Wednesday, February 18, 2009

Billboard: No Deal Reached For DIMA, SoundExchange

Billboard is reporting No Deal Reached For DIMA, SoundExchange:

The fact that the two parties did not reach a settlement comes as somewhat of a surprise. In the weeks leading up to the deadline, representatives from both parties expressed confidence a deal was imminent. However that changed early in the week, prior to the deadline, when talks fell apart during a conference call with all involved, according to sources. Exactly what issue sparked the fallout is unclear.
Doesn't this always happen at the last minute with SoundExchange negotiations with the internet broadcasters, both small and large?
"Pandora has threatened to shut down completely if it was forced to pay the full royalty rates, which raised the fees due to SoundExchange and other rights holders in some cases by 300%. RealNetworks previously said it would consider severely limiting the streaming radio options currently available to subscribers."
While I still don't think Pandora will completely shut down, they'll have to drastically change their service to a paid subscription service or one with audio ads every 2-3 songs.

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Monday, February 16, 2009

Other deals on the horizon?

While the NAB has a deal in place, others, including small commercial webcasters, religions and non-commercials, Pandora and possibly Real Networks (Rhapsody) also failed to come to a deal in time by the deadline of Feb 15th. DiMA, part of the Save Net Radio coalition and the organization representing clients like AOL, Yahoo and other large webcasters, has not announced a deal either.

There was some talk that because the 15th was a Sunday and the 16th was a holiday, that the real deadline is the 17th so there might still be a deal made.

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NAB and SoundExchange make deal.

Radio Ink and other journals are reporting that NAB and SoundExchange have made a deal:

"The new agreement keeps the per-performance rate structure but reduces the rates set by the Copyright Royalty Board for 2009 and 2010 by about 16 percent and establishes rates for 2011-2015. This year's rate is $0.0015 per streamed recording, moving up to $0.0025 in 2015. The CRB rates were $0.0018 for 2009 and $0.0019 for 2010."

For a station that plays music 24/7, and assuming 10 songs per hour, this equates to about $11 (in 2009) scaling to $18 (in 2015) per concurrent listener per month (or AQH persons) for their internet broadcasts... or in listener hours, 1.5 cents (2009) to 2.5 cents (2015) per listener hour per month for internet streams.

For a station doing 150,000 hours a month (205 average concurrent listeners per month) that would be around $2250 a month in SoundExchange royalties. 150,000 hours a month is typical of a lot of larger-market FM simulcast netcasts, to that's a typical number.

But we have way more listeners on net than that, and do more like 3 million listener hours (counting only US listeners). So SomaFM would be paying over $45,000 a MONTH at these rates. (Actually more, because without commercials, we play more songs per hour than an AM/FM station does.)

The only way this makes sense for broadcasters is if they're predominately talk or they're getting waivers in exchange for airplay of tracks.

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Thursday, February 12, 2009

SoundExchange to small webcasters: here's your one offer. Take it or lose it.

SoundExchange continues to try and strangle small webcasters like SomaFM, RadioIO, DI.FM, RadioParadise and others. They've offered us a not very good agreement... that among other things says we can't publicly complain about or discuss the agreement, and we can't talk to Congress about anything related to internet radio royalties or copyright law, and we can't participate in the CRB process for the 2011-2015 period.

They have us between a rock and a hard place. The deadline is Sunday, but for all practical purposes, the deadline is Friday, tomorrow.

Pretty soon I may not be able to post any of this in our blog, because we're going to get forced into an agreement that will limit our audience (and hence growth) and create a serious financial drag on us and other webcasters who aren't big enough to enter into direct licenses with the parties that own the copyrights to the music they play.

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Wednesday, February 11, 2009

Muzak Files Chapter 11 to Refinance Debt - NYTimes.com

Muzak Files Chapter 11 to Refinance Debt - NYTimes.com:

"Many of Muzak’s biggest creditors are music companies that license songs for use on Muzak playlists. While the company is known as the creator of elevator music, its business is now more focused on creating playlists for use in retail stores, installing professional sound systems and providing other services."
So even industry giant Muzak is being crushed by the high cost of licensing music.

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Tuesday, February 10, 2009

Sirius XM Prepares Bankruptcy Filing

Sirius XM Prepares Bankruptcy Filing - NYTimes.com: "Sirius XM Satellite Radio has been working with advisers to prepare for a possible bankruptcy filing in a move that could put pressure on the satellite company EchoStar, which owns a substantial amount of the company’s debt."

I'm sure the service will continue one way or another. The question I have is will they split off the programming side from the transport/distribution side. Much of the heavy debt was brought about by the technology side of the company, not the programming side. (Not to say that they didn't pay a fortune to get some of the programming they carry; they did... but maybe a spun-off programming division can make some more money syndicating that programming other ways- like they're doing with net radio now, and might even do with terrestrial stations.)

I'm also curious how bankruptcy will affect their royalty payments to SoundExchange.

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Monday, February 9, 2009

Does the New Administration change anything for radio royalties?

It seems that the RIAA, Recording Academy and MusicFirst think the new administration will be more on their side than the old administration:

Neil Portnow, CEO of the Recording Academy said last night at the Grammys:

“When it comes to protecting a musician's intellectual property and the right to earn a living, The Academy says, "Yes, we can!" And with a new Congress, we will champion the passage of pending legislation to ensure, that just like in every developed country in the world, all music creators are compensated for their performances when played on traditional radio.”

