Experimental Fees Settle Royalty War For Internet Radio

S-100 writes "SoundExchange has reached an agreement for royalty rates with a consortium of Internet radio broadcasters. The parties are ecstatic that the issue is finally resolved, and that the new rates are below the previous 'death to Internet radio' levels that had previously been imposed by the CARB. According to NewsFactor, Pandora founder Tim Westergren proclaims that 'the royalty crisis is over!', and other large broadcasters are equally pleased. One unheard-from group is less likely to be pleased: small Internet radio broadcasters. Buried in the details are a new minimum royalty payment: $25,000 per year. So say goodbye to all of the small Internet radio stations that you have been listening to, as they will no longer afford to operate legally."

Re:goodbye to the small Internet radio station?

[RLiegh]

I, for one, welcome our new allofinternetradio.ru overlords.

Re:What about public domain music?

[wikki]

This would only apply to record labels or artists covered by SoundExchange.

Basically it's part of the RIAA so you have the Big 4. Sony EMI, Universal, and Warner.

There may be some others.
http://en.wikipedia.org/wiki/SoundExchange#Business_structure_and_oversight

Re:What are they paying now?

[Neoncow]

If I understand, that's just for the right to not be sued for broadcasting the music. Broadcasters still have to pay to buy the music, for bandwidth to stream the music, hardware to do that, people to select music, build websites themselves, manage online communities, manage advertising relationships, etc.

AND that's the minimum. So if you have zero listeners, you have to pay $25 000 per year just to start.

$25K Adds Barrier of Entry to Control net Radio

[Hodejo1]

A big reason that traditional radio stations are in the hands of conglomerates only is because the cost of the antenna, broadcast equipment, and the scarcity of available frequency makes it extremely expensive to start a new terrestrial radio station. A Net radio station only needs a Net connection and some open source applications. The 25K means individuals are no longer able to run a free Net radio station. It will also knock out college radio stations who simultaneously stream the terrestrial broadcasts they deliver for no fee. Hobby Net radio is dead in this country. Of course, the agreement only applies to the US so overseas folk can pick up the slack...for now. A shame really and not the win Pandora calls it. It just helps the mid-sized VC-funded

Re:What about public domain music?

[afidel]

Actually SoundExchange is THE collection agency for streamed royalties in the US, even indie artists have to collect through them unless they negotiate other contracts which is very difficult to do as it involves lawyers and lots of paperwork to opt out of SoundExchange and they would still collect royalties through SoundExchange for any webcasters they didn't have direct agreements with.

Re:This is an outrage!

[bmo]

That would be ASCAP, not the RIAA.

"ASCAP protects the rights of its members by licensing and distributing royalties for the non-dramatic public performances of their copyrighted works. ASCAP's licensees encompass all who want to perform copyrighted music publicly."

http://www.ascap.com/about/ [ascap.com]

Got this email from their CEO (Tim)

[alexfeig]

I've been listening to pandora since it came out - I'm a huge fan. I got this email yesterday... pretty interesting. Apparently I like their free service *too* much:

I hope this email finds you enjoying a great summer Pandora soundtrack.

I'm writing with some important news. Please forgive the lengthy email; it requires some explaining.

First, I want to let you know that we've reached a resolution to the calamitous Internet radio royalty ruling of 2007. After more than two precarious years, we are finally on safe ground with a long-term agreement for survivable royalty rates â" thanks to the extraordinary efforts of our listeners who voiced an absolute avalanche of support for us on Capitol Hill. We are deeply thankful.

While we did the best we could to lower the rates, we are going to have to make an adjustment that will affect about 10% of our users who are our heaviest listeners. Specifically, we are going to begin limiting listening to 40 hours per month on the web. Because we have to pay royalty fees per song and per listener, it makes very heavy listeners hard to support on advertising alone. Most listeners will never hit this cap, but it seems that you might.

