Radio And Internet Newsletter reports: SENATE JUDICIARY COMMITTEE TO LOOK AT WEBCASTING ROYALTIES

SENATE JUDICIARY COMMITTEE TO LOOK AT WEBCASTING ROYALTIES:

"At a hearing of the Senate Judiciary committee this morning, Sen. Sam Brownback (R-KS) revived the issue of Internet radio performance royalties by proposing to add the Internet Radio Equality Act as an amendment to an unrelated copyright bill. Committee chairman Sen. Patrick Leahy (D-VT), while expressing his support for webcasters, countered by suggesting that the committee examine the issue in June in the context of broadcast radio performance royalties.

[RAIN will] have more details as they emerge. You can also check the SaveNetRadio website here: http://www.savenetradio.org."

I guess it may be time to go back to Washington DC again. Perhaps this time we can get some traction on that bill.

SXSW Panel: The Trials and Tribulations of Using Music Online

Be sure to come by the panel I'm on at SXSW: The Trials and Tribulations of Using Music Online.

This panel will discuss the usage of music for various online formats, including (but not limited to) podcasting, blog MP3 postings, internet radio, and vlogs (or other video). This session will address the different copyrights, licensing, and royalties associated with different types of use. Learn how and why you need to get copyright and/or licensing clearance for the music you use, and which clearances you need for which uses in order to operate legally. We will also discuss copyright royalties, royalty payments, and royalty collectors, including SoundExchange, ASCAP, BMI, and SESAC.

Should be fun. If you've never met Richard Bengloff (who heads up A2IM and is on the SoundExchange board and will be on this panel), he's a great guy who is amazingly knowledgeable about the music business, and genuinely cares about artists and content creators. Rich and I don't always agree, but I learn something every time I talk to him.

I can't wait. The other folks on the panel are all great as well (Brian Zisk and Chris MacDonald) as well as our moderator Elise Nordling (who besides programming and hosting Indie Pop Rocks works for IODA, an online music licensing company).

Room 10
Tuesday, March 11th
3:30 pm - 4:30 pm
South by Southwest, Austin, TX

CRB sets satellite radio royalty rates.

and guess what? They're lower than internet radio!

AP is reporting:

``Satellite Radio will pay a performance license rate of 6 percent of certain revenue this year for sound recordings played over its network, according to Copyright Royalty Board decision`` and ``also will pay a performance license rate of 6 percent of gross revenue subject to the fees for 2008, which will then increase by 0.5 percent annually before reaching 8 percent in 2012.``

Just to put that into context, Net Radio up until 2006 paid 10-12% of their revenue. And of course, unless we get a deal from SoundExchange that's codified by Congress, most net stations are going to pay what amounts to 300-600% of their revenues. That's right: 3-6 TIMES their revenues.

Perhaps it is time to start turning up the heat on Congress again to do something?

It's still Payola

From the Pittsburgh Post-Gazette:

In the past, the radio industry was plagued by payola scandals: Stations took money from record companies in exchange for airplay. Now, a group representing recording artists is seeking to turn the pay-for-play strategy on its head: It wants radio stations to pay artists and their record labels when the stations play their music.

What they don't mention is that record labels who want to promote artists will be able to waive these royalty fees if stations agree to feature their artists and releases. Suddenly, we have a legal form of Payola available again.

While I agree that it's only fair for broadcasters to pay reasonable royalties for the sound recording of the music they use, I don't think that exemptions should be allowed on a track by track basis.

With BMI, ASCAP and SESAC (who license the underlying composition of the song) you can't "opt out" of paying the royalty; you have to pay it no matter what. It should be the exact same way with the sound recording royalty.

SaveNetRadio Press Release on SoundExchange's proposed rates for Cable radio services

WASHINGTON, Nov. 5 /PRNewswire-USNewswire/ -- The SaveNetRadio Campaign today expressed surprise and hope upon learning that SoundExchange has formally proposed that cable radio services pay royalties between 7.25% and 7.5% of their revenue to sound recording copyright owners and recording artists. This proposed rate, effective from 2008 to 2012, is virtually identical to rates endorsed by more than 140 cosponsors of the Internet Radio Equality Act, but rejected by SoundExchange and the Recording Industry Association of America.

