Senate Judiciary passes Performance Rights Ace

Nasdaq wire is reporting The Senate Judiciary Committee on Thursday approved a bill to require radio stations to pay royalties to performers when their music is aired. (Music First representatives have also confirmed this.)

While the bill is still a long way from passing, this is the most important hurdle it needed to clear.

I have mixed feeling about this. While I don't think it's fair that one group (terrestrial radio) gets to use something for free that another group (digital broadcasters) has to pay a large fee to use. (We pay 10-12% of our revenues because we're a "small webcaster", large webcasters like Pandora have to pay 25% of their revenues just to cover the sound recording copyright. (BMI,SESAC,ASCAP royalties for the underlying composition amount to another 4-5%).

The more commercial indie labels I talk to all want a reasonable royalty that's consistent across similar platforms (analog or digital). They value the exposure they get from the radio, but they're also looking for additional streams of revenue. I can understand that.

There are also plenty of netlabels and very indie-artist run labels who aren't to the stage of "maximizing revenues" from their portfolio of works, and are more interested in getting the free publicity that radio offers them. To many labels, the exposure is much more important than the royalty revenue.

My fear is that despite the intentions of MusicFirst, soon after this gets passed, the RIAA labels will band together to raise the rates paid by the over the air guys to match the levels paid by (and that some say is bankrupting) internet broadcasters.

And if that happens it will be the end of terrestrial broadcast music. The only thing on the FM dial will be talk shows, religious and spanish programming. And that will be kind of sad. And ultimately not serving to the music industry.

Hopefully, my fear won't come to pass.

You have to pay them to play their stuff?

SomaFM listener Robert hits the radio royalty thing on the head:

Beginning with iTunes and through that my intro to your excellent station, I was not listening to music at all. For me was impossible to listen too on a lot of levels. So you introduced me to electronica, remix jazz and the like. Well now I am looking at my purchased iTunes library with  1700 + songs. I was thinking; "You have to pay them to play their stuff?", they should be paying you for bringing them customers like me , where else am I or anybody else going to hear this. Personally I like listening to music again, Thank You!

Most of the indie artists we play feel this way, and many of the independent labels feel this way too. For the most part, it's the big labels with lots of back-catalog that don't see the value in radio play.

If the royalties we pay were much lower (in line with what is proposed for terrestrial radio), this wouldn't be a big issue. But considering that SoundExchange is now pushing for higher and higher rates, there isn't much hope of our getting a royalty rate on par with what the terrestrial guys will likely get.

Looks like our ultimate solution will be directly licensing tracks from artists and indie labels, and play less and less music from the big labels. (We already play less than 20% of our music from big labels, so that won't be too hard.)

Snow Leapord support for aacPlus

I just noticed that the Snow Leopard Quicktime player now plays aacPlus over http via a .pls file right out of the box. If you get info while playing an aacPlus stream, it doesn't say anything special to indicate it's aacPlus: just AC, 2 channels, 22050hz. But it really is playing back as a 44.1 stream (remember that aacPlus synthesizes all audio over 10khz).

Strangely, though, RTSP streams in quicktime are NOT playing back in aacPlus! The are played back only as AAC (and hence sound like they're 22khz files rather than 44.1.)

To try it out, open up http://somafm.com/groovesalad48.pls from within Quicktime Player. You don't get Metadata but you do get the stream in full fidelity.

Now try the RTSP version:

rtsp://64.202.98.91:554/gs.sdp

Also, seems that the new Quicktime X doesn't support QTL files anymore. (This breaks all the quicktime links on the SomaFM site, we can change them to .mov files).

PS- Rumor is tomorrow's announcement of iTunes 9 will include aacPlus playback. That would indeed be exciting is that was the case!

Yahoo Launch wins appeal ruling over license fees

Newsday: Online radio service wins ruling over license fees:

"In short, to the degree that LAUNCHcast's playlists are uniquely created for each user, that feature does not ensure predictability,' the appeals court said. 'Indeed, the unique nature of the playlist helps Launch ensure that it does not provide a service so specially created for the user that the user ceases to purchase music."

This bodes well for Pandora as well, rumors were circulating saying that the RIAA was going to go after Pandora claiming it was an interactive service as well.

Interactive services, or "Music on Demand" services, are not covered by the DMCA/CRB compulsory license, and have to be individually negotiated with the copyright owners. The original suit dates back to 2001 and originally was settled in Yahoo Launch's favor.

