Tuesday, April 17, 2007

Can't you play just non-RIAA music?

Kevin writes in and asks:
So my question is: many of the artists that are played on SOMA FM are independent or self-managed, not big-label and often no-label. Do you have to pay royalties for their music regardless of whether or not the artists say so?

The law in the US doesn't make a difference between small labels and the big RIAA-supporting labels. While the RIAA has a huge influence on law (they are a lobbying organization after all!) it doesn't just apply to RIAA labels.

As stated in Section 114 of US copyright law, the owner of the "sound recording" copyright must be paid royalties when their recording is played over internet radio. (Over the air broadcasters are exempt from this royalty). In almost all cases, if it's been released on a CD, someone other than the artist owns the copyright to the sound recording. Even the little labels. And often, an independent artist will release some of their music through a larger label (either on a compilation or through a licensing deal). The bottom line is that the little labels hope to make money on their CD releases (no one should deny them that!) and often that means making a deal with a larger label.

These deals are what make getting waivers from the copyright owners hard and often impossible. If a label were to grant us and many other internet stations an unlimited right to use their recordings over the internet, it would make their licensing deals with larger labels more complex. So the little labels aren't going to do anything that could ruin their chances of making a deal with the bigger label. That's just common business sense, and I think they're completely within their rights to do that. But it makes it very hard for use to get blanket waivers from indie labels and artists for airplay on SomaFM.

It also means that we would be spending all our time working out licensing deals and the music we play would be contingent on who we could make deals with. We would no longer be able to independently play the music we want to play for our listeners. In some ways it would be like another form of payola - there would be economic decisions affecting the music we play, not just artistic ones. Our mission is to be extremely independent and only play what we think is the very best music on SomaFM. Adding economic factors into our decision making process compromises our artistic integrity. (OK, that last sentence sounded pompous but I think you get what I mean.)

This is why internet broadcasters need a statutory license at a reasonable rate. Or better yet, have the exemption that AM/FM radio broadcasters get for their over-the-air transmissions extended to internet radio.


Anonymous John said...

While I can see the massive reduction in logging and paperwork a blanket license might provide, I feel that maybe this is a "where there's a will there's a way" type of situation.

How many labels does a station like "Groove Salad" deal with?

It seems to me the biggest losers out of this decision (apart from, obviously, the US Internet Radio Stations) are those Artists signed to small/independent Labels who are getting airplay via Internet Radio.

Surely these people should be motivated enough to start dealing directly with Internet Radio?

It doesn't sound like the small labels are getting any benefits at the moment from being part of SoundExchange. What do they lose by by-passing SoundExchange entirely?

April 17, 2007 10:06 PM  
Blogger Rusty Hodge said...

For Groove Salad, there are probably only about 300 different labels to deal with. But Indie Pop Rocks has a really deep playlist, over 5000 songs a month (probably more), from about 1000 different labels.

We've tried to get waivers from these labels, and it's not very easy much of the time. The marketing people at the labels want the airplay, but the legal people don't want to sign any deals that don't have revenue attached to them, and they especially don't want to sign boiler-plate legal forms.


April 17, 2007 11:12 PM  
Blogger Darrell said...

Hang in there Rusty. This new ruling is likely to kill StillStream, as it now exists, but maybe SomaFM is big enough that it can resist this outrage and get the law changed. It won't help me any but at least independent artists will have a fighting chance of getting some netplay.

April 18, 2007 9:45 AM  
Blogger Inboulder said...

I appreciate your situation Rusty, but I think expecting the government to perpetually regulate the major's licensing monopoly is counter productive over the long term.

Perhaps it's not as bad as it first appears, maybe soma.fm does have some leverage. You could offer a stock license, available as an easy online webapp. Something like the Radio Internet Airwaves agreement, it would grants the same licensing rights as radio stations; maybe minor labels would go for it. And if they don't, call them out, especially for stations like 'indi pop rocks', I don't think the irony would be lost on anyone.

April 19, 2007 3:23 PM  
Anonymous RickB said...

While I'll agree that this ruling can deal a major blow to innovation, I also wonder if there might not be an opportunity here. It was mentioned that SomaFM would have to have 6 ads per hour to pay for the royalties. Cripes, on-air broadcasters have 6 ads every freakin' song! If you had to resort to 6 or 7 or even 10 ads per hour, I for one could live with that. Really. I don't think it would impact listenership that much and in fact could actually turn into a revenue stream for SomaFM. Just a thought

April 23, 2007 7:03 AM  
Blogger Rusty Hodge said...

That's at least 6 ads an hour to cover the SoundExchange royalties.

And if we had commercials, we'd lose our listener support dollars, which cover our streaming and operational costs, and adds up to another 2 or more commercials an hour.

So that's at least 8 minutes of commercials an hour on average over a 24 hour period - as we're talking 60 second commercials, because that's about all that's available to internet radio broadcasters now.

The biggest problem for us is that if we take on advertisers, we can no longer be completely independent in our music choices. We would have to be more conservative in our music choices as advertisers are very picky about the kind of content their ads are placed into.

April 23, 2007 10:57 AM  
Anonymous Anonymous said...

Why don't the net radio stations just start their own label? Seems a lot easier than the licensing nightmare. Sign up new artists, pay them what they're currently getting, keep the rest. Get revenue from online sales for the stations and the artists. Screw the labels.

April 30, 2007 10:48 AM  

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