"Perhaps this agreement means that SoundExchange agrees that 7.5% of revenue is a fair rate; they just prefer that the rate not be legislated," Jake Ward, a spokesperson for the SaveNetRadio campaign said. "The Internet radio industry has never asked for more than royalty parity and an opportunity to grow their businesses to the benefit of artists, consumers, and even record labels. Perhaps SoundExchange's agreement that cable radio should pay 7.5% of revenue is a precursor to an equivalent offer for Internet radio services. It is hard to imagine that recording industry interests would continue to reject Congressional legislation and webcasters' efforts to set fair royalty rates while simultaneously agreeing to the same standard for cable radio services."

The Internet Radio Equality Act -- H.R. 2060 and S. 1353 -- would vacate the March 2nd Copyright Royalty Board's decision and set a 2006-2010 royalty rate at a competitive level with royalties paid by cable and satellite radio services (7.5% of revenue.) The bill would also change the royalty rate-setting standard used in royalty arbitrations, so that the standard applied to webcasters would align with that applied to cable and satellite radio.

For more information on the SaveNetRadio coalition visit http://www.savenetradio.org/

Internet Radio Hearing this Wednesday: Call your Senator and ask them to attend!

Just found this out a bit late:

This Wednesday morning (tomorrow), the Senate Commerce Committee will meet to hold a hearing on the future of radio in the United States. Representatives from broadcast radio, music industry, and Internet radio will testify before the committee about the current state of the radio industry and how royalty fees and other issues, like competition and innovation, affect the future of the industry. This is an unprecedented opportunity for Internet radio to explain its value to Congress, and we need your help to make sure they are listening.

Call the Senate switchboard at (202) 224-3121 and ask to be connected to your senator's office. If you don't know your Senator's name, just tell them your state, and they'l connect you.

Or look up their direct number on the senate site.

Here's what you should say:

• I am a constituent, and an Internet radio listener calling to ask that as a member of the Senate Commerce Committee, the Senator attend Wednesday's hearing on the future of radio.
• Internet radio has been a revolutionary force in the music industry since its creation and now empowers artist, consumers, and music lovers of every kind. The Copyright Royalty Board's unprecedented and ill informed decision to increase royalty fees for Webcasters by more than 300% has threatened to bankrupt this important industry and we need the Senator's help.
• The real future of radio for music lovers, artists, and the music industry as a whole is online. To save this industry and allow it to prosper, there must be parity and equality between webcasters, satellite radio, and broadcast radio. Today Internet radio pays a recording royalty fee more than twice that of satellite radio, and terrestrial radio pays none at all. To fix this unfair and inexplicable inequality, please cosponsor the Internet Radio Equality Act, S. 1353, pending in the Senate today.

Details on the hearing:

Full Committee Hearing on the Future of Radio

Wednesday, October 24, 2007, at 10:00 a.m. in Room 253 of the Russell Senate Office Building

Witness List

Mr. Mac McCaughan, Musician and Cofounder, Merge Records
Chapel Hill, North Carolina 27514

Mr. W. Russell Withers Jr., President, Withers Broadcasting Group
Mt. Vernon, Illinois 62864

Mr. Tim Westergren, Chief Strategy Officer & Founder, Pandora
Oakland, California 94612

Mr. S. Derek Turner, Research Director, Free Press
Washington, DC 20001

Ms. Carol Pierson, President and CEO, National Federation of Community Broadcasters
Oakland, California 94612

Ms. Dana Davis Rehm, Senior Vice President for Strategy & Partnerships, National Public Radio
Washington, DC 20001

More Details

Radio Royalty Update

Official Internet Radio Royalty Update: both sides still "in discussions". Nothing has changed there. The Internet Radio Equality Act is feeling doomed as congress is more interested in a long term copyright change.

