Monday, July 16, 2007
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July 15 has passed and, thanks to the emails, letters and phone calls listeners placed to Congress, Internet radio is still streaming - at least for now. Under pressure from Congress, SoundExchange agreed at the last minute to not immediately enforce the devastating rate increases that were scheduled to take effect today and to enter into negotiations with webcasters.
To those of you who have contacted your representatives in Congress, you have my profound gratitude. Please know that your your doing so DID have an impact. I can guarantee you that the ONLY reason that thousands of stations did not go silent yesterday was because of the pressure Congress felt after hearing from hundreds of thousands of concerned constituents over the past several months.
Unfortunately, at this point, there is still much that needs to be resolved and the future of Internet radio still faces many potential dangers in the days and weeks ahead. The good news is we are still alive to fight and, now that Congress has stepped into the picture, SoundExchange is under pressure to negotiate honestly and in good faith - something that it has not done to date.
Right now, the situation is very fluid and lot of what is going on is taking place behind the scenes and is simply unknown to most webcasters and the general public. Based on what I have read from various online sources, here is where things currently stand:
SoundExchange has agreed to cap the $500 per channel "administration fee" which threatened to immediately bankrupt webcasters such as Live365, Pandora and Yahoo who each offer thousands of channels. The cap would be at 100 channels or $50,000. My understanding is that this only applies to stations that fall under the "large commercial webcaster" category which is determined by the size of a company's annual revenues. Live365 falls under this category. LoudCity, however, is classified as a "small commercial webcaster" and will likely end up under some different sort of arrangement.
A new bill, H.R.3015, has been introduced in the House which would officially postpone implementation of the new rates for 60 days in order to allow time for negotiations between SoundExchange and webcasters or for passage of the Internet Radio Equality Act which would set Internet radio royalties at a rate equal to what satellite radio pays to perform the same recordings. Such a bill would give webcasters a postponement of execution that is more binding than SoundExchange's mere promise to not enforce the new rates. Some websites are suggesting that the bill will pass quickly while others say it stands little chance of passing. The general consensus, however, is that just the mere fact that such a bill is out there is probably enough to pressure SoundExchange into keeping its promises.
One area of particular concern to me is reports that, in the negotiations with the large commercial webcasters, SoundExchange has supposedly said that the per-song per-listener rates are "non negotiable." This ought to be troubling to the Radio Dismuke audience and fans of niche genres because Live365 falls into that category by virtue of its annual revenues. Despite being a "large webcaster" Live365 is, in fact, the home to the vast majority of the Internet's SMALLEST radio stations. Live365 makes it affordable for hobbyists and music enthusiasts to provide highly specialized programing to very limited audiences that are simply not profitable for more commercially oriented webcasters to serve. For example, on Live365, Radio Dismuke is only one of several stations that feature vintage music. Weimar Rundfunk specializes in European recordings from the 1920s though 1940s. Elite Syncopations specializes in ragtime music. And there are others.
Beyond the danger to Live365, my concern about the negotiations with the large webcasters is that SoundExchange might be taking a hard line approach with the per-song per-listener rates in order to pressure webcasters such as Yahoo, AOL and Pandora into cutting direct license deals with the major RIAA labels at lower rates. Such an approach would be a DISASTER for independent artists. If the only way for the largest and most successful webcasters to survive is by dealing directly with the labels, it would mean that it would cost such stations far more money to play music by unknown artists and obscure genres than it would to play mass market hits - which is the exact opposite of what would occur under normal marketplace conditions. It would also give the RIAA labels considerable leverage over such webcasters because they would always be under the potential threat of their direct license not be renewed at the end of its term. This would have the effect of giving the RIAA labels considerable leverage over stations in terms of getting airplay for the particular recordings that the labels are especially interested in promoting at any given time.
Congress and its constituents have already made it clear that they will not allow RIAA/SoundExchange to get away with killing off Internet radio completely. My guess is that SoundExchange has already conceded that it has lost the battle as far as killing off the smaller webcasters is concerned and that its focus is now on trying to at least make it so that the most successful webcasters who have the deepest pockets in terms of being able to promote themselves are under extreme financial pressure to play only RIAA approved formats and artists.
