monday.
http://action.freepress.net/campaign/internetradio/
The radio world finaly has something good going on and our goverment and big companies always want to mess things up.
What your million dollar saleries are not enough? How about if you people find a real job and leave us hard working people alone so we can listen to net radio. Have a crappy day.
Okay, internet radio can't afford the new rates with your existing business model. So, change your business model. Charge subscription fees, get more listeners so you can get more advertising and charge more for it, make the known income strategies of traditional radio work for you.
As an aspiring songwriter / performer, I had given a lot of thought of keeping the creative process "in-house": Writing my own music - creating my own publishing company - registering for my own copyrights - using the internet to market my product for next-to-nothing - shopping the material to internet radio for airplay - possibly submitting the material to iTunes myself - pressing and selling my own CDs online...
Now hearing this, it seems that the RIAA (in the form of SoundExchange) wants the get their hands on their pound of my flesh. As I understand what I have read, even a private licensing agreement directly with the SRCO (Sound Recording Copyright Owner) does not negate the "compulsory" licensing imposed on internet radio by SoundExchange...
Now, if I wanted to collect my royalties from SoundExchange, I would have to join them (starting to sound like a lost episode of Star Wars...) and pay a fee. You want the money we got for you? Pay up...
What kinda backwards world are we living in where a non-involved party can engadge is money collection for services they had nothing to do with?
In our country more simple, hope time by time your resolve your questions and all will be OK to you. Wish you all OK in your work.
Is this gonna end someday??
In response to Marina:
Terrestrial radio stations (FM based) do in fact pay royalties but there is a distinct difference. FM pays per song, where as web casters are forced to pay per performance. On the service they sound one in the same, but it's not. FM pays approximately .007 per song, which means when they reach 1,000 songs despite the number of listeners are tuned in at any specific time they pay $7.00. A web caster has to pay the royalty fee established multiplied by the number of listeners that are listening to a song at any particular time. As of 2008 that rate as mentioned in the article is set at .0014 per performance. If a web caster has 1,000 listeners, each listener is considered a performance which means you are shelling out $14.00 per song for each royalty. $14.00 goes to the songwriters and $14.00 goes to the recording industry. $28.00 a song verses .007 per song? Plus $2,000 startup costs ($500 goes to BMI, ASCAP, SESAC and Sound Exchange) for just one station, before a single song is played. Fair? Not a chance.
In response to Rob. You can't make a viable business model out of Internet broadcasting. Because a station gets punished for becoming popular. Plus, they get % of your revenue if you attempt to add banner ad advertising to the same website your broadcasting music from. Sure, you could sell station merchandise, but who's going to pay $100 for a station t-shirt, or $50.00 for a station coffee mug? That's the price point one would have to use just to break even.
[note - see my response to Bill below. DDO]
In response to Bill's comments above, actually on the Internet, an FM station that simulcasts its signal pays exactly the same thing as a pure webcaster. They pay based on the number of songs played multiplied by the number of listeners to each song. There are a number of other issues that are not completely accurate in Bill's comments on where the payments go, and what the costs for a start up Internet radio station would be - you might want to look at our advisory clarifying many of these issues here: http://www.dwt.com/practc/broadcast/bulletins/04-07_CRBDecision.htm
Or look at many of the other posts on this Blog under the Internet radio topic for more information
I have a question. Do these royalty fees apply to MAJOR record label songs? What about Indie labels? or unsigned bands? Some one please clarify this for me.
Thank you