I think what Congress is hoping is that everyone can keep "negotiating" long enough for them to pass the next set of laws. That forces net radio into an uncomfortable position- we're potentially assuming some huge royalty obligations.

I think we still need to put pressure on congress. But I think we've lost their ear.

More Bullshit from RIAA via SoundExchange

RIAA has SoundExchange issue press release to try and trick congress into thinking the royalty situation has been solved. Nice work guys.

The reason many people are signing is because they fear lawsuits from the RIAA. RIAA representatives have been calling webcasters and telling them if they didn't sign by Sep 15th, they would be operating in violation of the law. That's the only reason they signed. It's like a Sporano's episode.

The only way that webcasters can escape the high royalty rates is by signing this current agreement and only playing SX affiliated label music. This means less independent music, and more big label music. Which is exactly what the RIAA wanted.

This agreement is useless to SomaFM because it doesn't even cover half of the music we play.

Here's the release:

Small Webcasters Embrace SoundExchange Offer on Discounted Rate - September 18th, 2007

Individual Agreements Allow Small Internet Operators Subsidized Rates Through 2010

Contact Richard Ades or Gregg Perry 202.640.5894 news@soundexchange.com

WASHINGTON, D.C. - SoundExchange announced today that significant numbers of small commercial webcasters have signed agreements that allows them to continue operating through 2010 with essentially the same terms they have enjoyed under the Small Webcaster Settlement Act (SWSA). These agreements - sent in late August and signed individually with each webcaster - guarantee the same rates through 2010 that qualified small webcasters have received since 1998 for the use of sound recordings owned by SoundExchange members. The agreements are retroactive to January 1, 2006, which is the beginning of the current rate period, and continue through December 31, 2010, at which time new rates will be set either through negotiation or by the Copyright Royalty Board (CRB).

"Giving small webcasters more time to build their businesses with below-market rates is something Members of Congress wanted us to get done, and we have," said John Simson, Executive Director of SoundExchange. "We hope that these small webcasters will continue to provide innovative kinds of programming and a rich diversity of music."

Twenty-four small webcasters have already signed the agreements with others indicating they are in the process of signing. Some opted not to sign the agreements because their business models benefit more from the regular commercial rates (due to their size and the difference in minimum payments). Others did not sign because they operate via webcast aggregators who handle payments on their behalf.

Qualified small commercial webcasters who accepted the offer are now able to stream sound recordings of any and all SoundExchange members at subsidized rates. SoundExchange represents more than 28,000 recording artists and 3,500 record labels, including all the major recording companies. As part of the agreement, small webcasters (defined as those earning $1.25 million or less in total revenues) would pay royalty fees of 10 or 12 percent of revenue. The agreement also includes a usage cap to ensure that this subsidy is used only by webcasters of a certain size who are forming or strengthening their businesses.

"It's a sacrifice our members are willing to make at the request of Members of Congress and in order to give the smallest webcasters below-market rates for an additional limited time," added Simson. "This is a great deal for someone who wants to start or build a webcasting business."

# # #

Gee. 24 webcasters signed this. If you're a webcaster and signed it, I'd like to hear your reasons for signing it.

The usage cap is also a joke: if you average more than about 6900 concurrent listeners- about the audience of a single commercial station in a mid-sied market.

There are thousands of small webcasters. And only 24 have signed on? That tells you just what a huge problem this really is.

RIAA blocking IREA, holding up any settlements

I've heard "off the record" now from several sources that the RIAA has been the party behind a large mis-information push about the Internet Radio Equality Act.

One example is claiming that the biggest internet radio services are giant corporations. With the exception of Yahoo and AOL, most of the largest internet broadcasters - in terms of listeners - are all independent operations.

As Bill Goldsmith at Radio Paradise says:

SoundExchange has been challenged many times, by numerous people (including myself) to give ONE example of a webcaster currently online in the U.S. who could operate successfully under the CRB rate structure. They have never done so, because there are no stations that meet that criteria.