Another concern I have is that SoundExchange will attempt to harass smaller stations out of existence by unreasonable reporting requirements. Under the old rates, educational institutions such as colleges paid very low licensing fees. Many colleges, however, have been forced to take their streams down not because of the royalties but because they simply could not afford the expense and hassle of keeping up with all of the reports that SoundExchange was demanding. I have read that SoundExchange is already complaining in the current negotiations about the need for increased reporting and tracking requirements.
Never forget that the RIAA's motive in this entire mess has ALWAYS been nothing more than to kill off what it sees as an emerging threat to the influence it has traditionally had over which recordings receive all-important FM radio airplay. Internet radio is poised to replace FM radio's role as the primary musical trendsetter in our culture. If the RIAA labels are not able to exert similar influence over airplay on the Internet, their days are very numbered. The very moment it becomes apparent to artists that they can get much needed airplay and become successful on their own, there will no longer be any reason for them to sign the terribly one-sided record contracts with the RIAA labels. By bypassing the major labels, artists will be able to retain much more control over their artistic product and would be entitled to receive 100 percent of all revenues that might be derived from it. The way things are rapidly evolving, there will soon no longer be a need for the role that the major record labels traditionally served prior to the advent of recent technological advances. What we have been witnessing over the past few years is an obsolete and dying industry desperately trying to use the law of the land in order to carve out a relevance and role for itself that would otherwise not exist in a free market.
In my opinion and in the opinion of most webcasters, the only viable LONG TERM solution to this mess, regardless of the outcome of any negotiation with SoundExchange, is the passage of the Interent Radio Equality Act. If the act were passed, Internet broadcasters would still be paying the highest royalties of any category of broadcaster in the United States and it would be among the highest royalties paid by broadcasters anywhere in the world. The advantage of the Act, is that it would provide PERMANENT relief to the various attempts by the RIAA to kill off webcasting as an independent industry.
Whatever may come out of the negotiations with SoundExchange is only going to be good through the year 2010. After that, the whole process starts over again. The RIAA attempted to shut down Internet radio when the first rates came out in 2002 and was stopped only because of a pubic outcry to Congress. At this point, it appears that the same might happen in 2007. The fact of the matter is, however, that webcasters simply cannot afford to have to endure this every four years. No serious investor is going to make a substantial financial commitment to an industry that is under constant threat of a possible forced shutdown in the future. Very few webcasters currently make much, if any, profits. And yet they have been forced to fight a battle that has been very costly in terms of legal and lobbying expenses, staff hours as well as lost opportunities that might have been pursued had the webcasters been able to focus more on their businesses than on fighting the RIAA. I have been fortunate in that my agreements with Live365 and LoudCity have sheltered me from such expenses. However, even on my level, this battle has been costly in terms of lost opportunities. For over a year and a half now I have been more or less forced to put all of the various plans I have entertained for substantially expanding Radio Dismuke's audience and programing abilities on indefinite hold until the royalty issue has been resolved one way or another. It makes no sense for me to sink time and money in significant expansion when I have no way of knowing whether my existing service providers will still be around and whether or not I will be forced to struggle to find a way to keep the station going at a fraction of its present size at a significantly increased price. The Internet Radio Equality Act would provide a long term legal stability that the Internet radio industry has yet to enjoy. Had such an approach been taken since the get-go, I can assure you that Internet radio would be far more advanced and evolved that it presently is.
Because the long term outcome is still uncertain, it is very possible that webcasters will once again be forced to ask their listeners to contact Congress on their behalf before this is finally over. I will let you know when and if any such action becomes urgent.
In other news, despite the gloomy mess of the past few months, I have been constantly updating the Radio Dismuke playlist. Over the past weekend, I added 60 new selections - all from vintage 78 rpms. I would guess that over 80 percent of those new selections have never been reissued in CD format. I have many hundreds of additional 78 rpm recordings lined up for eventual inclusion. The difficulty with 78 rpms is that transferring them and digitally restoring the audio so that it will be acceptable to modern audiences is very time consuming so using them has to be an ongoing and very long-term project. As of today, Radio Dismuke currently has 1,947 tracks in its playlist. The playlists of most terrestrial stations are but a fraction of that size. At its present size, it takes over 4 days for Radio Dismuke to cycle through its playlist (I do have it set up so that recently added recordings are played somewhat more frequently). The current playlist features 665 unique artists - far more than one would hear in a given week on a typical FM station. According to one of the Live365's employees, during the month of May, over 250,000 artists received airplay across the thousands of Internet stations in the Live365 network. That's about 249,000 artists who would have most likely received NO airplay at all had it not been for Internet radio and about 249,500 more artists whose existence and work the major RIAA labels would rather you not be made aware of. Internet radio is special and, in my opinion, it is the most wonderful thing that has come along for music and the artists who perform it since the invention of recorded sound. It is definitely something worth fighting for.