We hate the idea of capping anyone's usage, so we've been working to devise an alternative for listeners like you. We've come up with two solutions and we hope that one of them will work for you:

Your first option is to continue listening just as you have been and, if and when you reach the 40 hour limit in a given month, to pay just $0.99 for unlimited listening for the rest of that month. This isn't a subscription. You can pay by credit card and your card will be charged for just that one month. You'll be able to keep listening as much as you'd like for the remainder of the month. We hope this is relatively painless and affordable - the same price as a single song download.



Your second option is to upgrade to our premium version called Pandora One. Pandora One costs $36 per year. In addition to unlimited monthly listening and no advertising, Pandora One offers very high quality 192 Kbps streams, an elegant desktop application that eliminates the need for a browser, personalized skins for the Pandora player, and a number of other features: http://www.pandora.com/pandora_one [pandora.com].

If neither of these options works for you, I hope you'll keep listening to the free version - 40 hours each month will go a long way, especially if you're really careful about hitting pause when youâ(TM)re not listening. Weâ(TM)ll be sure to let you know if you start getting close to the limit, and weâ(TM)ve created a counter you can access to see how many hours youâ(TM)ve already used each month.

Weâ(TM)ll be implementing this change starting this month (July), Iâ(TM)d welcome your feedback and suggestions. The combination of our usage patterns and the "per song per listener" royalty cost creates a financial reality that we can't ignore...but we very much want you to continue listening for years to come.

Re:NO

[afidel]

Live365 was covered under last years agreement that capped fees at $50K/year for per station fees AFAIK so that would be an umbrella cost carried by Live365 and then you would be responsible for the per performance royalties.

Re:What about public domain music?

[someSnarkyBastard]

Jamendo maybe? http://www.jamendo.com/en/ [jamendo.com] IIRC, Jamendo is offered as a plugin for Rhythmbox in GNOME, free to stream and download, donations go direct to artists, all CC licensed works. All they need are listeners...

Will keep going until shutdown.

[VertigoMan]

As a DJ on a small shoutcast station I can tell you that we have no plans to stop broadcasting. We have a maximum capacity of 250 listeners, though I think we average around 70. Yep, we are going to stay on the air until they force us to shutdown. We might be small enough to fly under the radar for some time. I think that might be the case with a lot of the small home based stations.

$500, not $25,000, apparently

[Futurepower(R)]

Slashdot Error: The minimum is $500 [wikipedia.org], not $25,000, as the Slashdot story says. In all these years, the company that owns Slashdot has not learned the basic elements of editing.

I assumed, in my grandparent comment, that the Slashdot story was correct, and was shocked at the amount.

This government PDF file seems to say $500, also: Final Determination Of Rates And Terms, Docket No. 2005-1 CRB DTRA [loc.gov] (PDF) Quote: "(b) Minimum fee. Each Commercial Webcaster and Noncommercial Webcaster will pay an annual, nonrefundable minimum fee of $500 for each calendar year or part of a calendar year of the license period during which they are Licensees pursuant to licenses under 17 U.S.C. 114."

Error: $500, not $25,000, apparently

[Futurepower(R)]

They plan on using the power of government to enforce the agreement.

However, the Slashdot story seems to be in error. The amount should be $500, not $25,000, apparently [slashdot.org].

Re:Error: $500, not $25,000, apparently

[Skye16]

From Wikipedia:

The Digital Performance in Sound Recordings Act of 1995 and the Digital Millennium Copyright Act of 1998 together granted a performance right for sound recordings. As a result, copyright law now requires that users of music pay the copyright owner of the sound recording for the public performance of that music via certain kinds of digital transmissions.

From the Library of Congress, Section 3f2: ( http://thomas.loc.gov/cgi-bin/query/F?c104:1:./temp/~c104dVWooD:e844 [loc.gov]: )

`(2) In the absence of license agreements negotiated under paragraph (1), during the 60-day period commencing 6 months after publication of the notice specified in paragraph (1), and upon the filing of a petition in accordance with section 803(a)(1), the Librarian of Congress shall, pursuant to chapter 8, convene a copyright arbitration royalty panel to determine and publish in the Federal Register a schedule of rates and terms which, subject to paragraph (3), shall be binding on all copyright owners of sound recordings and entities performing sound recordings . In addition to the objectives set forth in section 801(b)(1), in establishing such rates and terms, the copyright arbitration royalty panel may consider the rates and terms for comparable types of digital audio transmission services and comparable circumstances under voluntary license agreements negotiated as provided in paragraph (1). The Librarian of Congress shall also establish requirements by which copyright owners may receive reasonable notice of the use of their sound recordings under this section, and under which records of such use shall be kept and made available by entities performing sound recordings.