Instead, the RIAA brings up misleading statements of how most webcasters are all billion dollar corporations who could easily afford these rates, yet won't state facts. (I've asked members of the SoundExchange board as well as their news department to name the 20 major webcasters and gotten no response.) WHY? Because they can't name them because they don't have the facts to back it up.

Additionally, the RIAA is holding up settlements that could be enacted (and congressionally codified). Independent artist representatives on SoundExchange's board support a settlement that's favorable to independent internet broadcasters, but since the majority of the SoundExchange board is controlled by the RIAA and the musician's union (which represents session musicians performing on RIAA label recordings), nothing is happening.

Why?

It should be obvious. The RIAA wants to force all webcasters to make direct deals with the Big 4 labels, because that's the way the Big 4 labels get control back. They want to control what you hear over the air.

Don't let this happen.

Get on the phone right now and call SomaFM's home town representative, House Speaker Nancy Pelosi's office at (415) 556-4862 and ask Speaker Pelosi to demand that the RIAA come to a fair settlement with small webcasters. Remind her that otherwise, the RIAA will end up forcing small webcasters out of business through impossibly high royalty rates. Also remind her that the majority of the "Big 4" labels represented by the RIAA are foreign-owned, and will be putting American companies out of business.

Call her office now. You can leave messages after hours.

Rep. Mike Doyle on Mashups

Rep. Mike Doyle (Pittsburgh) thinks that Congress should explore ways that music "mashups" could be legally sanctioned.

Here's your chance, said Rep. Mike Doyle, a Democrat whose district includes Pittsburgh. "You always hear about big powerful interests coming to Washington and writing legislation behind the scenes. How would you design a bill?" The question was directed to the congressman's lunch companion—Gregg Gillis, who under the nom de laptop Girl Talk creates digital hip-hop tunes that mash up hundreds of songs. Gillis, 25, has been gaining fame for his feverishly inventive creations. But while his last CD made the best-of-year list in Rolling Stone and Pitchfork, he can't sell it on iTunes and lives in fear of a ruinous copyright lawsuit by a label representing one of the dozens of performers he's sampled without permission.

Full article here

SoundExchange starts new lobbying organization

SoundExchange starts new lobbying organization: the Music First Coalition to go after over-the-air broadcasters and remove the exemptions they were granted in the copyright act.

Mark Kadesh is the executive director of the Music First Coalition, a new lobbying coalition started by SoundExchange to go after over-the-air broadcasters for more music royalties.

Mark Kadesh, previously the Chief of Staff for Senator Dianne Feinstein, recently joined Bartlett Bendall, and they've changed their name to Bartlett, Bendall & Kadesh.

You can see why Senator Feinstein hasn't been too receptive to internet radio issues; her former chief of staff seems to have been in bed with the RIAA lobby.

And SoundExchange is one of Bartlett, Bendall & Kadesh's clients, as is the RIAA, MPAA and NBC Universal as well as Universal Music Group.

Their current and past clients include:

ALDRICH CONTEMPORARY ART MUSEUM
AMGEN, INC
APPLIED DNA SCIENCES
BICKEL & BREWER
BLACK WARRIOR - CAHABA RIVERS LAND TRUST
BOND MARKET ASSN
CALIFORNIA HEALTHCARE INSTITUTE
CITY OF CALERA, ALABAMA
COALITION FOR FAIR & AFFORDABLE LENDING
COUNTRYWIDE FINANCIAL
EASTERN HEALTH SYSTEM INC
EQUIFAX
FEDERAL HOME LOAN BANK OF ATLANTA
FEDERAL HOME LOAN MORTGAGE CORP
FINANCIAL SERVICES INSTITUTE
FIRST DATA
GENENTECH, INC
HUMAN RIGHTS CAMPAIGN
INTEL
LINCOLN CENTER FOR PERFORMING ARTS
LOVE TERMINAL PARTNERS
MAINE MEDICAL CENTER
METLIFE
METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA
MORGAN STANLEY
MOTION PICTURE ASSN OF AMERICA
NATL CENTER FOR VICTIMS OF CRIME
NBC UNIVERSAL
OPTIMAL GROUP INC
PMI GROUP INC
RESOURCES LEGACY FUND FOUNDATION
SOUNDEXCHANGE
SOUTH COAST AIR QUALITY MANAGEMENT DISTRICT
SOUTHEASTERN ECONOMIC ALLIANCE
SOUTHERN CALIFORNIA EDISON
UNIVERSAL MUSIC GROUP
WASHINGTON MUTUAL BANK
WESTERN UNION