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Please feel free to foward this email to anyone you think might be interested in reading it.
Thursday, July 12, 2007
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At the end of this email is an URGENT message that the SaveNetRadio.org has put out and which I support. This Sunday, July 15 is the day that the new royalty rates become due retroactively and will drive most webcasters into bankruptcy.
Not only are the per-song per-listener rates themselves very high, on top of them are a $500 per channel "administration" fee that will be ruinous for my service providers Live 365 which hosts around ten thousand channels and LoudCity which hosts around five hundred. All of these fees are retroactive to January 2006. In the case of Live 365, it means that on July 15 they will immediately be in the hole for about $5 million just for one year's "administration fees" alone. Live 365 was founded a few years ago during the dot.com boom and only turned its first profit ever last year - and that profit was only a few thousand dollars. Live 365 simply does not have millions of dollar to fork over.
LoudCity is in a similar situation. Not only will they owe about $250,000 in "administration" fees, they will be force to pay per song per listener rates for all of 2006 a year that they had every reason to believe would have been charged on a similar basis as the old royalty rates with perhaps a reasonable increase. For them, their SoundExchange royalties under the old rates would have been capped at $2,000. Their royalty bill from my stream alone is now going to cost them well in excess of $2,000 and, when one multiplies that by 500 stations, the bill will have RETROACTIVELY jumped from around $2,000 to into the HUNDREDS of thousands of dollars. Based on my knowledge of the rates they charge their customers, my guess is that LoudCity took in CONSIDERABLY less than $180,000 in TOTAL revenues last year - not even enough to pay the "administration fees" which are being retroactively applied to them.
As I have explained in previous emails, this is all part of an effort of the RIAA to effectively take over Internet radio by killing off the existing players so that the major labels can sign "sweetheart deals" with hand picked webcasters who will be charged less than the statutory royalty rates in exchange for playing the lowest common denominator mass market recordings currently found on FM radio and from which the four major RIAA labels derive most of their revenue. This is nothing more than a disgusting effort to use a very flawed law that the RIAA lobbied for in order to kill off emerging competitors (independent artists and niche genres which, thanks to Internet radio, were able to receive radio air play for the first time ever) in order to prop up their technologically obsolete business models.
As of right now, both of my service providers, Live 365 and LoudCity have said that they DO plan on remaining on the air after the July 15 deadline passes. From what I gather, the attitude that both will be taking is that, since they will ALREADY be effectively bankrupt as of July 15, they have absolutely nothing to lose that they haven't already lost and will keep broadcasting while attempting to fight it out in court until they receive a court order that forces them to shut down. I have no way of knowing for sure how long such a process will take - but so long as they are fighting this, I will continue to provide them my streams of 1920s and 1930s popular music and jazz. Other webcasters, for a variety of reasons, are not quite as gutsy as Live 365 and LoudCity in this regard and plan to go out of business as of July 15. When that happens, a MONSTROUS injustice will have taken place - and many will lose their businesses, their incomes and, in some cases, even their homes. The ONLY thing that webcasters are "guilty" of is playing music and artists that the RIAA labels would prefer that you not be aware of on grounds that it might diminish interest in the artists and music that they want you to be listening to and purchasing.
The recent Day of Silence was EXTREMELY successful in terms of the number of people that contacted Congress. Congressional switchboards and faxes were jammed from the very large number of calls from the hundreds of thousands of concerned Internet radio listeners who called in. Unfortunately, the RIAA is a VERY powerful organization with LOTS of political pull and many bought and paid for politicians in both houses of Congress. At last count 127 members of the House have agreed to co-sponsor the Internet Radio Equality Act which would set Internet radio royalty rates on par with those charged satellite radio and resolve the whole situation. There IS a significant amount of support for our cause in Congress. But, in order for it to do any good, the bill has to come to the floor for a vote. That can be a very difficult thing as it is not hard for opponents of a bill to kill it off in committee. That has essentially what has been happening since the otherwise successful Day of Silence.