SoundExchange: Please make your website usable!

Dear SoundExchange;

Could you please redo your website to make it usable? That means, use HTML not Flash. Make it so there are actual URLs to different sections of your site. Make it so my back button works. Make it so I can increase or decrease the font size. Make it so you can actually find what you need on it.

It's a nightmare trying to get the forms we need (not to mention the information we need) off your site.

Thanks

FMQB: Radio Industry News, Music Industry Updates, Arbitron Ratings, Music News and more!

As reported in FMQB: "the musicFIRST Coalition filed a formal request with the Federal Communications Commission (FCC), asking them to investigate and take action against radio stations over reports that some of them are refusing to air music from artists who support the Performance Royalty. "

Specifically, they're targeting WMPH, a high school radio station in Wilmington, DE that mostly plays dance and electronic music. WMPH decided to boycott those artists that were promoting Music First. And this likely didn't affect their playlists at all, as most dance/electronic artists that get airplay on non-commercial radio are not affiliated with the Big 4 labels that are behind MusicFirst.

While I'm not opposed removing terrestrial radio's exemption that allows them to play any publicly-released sound recording without royalties, I also think that royalty should be reasonable. And I also think that stations that make licensing deals with the labels they play- labels that still want the promotional exposure- shouldn't be forced to pay a licensing fee for using recordings they don't use.

John Simpson at SoundExchange has repeatedly encouraged direct licensing in response to the CRB rates, including this quote from 2007: "they always have the outlet of going in direct licensing" (Royalty Week PDF)

So why is MusicFirst (of which SoundExchange is a supporting member and financial backer of) getting so upset when a broadcaster says it won't play material from artists who are proponents of this royalty?

You can't force broadcasters to play your music and then charge them for it.

Perhaps once more broadcasters start following the lead of WMPH, we'll start to hear more innovative music on the airwaves, and not just the same old derivative stuff that the big labels try to foist off on the public all the time.

And then maybe them, the labels will start to acknowledge the promotional value that radio exposure can give.

Some things broke, some things improved

When Apple release the new 3.0 iPhone software yesterday, we found a bug in the SomaFM iPhone App. Here's what happens:

Some channels don't get displayed in the listings, while others are being listed twice. Well, they're not really being listed twice, for some reason the wrong text and graphics is showing up in the wrong position in that list, so it will seem like some channels are listed twice. As a temporary work-around, you can get to missing channel by clicking on one of the duplicate entries.

We're working on fixing the bug now, but we have to wait for the approval process again, so it will likely be a week or longer before the fix is available in the store. Really sorry about that. You can vent your frustrations in our iPhone support area.

In better news, the iPhone 3.0 software brings better features to our WebApp. If you have the 3.0 software installed on your iPhone, you now have access to our aacPlus streams, which sound great over EDGE networks. We have aacPlus support for Groove Salad, Space Station Soma, Secret Agent, Indie Pop Rocks and Illinois Street Lounge right now, we're planning to get a couple more channels up real soon now (most likely Boot Liquor, Lush and Drone Zone).

We've also rolled out streaming on more Nokia platforms, including the 5800, and the new Palm Pre. I'm excited how the mobile platforms are really taking off finally! It's been a long time, but internet radio in your car and wherever you are is finally starting to become common.

Performance Rights Act (HR 848) Approved, on way to passing

The House Judiciary Committee approved the Performance Rights Act (HR 848) today, with 21 in favor, 9 not in favor.

It includes these rates that apply only to over the air broadcasts:

Any station that makes less than $100,000 annually will pay only $500 annually for unlimited use of music.

Any station that makes less than $500,000 but more than $100,000 annually will pay only $2500 (half of the amount in the original version of the bill) annually for unlimited use of music.

Any station that makes less than $1,250,000 but more than $500,000 annually will pay only $5000 (unchanged since the bill was introduced)) annually for unlimited use of music.

The bill also includes a statement of "Parity for all radio services" which establishes a “placeholder” standard to determine a fair rate for all radio services that will encourage negotiations between the stakeholders

As I've mentioned before compared to AM/FM broadcasters, Webcasters currently get a really bad deal: A webcaster with 1.25 million in revenue would be paying about $140,000 while an over-the-air broadcaster would only pay $5000. A webcaster with $250,000 in revenue would be paying $25,000 a year while an over-the-air station would pay 1/10th that.

SomaFM joined over 300 other broadcasters in signing a letter to Chairman Conyers and Ranking Member Smith [PDF] asking them to amend the Performance Rights Act to extend small broadcaster protections to small webcasters.