(Source: US Senate Registrant/Client List and Senate Identification Numbers)

They also list their current clients on their web site, which includes the RIAA.

There is some lively discussion about this over at the Slyck Forums.

tricky lawyers and new media

Fred von Lohmann (on a mailing list, quoted with permission):

The history of the 20th century makes it clear, time and time again, that new media businesses are built by "tricky lawyers" helping their clients to plant a business in the lacunae and DMZs of copyright law. Broadcast radio, cable TV, jukeboxes, VCRs, MP3 players, are just some examples. In many of those cases, the legal rationales were far more outlandish than the DMCA rationales being invoked by Web 2.0 companies (in several cases, the lawyers lost the battle, but the businesses won the war).

Gonzales proposes new crime: 'Attempted' copyright infringement

`` General Alberto R. Gonzales today highlighted the Justice Department’s ongoing efforts to protect intellectual property rights, and announced a comprehensive legislative proposal entitled the “Intellectual Property Protection Act of 2007,” before members of the U.S. Chamber of Commerce Coalition Against Counterfeiting and Piracy.``

The Intellectual Property Protection Act of 2007 would:

Increase the maximum penalty for counterfeiting offenses from 10 years to 20 years imprisonment where the defendant knowingly or recklessly causes or attempts to cause serious bodily injury, and increase the maximum penalty to life imprisonment where the defendant knowingly or recklessly causes or attempts to cause death;

• Provide stronger penalties for repeat-offenders of the copyright laws;
• Implement broad forfeiture reforms to ensure the ability to forfeit property derived from or used in the commission of criminal intellectual property offenses;
• Strengthen restitution provisions for certain intellectual property crimes (e.g., criminal copyright and DMCA offenses);
• Ensure that the exportation and transhipment of copyright-infringing goods is a crime, just as the exportation of counterfeit goods is now criminal.

David Byrne on Net Radio

David Byrne and Danielle Spencer wrote a good article on the importance of internet radio.

I do want to clarify something that Danielle Spencer wrote:

While traditional terrestrial radio does pay songwriter/publishing royalties for the musical work itself, in the U.S. they don’t pay performance royalties for the sound recording under the rationale that airplay promotes the songs, which benefits the copyright holders. (This determination was mostly due to the radio industry lobbying congress not to collect these royalties.)

This is not historically accurate - this is the version of history that the RIAA likes to propagate! When the original copyright laws were written, Congress realized it was granting a legal monopoly to the copyright holder. So in order to balance out that government-given monopoly it also added provisions for fair use and public rights, such as copying for personal use, exemptions for libraries, and exemptions for radio broadcasters. Fair Use is These public rights are an important part of the American way. We are one of the few countries in the world that have it fair use and other public rights defined in our law. Like freedom of the speech, it is a foundation of our culture. But the RIAA wants to change this, and they're doing it by chipping away at the law.

Can you imaging the outrage if over-the-air radio suddenly was forced to pay huge amounts of money to play music? Music radio would go away, and become all talk radio. Payola would return in a new form: the only music you would hear on the radio is music that the record labels granted permission for broadcasters to play. The labels would then control the music that got played over the air to the public - which is something they have always wanted to do anyway.

Many people, including myself, think that this is all about control and not money. The labels want to control what music the public hear- they want radio to only be an extension of their marketing efforts. So if they can't bribe stations to play the music they want them to play, they went for legislation that says stations have to pay for everything other than the music the labels want them to play.