Another factor is that SoundExchange, the royalty collection organization founded and controlled by the RIAA is sending out very false and misleading information to members of Congress - most of whom are NOT scholars in the complicated issue of copyrights and royalties. For example, the head of SoundExchange yesterday distributed an email to members of Congress suggesting that it has offered to cap the $500 minimum fee to $2,500 per service provider. That is VERY misleading. The offer on the part of SoundExchange to cap the fee was ONLY good through 2008 AND required webcasters to agree to give up all future efforts to lobby Congress for changes in the law. No webcaster in his right mind would agree to such a thing - and, in the long run, what good is it to effectively AGREE to go out of business in two years and voluntarily forfeit one's right to petition Congress for redress of grievances? The ONLY reason that SoundExchange made such a bizarre offer in the first place was to provide window dressing so that it could tell Congress that it was "working" with webcasters and that it is the webcasters who have turned down their alleged offers of benevolence. This is the nature of the sort of organization that webcasters are up against - and, as of right now, it is very close to achieving its goal of shutting down all Internet radio except for a handful of RIAA sanctioned operators.
SaveNetRadio is requesting people to IMMEDIATELY contact ALL of their Senators and Congresspersons TODAY and urge them to support the Internet Radio Equality Act and to bring it up for a floor vote IMMEDIATELY. They are asking Internet radio fans and supporters to not quit until they feel that they got their message across very clearly. If your representative has already co-sponsored the bill, please thank them for their support and ask them to please push for the bill to be put up to a floor vote now BEFORE the July 15 deadline goes into effect. If you have already contacted your representatives in support of this issue - you have my profound gratitude. If it is all possible, please do so AGAIN in order to stress the importance of bringing the issue to a floor vote.
Here is where you can go to look up the name and contact information for your Congressperson and Senator:
Your support on this is appreciated not only by me but by may many, many listeners who depend on Internet radio in order to hear the music that they love - music that is NOT available on FM radio and will NOT be available on the Internet for much longer if the RIAA achieves its goal of transforming the Internet into a carbon copy of FM.
Below is the plea from SaveNetRadio.org
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URGENT URGENT URGENT
IMMEDIATE ACTION NEEDED FOR THURSDAY, JULY 12TH
Time and options are running out for Internet Radio. Late yesterday, the U.S. Court of Appeals DENIED the emergency stay sought on behalf of webcasters, millions of listeners and the artists and music they support.
UNLESS CONGRESS ACTS BY JULY 15th, it is the end of the road for Internet radio.
We are appealing to the millions of Internet radio listeners out there, the webcasters they support and the artists and labels we treasure to rise up and make your voices heard before this vibrant medium is silenced.
This situation is grave, but that makes the message all the simpler and most serious. CALL YOUR SENATORS AND REPRESENTATIVES RIGHT AWAY and urge them to support the "Internet Radio Equality Act." If they've already co-sponsored, thank them and tell them to fight to bring it to the floor for an immediate vote. If the line is busy, call back. Call until you know your voice has been heard. Your voices are what have gotten us this far -- Congress has listened. Now, they are our only hope.
We are outmatched by lobbying power and money but we are NOT outmatched by facts and passion and the power of our voices.
The exact page of the SaveNetRadio.org website that allows you to look up Congressional office phone numbers is here: http://www3.capwiz.com/saveinternetradio/alert_9738601.html
Friday, July 06, 2007
Now a musican by the name of SONiA is very eloquently making the same case in an editorial in the Baltimore Sun.
"While the royalty rate increases would mean certain bankruptcy for almost every Webcaster, the effect on indie artists would also be disastrous. Losing Internet radio would mean the loss of our biggest promotional resource.
This becomes obvious when you look at the market. Right now, independent artists make up less than 10 percent of what's played on broadcast radio. On Internet radio, we make up about 37 percent.
And as much I appreciate royalties as an artist, a bump in royalties means little to indie singer-songwriters if it also means the death of our biggest source of exposure. If Internet radio dies, there won't be any royalties to pay...."
She concludes by saying:
"For us, Internet radio has become essential. A world without it can only be described as scary."
Check out the entire editorial - the points she makes are right on the mark.