On the webcasters side, Rep. Zoe Lofgren of California spoke passionately and convincingly of this need to extend small broadcaster royalty limits to small webcasters. Unfortunately, a specific webcaster inclusion was not put in this version of the bill, so we'll need to do more lobbying of Congress to get it included in the final bill.

In related news, The Webcaster Settlement Act of 2009 was also introduced. The text is basically the same as the WSA 2008, the biggest difference being instead of a specific date for submitting deals for publication (a deadline which has already passed) the new bill gives 30 days from enactment to finalize deals.

Webcasters deserve the same deal as over-the-air Broadcasters

The terrestrial broadcast performance royalty bill, officially known as "The Performance Rights Act" (H.R. 848) [alternative link], will also be considered by the House Judiciary Committee today. Unlike webcasters, the rate would be $5000 a year for stations with revenues up to 1.25 million dollars. A webcaster with 1.25 million in revenue would be paying about $140,000 a year to play the same music.

Doesn't seem fair does it?

If this indeed passes, and there is a good likelihood it will, then we need to demand that webcasters who broadcast non-interactive radio streams should also get to pay those same rates.

Here's the relevant text from the bill:

SEC. 3. SPECIAL TREATMENT FOR SMALL, NONCOMMERCIAL, EDUCATIONAL, AND RELIGIOUS STATIONS AND CERTAIN USES.

(a) Small, Noncommercial, Educational, and Religious Radio Stations-

(1) IN GENERAL- Section 114(f)(2) of title 17, United States Code, is amended by adding at the end the following:

(D) Notwithstanding the provisions of subparagraphs (A) through (C), each individual terrestrial broadcast station that has gross revenues in any calendar year of less than $1,250,000 may elect to pay for its over-the-air nonsubscription broadcast transmissions a royalty fee of $5,000 per year, in lieu of the amount such station would otherwise be required to pay under this paragraph. Such royalty fee shall not be taken into account in determining royalty rates in a proceeding under chapter 8, or in any other administrative, judicial, or other Federal Government proceeding.

(E) Notwithstanding the provisions of subparagraphs (A) through (C), each individual terrestrial broadcast station that is a public broadcasting entity as defined in section 118(f) may elect to pay for its over-the-air nonsubscription broadcast transmissions a royalty fee of $1,000 per year, in lieu of the amount such station would otherwise be required to pay under this paragraph. Such royalty fee shall not be taken into account in determining royalty rates in a proceeding under chapter 8, or in any other administrative, judicial, or other Federal Government proceeding.'.

Dear RIAA and Big Media companies

Dear RIAA:

Start an ad campaign talking about how the RIAA is advancing the "art" of recorded music. Publish more technical standards for making MP3s and online music sound better. Define a standard for musical metadata and get all your member labels to commit to use it. Push for higher quality; easier access to music. Make your name synonymous with quality improvements to recorded music, rather than someone who sues kids and grandparents for copying a few songs.

In fact, you should spin-off your enforcement division altogether, and disassociate it from your name.

Dear Big Media:

Think about breaking yourselves up: reverse consolidation. You own lots of tiny labels that still have a lot of love and respect from the community. Let them leave the nest, and remove the "big media" stigma that's attached to them.

Bring back your old brands to keep older music alive and viable and make a point of showing how that brand (aka marketing label) is the guardian, the caretaker, of that music.

Just a thought... from someone who (as a child) used to love the big labels, and thought the RIAA was this great organization promoting technical and artistic excellence in records.

SXSW Road Trip

Merin and I decided to drive from San Francisco to Austin for SXSW. We're bogging about being on the road to SXSW and what we discover along the way.

We're also road testing internet radio (SomaFM on the iPhone especially) and finding that unfortunately there are too many places on the interstate in the southwest that it still doesn't work reliably.

In addition to the blog, we're posting some updates on SomaFM's twitter (be sure to follow @somafm!)

Rusty speaking at SXSW on DMCA issues

I'm speaking at SXSWi on "Rewriting the DMCA: How to Improve Section 114":

``This panel will discuss the ugly bits of the Section 114 compulsory license for digital/internet music usage, and what parts are in it for historic reasons that don't apply in todays world; as well as changes that both users of the licenses (webcasters) and content providers (artists, labels) would agree to.``

Tuesday, March 17th; 11:30 am - 12:30 pm Room Hilton E