Historical datapoint: he DMCA was passed under the Clinton administration, and the DMCA is what has placed huge royalties on internet radio. The Performance Rights Act of 2009 will add those same royalties on over-the-air broadcasters that internet broadcasters now pay. While on one hand, I think it's great that there is equality for over-the-air (often referred to as terrestrial) broadcasters, but I'm concerned that rather than one fair, small royalty placed on everyone will actually end up being one really large royalty levied on all broadcasters, terrestrial and internet.

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SoundExchange Offers Settlement To Webcasters

Billboard is reporting that SoundExchange has made a new settlement offer to webcasters: but it's not the results of negotiation, it's a unilateral offer, and it's ultimately won't work for webcasters like SomaFM.

I'm quoted in the Billboard article saying:

"'We're disappointed with the offer,' says Rusty Hodge, founder of SomaFM. 'It effectively is worse that the previous [one]. Basically SoundExchange has done nothing to comprise with webcasters at all.'"

This hasn't been a negotiation. This has been a series of offers that gets worse each time. The original SWSA passed in 2002 was better than the current offer. The offer made about 18 months ago was the same as the current offer except that there were less strings attached; and because at that point, the offer only applied to SoundExchange member artists.

The current offer is just the same old offer with more restrictions and limitations. There has been no compromise. Every counter-offer webcasters make is met with a less-desirable offer from SoundExchange.

The really big issue for SomaFM is the traffic limits of 5 million monthly aggregate tuning hours. While that number sounds big, in January, we did did about 6.2 million. 5 million monthly tuning hours equates to 6720 average concurrent listeners. And the SoundExchange offer technically applies to US-only listener hours, which is about 50-55% of our listeners, so we're still technically under the limit. But this means that as we grow in the future we're going to hit that cap, and we'll be forced to limit the number of listeners we have.

The big RIAA labels are threatened by independent internet broadcasters and want to make sure that we're constrained to a niche market.

We're very disappointed with this so-called "offer".

The RIAA is still out to kill off independent webcasters like SomaFM.

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Wednesday, February 4, 2009

Conyers, Issa Re-introduce Bipartisan Performance Rights Legislation

This bill as it stands probably doesn't do much for webcasters, other than propose to take away the exemption for terrestrial broadcasters. I'm disappointed that it doesn't say that all forms of broadcasting will pay the same price, be it terrestrial or digital. Media Week has more on the story, including the response from the NAB, including this quote from NAB's letter to House Speaker Nancy Pelosi:
Three of the four largest record label conglomerates -- Universal Music Group, Sony Music Entertainment and EMI -- are internationally-based" and "although the big record labels have seen their revenues decline over the last decade, local radio broadcasters are not the reason the recording industry is losing money, and it should not be the industry to fix it.
 

Here's the text of the press release:  

WASHINGTON. D.C. – Today, House Judiciary Committee Chairman John Conyers, Jr. (D-MI), and Darrell Issa (R-CA), introduced The Performance Rights Act, a bipartisan measure that takes a first step at ensuring that all radio platforms are treated in a similar manner and that those who perform music are paid for their work.   

The legislation would amend an inequity in America's copyright law that exempts over-the-air broadcasters from paying those who perform the music that we listen to on AM and FM radio.  Webcasters, satellite radio providers and cable companies are presently required to pay for music they broadcast.   

"Beyond the fairness that this bill provides for performers, we have an opportunity to show the rest of the world that the United States practices what it preaches in protecting intellectual property," said Issa. "For the past 70 years Congress has ignored the constitutional mandate that we protect copyrights by completely exempting broadcasters from paying performers, while the vast majority of countries have no such exemption.  Our ignorance of intellectual property rights on this issue is a worldwide embarrassment and it must end now."   

"All those in the creative chain of musical production - the artists, musicians, and others who enrich us culturally - deserve to be justly compensated for their work," said Conyers.  "We have introduced the Performance Rights Act to ensure fairness so that any service that plays music pays those who create and own the recordings - just as satellite, cable and internet radio stations currently do. Working with the Senate, I hope that Congress may act quickly to pass this important legislation to level the playing field between different technologies and ensure rightful compensation to performers."  

  The Performance Rights Act is cosponsored by Reps. Issa, Berman, Waxman, Blackburn, Hodes, Wasserman Schultz, Weiner, Cohen, Nadler, Wexler, Peterson (MN), Johnson (GA), Schiff, Sherman, Shadegg, Jackson Lee, L. Sanchez, and Harman. Companion legislation was introduced Wednesday in the Senate by Judiciary Committee Chairman Patrick Leahy (D-Vt.) and former Chairman Senator Orrin Hatch (R-Utah).   

"In introducing the Performance Rights Act, we are sensitive to the needs of broadcast radio stations," said Senator Patrick Leahy (D-Vt.), Chairman of the Senate Judiciary Committee.  "I want to ensure that the performing artist, the one whose sound recordings drive the success of broadcast radio, is compensated fairly.  Our legislation, appropriately, permits noncommercial stations to take advantage of the statutory copyright license subject only to a nominal annual payment to the artists.  Similarly, we intend to nurture, not threaten, small commercial broadcasters.  Smaller music stations are working hard to serve their local communities while finding the right formula to increase their audience size.  I will continue to work with the broadcasters – large and small, commercial and noncommercial – to strike the right balance."    

"This legislation would ensure that musical performers and songwriters receive fair compensation from all companies across the broadcast spectrum - not just from Web casters, satellite radio providers and cable companies," said Senator Orrin Hatch (R-Utah), former Chairman of the Senate Judiciary Committee.  "It is an attempt to strike a harmonious balance between fair compensation for artists and a vibrant radio industry in the U.S."   

 

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