Emphasis mine.

Re:$500, not $25,000, apparently

[Quantumstate]

If you had read the summary you might have worked out that the story is about a new agreement on fees. This means that your wikipedia article on what the fees have previously been is completely irrelevant. If you had then RTFA you would find that the summary is correct.

Re:What about public domain music?

[Attila Dimedici]

Actually that is not entirely true. Artists are free to enter into an agreement with a "broadcaster" independent of SoundExchange. The law only prevents artists from suing for copyright infringement those "broadcasters" who have paid the SoundExchange license fee.

Re:$500, not $25,000, apparently

[Futurepower(R)]

If you read the actual agreement, the government document to which I linked, you will see that the Wikipedia article is correct. I can find no mention of anything different than $500.

Re:Error: $500, not $25,000, apparently

[Alsee]

Slashdot story seems to be in error. The amount should be $500, not $25,000

There was a 2007 agreement setting the minimum at $500, and at the moment the Wikipedia article is reporting that OLD figure.

The linked story is on a NEW agreement, and it states the NEW minimum is $25,000.

The RIAA came to an agreement with the handful of largest webcasters to set government rules to exterminate the pesky small webcasters who have the annoying habit of playing a lot of non-RIAA indie music.

-

Re:Social corruption, or small-player boon?

[CodeShark]

Music is not melody? Where'd you come up with that line of BS? Check Wikipedia's definition, for example. The first paragraph of their
Entry [wikipedia.org] on the subject states that:

Music is an art form whose medium is sound organized in time. Common elements of music are pitch (which governs melody and harmony), rhythm (and its associated concepts tempo, meter, and articulation), dynamics, and the sonic qualities of timbre and texture. The word derives from Greek (mousike), "(art) of the Muses".

Me, I have trouble calling large parts of the techno and of rap stuff on the radio anything other than junk because they are specifically not very "musical sounding", aka having melody, harmony, articulation, timbre, texture, etc.
'
Course, it might also be that the "art of the muses" was supposed to INSPIRE, not degrade.

The latest version is still $500, not $25,000.

[Futurepower(R)]

You are correct, but the amounts don't seem to change. This is apparently the correct information, from the Proceedings page of the Copyright and Royalty Board (CRB) [loc.gov]. The link titled "Notice of agreement 74 FR 9293 March 3, 2009" is a PDF file: PDF [loc.gov]. See page 9303 of the U.S. Federal Registry:

4. Minimum Annual Fees

(a) In General. For each year from 2006-2015, an Eligible Small Webcaster shall pay annual minimum fees as follows:

(1) $500 for electing Microcasters, which shall constitute the only royalty payable hereunder by an electing Microcaster, except that an electing Microcaster also shall pay a $100 annual fee (the ''Proxy Fee'') to SoundExchange for the reporting waiver discussed in Section 6(a), and the provisions of Section 5(d) shall apply;

(2) $2,000, for Eligible Small Webcasters other than electing Microcasters that had Gross Revenues during the prior year of not more than $50,000 and reasonably expect Gross Revenues of not more than $50,000 during the applicable year; or

(3) $5,000, for Eligible Small Webcasters that had Gross Revenues during the prior year of more than $50,000 or reasonably expect Gross Revenues to exceed $50,000 during the applicable year. (b) The amounts specified in Section 4(a) shall be paid by January 31 of each year. (c) All minimum fees (but not the Proxy Fee for the reporting waiver for Microcasters) shall be fully creditable toward royalties due for the year for which such amounts are paid, but not any other year.