Internet radio broadcasters face the alarming prospect of paying much higher royalties to song performers, says the Wall Street Journal, a burden that could silence some online stations.
This looks a possibility if you’re an internet station in the US as it relates to a decision by the Copyright Royalty Board (what the Journal calls an “obscure federal agency”) to set sound-recording royalty rates for online radio stations in that country.
Without meaning to belittle the genuine concerns of those internet broadcasters – many of whom may well be forced out of business – I think this presents huge opportunities for anyone (including an internet radio station) to set up as a podcaster. Podcasts are not effected by this US ruling.
Todd Cochrane has the pragmatic view:
[…] a lot of Podcasters are looking at the decision as an opportunity to pick up significant listenership as a huge number of webcasters are forced out of business.
[…] listeners are going to be on the hunt for content. The question that has to be asked is how do we convert that masses of people that will no longer be able to listen to webcasts.
As one of the U.S.-based Internet Broadcasters affected by this, let me provide a thoughtful analysis:
We’ve (by ‘we’ I mean Legally Operating U.S.Webcasters) been paying these “Performance Royalties” for several years, since the U.S.Copyright Office ruled in favor of the major music lables. These royalties are separate from songwriter royalties, which my service provider (Live365.com) also pays. Performance royalties are paid to an entity called SoundExchange, created by (surprise!) the major music lables. SoundExchange then redistributes the monies to the Copyright Holders, which, in most cases, are (surprise!!) the major music lables. Only the wealthiest stars (Bowie, Springsteen, etc.) can afford to buy back the copyrights to their recordings. That’s why the Rolling Stones don’t own the copyrights to their recordings from 1963 to 1970. They are owned by Allen Klein, who recieved them in an agreement after he was fired after a couple of years as the Stones’ business manager. Under virtually every contract the major lables (& many independent lables) ever offered, the lable owns the copyrights to the recordings.
Under the New Rates, using AOL Radio’s own publically-availible figures for listenership, they would owe $1.5 million USD…for November 2006 alone!
Of course, Time-Warner owns both AOL Radio (a payer) and Warner-EMI (a payee). Live365 being a private corporation, figures are not public knowledge. However, Kurt Hanson (a well-regarded analyst of online media) estimates that Live365, given their listener counts, now pays roughly $350 thousand USD a month for both Performance & Songwriter royalties. The proposed rates, from Jan.1, 2006 until Dec.31,2010, would be unbearable, both for independent hobbiest webcasters (me) and for big corporations (such as Real Networks’ Rhapsody service, Yahoo!Launchcast, etc.).
As for switching from streaming audio to podcasting, don’t think I haven’t thought very seriously about it! However, no matter how niche a webcaster is, only a few would be able to come up with enough quality podsafe recordings to have much of a playlist. That’s not a knock against podsafe/Creative Commons-licensed music: There’s some great stuff out there. But, even with as Eclectic a playlist as I webcast, I’d have to cut out so much great music (not just major lable songs – how does one track down if there is a copyright holder for wax cylinder recordings?) that I’d have to make tracking down copyright holders my full time job…at the expense of the full time job that finances this avocation. All but a handfull of us independent webcasters do this to share our love of the music we play. I pay Live365 over $475 USD a year for the chance to Legally webcast. I cannot afford to have that double…or worse. Not many of us can.
Of course, this decision only affects U.S.-based Internet Radio. However, hundreds of webcasters using Live365’s services are based outside the U.S. (I think it’s around 75 different countries), and Listeners come from close to 150 different countries. Live365 alone has over 4,000,000 unique listeners a month. And Neville, the major music lables in the U.S. are the same major music lables in the U.K. and the vast majority of countries. And don’t doubt for a minute that they are talking to governments & music-licensing agencies in most of those countries. The U.K. (can’t remember the name of the organization at the moment) has already imposed heavy fees for live webcasting on U.K.-based internet radio. So no one should think “It can’t happen here”. That’s what we thought several years ago.
Sorry for the long comment. This has me so upset I emailed my Congressman…and I don’t even like the guy!
Love & Peace, Clarence
Wow, Clarence! Thanks for such a detailed commentary. You’ve given me much food for thought.