Monday, April 23, 2007

Senator Dianne Feinstein has the wrong numbers

Senator Dianne Feinstein is responding to letters asking her to support legislation helping internet radio, but her response sounds like it came right out of a SoundExchange press release:
Under the Copyright Royalty and Distribution Reform Act of 2004, Congress - at the behest of webcasters - created the Copyright Royalty Board which consists of three judges. By law, the judges are a venue of last resort and are required to periodically set rates for various statutory copyright licenses in the event that webcasters and copyright owners are unable to reach voluntary agreements. In the absence of an agreement, the judges set a rate designed to approximate the fair-market value that webcasters should pay to artists and performers for streaming their music for the years 2006-2010. The new rate that was established is less than a 5 percent increase of the rate in effect from 1998-2005.

Wow, talk about dancing around the numbers. For large webcasters which had revenues in excess of $5 million, or otherwise chose not to work under the percentage of revenue option in the Small Webcasters Amendment, the rates per song per listener increased only 5% from 2005 to 2006. But they go up 38% from 2006 to 2007. And more each year, until finally in 2010, they will be 150% higher (or 2.5 times more) than they were in 2005.

Year Rate Year to Year Increase Increase since 2005
2005 0.000762
2006 0.0008 5% 5%
2007 0.0011 38% 44%
2008 0.0014 27% 84%
2009 0.0018 29% 136%
2010 0.0019 6% 149%

The other thing she doesn't take into consideration is that the fact that small webcasters pay royalties based on a percentage of revenue, not per song per listener, but are no longer allowed to pay based on a percentage of revenue. These small webcasters (like us) are facing royalty payments that are several times our annual gross revenues! She goes on to say:

Although a few webcasters have recently claimed that the process was unfair, it was not arbitrary and allowed representatives from all sides to make their cases. The judges began the proceedings in 2005, and heard testimony from dozens of witnesses and conducted a comprehensive review of tens of thousands of pages of evidence submitted by all interested parties over an 18-month period.

Unfortunately, the hearings were largely in secret, and the " tens of thousands of pages of evidence" were not released. We have been told from parties to the negotiations that many of these pages of evidence included numbers from music download services, on demand streaming services, and other non-radio music services. Since radio is completely different than these on-demand and download stores, why should those numbers be used to set the rates for webcasters?

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4 Comments:

Anonymous Anonymous said...

This is just more of the Bush administration "pruning the buds, so the American Beauty Rose can bloom." This has been their goal since the first age of the robber barons. J.D. Rockefeller made it a point to concentrate all wealth in America in the hands of a few giant corporations who were smarter and better suited to run things because they were rich. This is just more of the same.
With Karl Rove working day and night to keep our elections from being legitimate, I don't know that there is much hope for America any more as a free country.

April 24, 2007 7:21 AM  
Anonymous liar said...

You have, I trust, sent these numbers along to Ms. Feinstein ?

April 24, 2007 8:08 AM  
Anonymous Marc said...

Hey "anonymous" ... Fienstien is a democrat, and fiercely opposed to, and critical of, anything the current administration does. Your allowing your Uber-Libness to cloud your judgement.

April 27, 2007 6:35 PM  
Blogger Rusty Hodge said...

In all fairness, I should remind Anonymous that the DMCA was passed by the Clinton administration. But copyright issues historically haven't been along party lines, there is a lot of disagreement within each party when it comes to copyright issues.

Feinstein historically sides with the large entertainment companies, so her response is not a shock.

April 27, 2007 7:09 PM  

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