New Webcasting Rates

[SorceryKid]

New Webcasting Rates Could Spell End
The Future or Fate of Independent Online Radio Rests in Judges' Hands

By Randall Krause

Official proceedings to determine the new license fees for U.S.-based Webcasters retroactive to January 2006 are drawing to a close. The trial-phase was completed this past November, and deliberations were held on December 21. It is now up to the Copyright Royalty Judges to evaluate the testimony submitted by all parties involved and enact a new statutory rate by March 4, 2007.

SoundExchange has urged that the license fees be raised to 30% of gross revenues or 0.08 to 0.19 cents per-track per-listener, whichever is higher. (This, of course, is in addition to the revenue-based fees already imposed by ASCAP, BMI, and SESAC for use of their repertory of musical works.)

Other participating industry groups -- including such major players as AOL, Yahoo!, NPR, and AccuRadio, and Digitally Imported -- argued that the rates were already excessive given the current marketplace conditions. Any increase would impose an unrealistic barrier-to-entry.

At present, eligible online music stations that elect the Small Webcaster Settlement Act pay a license fee corresponding to 10% or 12% of revenues or 7% of operating expenses. In other words, SoundExchange is proposing a triple-fold increase in the statutory rate, and one that would apply to all Webcasters regardless of commercial or non-commercial status.

There is a good likelihood that the revenue-based model now afforded by the SWSA will become obsolete. Individual broadcasters (in particular, those generating less than $50,000 per year) will no longer be provided immunity from the standard performance-based license fees endured by large commercial broadcasters. This could spell disaster for many.

The recording industry contests that stream-ripping alone imposes an unbearable economic risk, and therefore higher royalties are a necessity to compensate sound-recording copyright owners for potential losses in CD and MP3 sales. This ongoing sense of paranoia is particularly evident given that the recording industry still perceives Webcasting to have very little to no promotional benefit to performing artists.

Will March 4, 2007 spell the end for independent online radio?

_________
Randall E. Krause
Executive Director
Small Webcaster Community Initiative
info@smallwebcaster.org

[Greg_E]

Great.... We are just getting started and now it's all going to be gone. Guess I'll hold off buying any more servers since it looks like I might be able to re-purpose my Shoutcast server.

That is how it goes...

The cyclic inflation of every little connected thing within the economy...

Eventually it will be up to those three places to service the planet...

Then what..

Charges from the government on monopolization..



This could be interesting..

Really if it was up to these guys I think they would try to cap our ears, shut down our computers and the only way we would ever hear anything would be by paying to go see it live or by paying to un-cap our ears so we can hear a song at a time...

One thing to be there to protect the artist..its quite another for them to try equalize the profitability of those artist with more laws and higher rates.. The accusations will never stop and I believe tat somewhere someone else will draw the line before it absolutely goes too far..

I mean if you were the head of a corporation and you were sitting around looking for oles in your profitability and income, watching the numbers and the investment dollar based on your individual gains.. What would you do or attempt to do to raise that number... Not to mention the publicity you get, even on national news ... What a way to drop a name...

We all know what it is..we all know the elements involved..

[Greg_E]

There is one loophole, but it's a long road. Written into the laws is the option to contract with each record label to play their music. Might have to do this in the near future.

It's strange that ASCAP, BMI, SESAC don't seem to follow the same trend as the evil RIAA. The rates for schools are very reasonable, so I can't understand where the RIAA gets off???

[Greg_E]

BTW, what's the source of this info. I looked all over the SX site, but their content is woefully out of date.

[SorceryKid]

Reference the following article published in the Broadcast Law Blog.
http://www.broadcastlawblog.com/arch...y-march-4.html

--Randall

[Greg_E]

Thankyou! I recently started a thread over at the BSI forums about some of the things I had (recently) learned and wanted to keep on top of things.

Please note that I'm finding your posts extremely valuable while I navigate the mine field that is licensing fees.

What will it take to push your organization up to the level of being able to have a lawyer in DC fighting for our rights? I'm really dissappointed with IBS, they were very responsive right up until they received our payment, now they are gone! I like the thought of having a group of people working to help my stream stay legal, and fighting to keep the price a little lower.

[gameplaya15143]

Originally posted by Greg_E
navigate the mine field that is licensing fees

..and that's no understatement

The new rates aren't set in stone yet are they?

[Greg_E]

The judges need to vote on them (March 4), but from what that article said, the arguments are finished. We can now only hope for a fair deal.

[SorceryKid]

Originally posted by Greg_E
It's strange that ASCAP, BMI, SESAC don't seem to follow the same trend as the evil RIAA. The rates for schools are very reasonable, so I can't understand where the RIAA gets off???

I'm sorry for not replying sooner. I've been tied up with business obligations. I'll try to answer your question in simplest terms.

It is important to remember that for nearly 25 years, sound-recording copyright owners in the U.S. have been denied the exclusive right to public performance. When the Copyright Act underwent its modernization in 1976, the lobbying efforts of the recording industry could simply not overcome the political might of terrestrial radio broadcasters.

As a result AM and FM stations, as well as restaurants, nightclubs, theme parks, and so on were free to exploit sound-recordings in public performance -- royalty-free.

It was not until the passage of the DMCA in 1998 that record labels and recording artists could finally seek appropriate remuneration for the use of their creative works under statutory license.

Now, contrast this shortsighted mentality with many forward-thinking nations like Australia, United Kingdom, etc. who for decades (well before the popularization of the Web) already understood the importance of providing equal copyright protections in both musical-works and sound-recordings.

I personally do not entirely blame the Recording Industry Association of America for holding a grudge. Even despite its relative ubiquity, copyright law in the United States is still inadequate and in continual need of reform.

--Randall

[SorceryKid]

Originally posted by Greg_E
What will it take to push your organization up to the level of being able to have a lawyer in DC fighting for our rights? I'm really dissappointed with IBS, they were very responsive right up until they received our payment, now they are gone! I like the thought of having a group of people working to help my stream stay legal, and fighting to keep the price a little lower.

Thank you. I'm always glad to share helpful insights about the current political climate facing our community.

Our trade group will likely go public later this week with a newly defined mission and objectives. At that time, a press release will be available.

Initially, my hope is to join forces with several other coalitions working on similar but equally important fronts, including the Home Recording Rights Coalition and the Digital Media Association. For legal counsel, we will hopefully be employing the services of David Oxenford since already he has extensive experience representing small Webcasters on Capitol Hill. I also have some other inside contacts that will prove valuable in the fulfillment of our goals.

Ultimately, however, the success of our organization will be greatly dependent upon the commitment of our members. So, we hope that you will become actively involved since you clearly have the passion.

Thanks,

--Randall

[Greg_E]

I hate to say it, but it is only passion because I've put a lot of my unpaid time into our radio station, so I'd like to see it keep going for a while without getting shut down because we did something wrong. No one else in our department seems to be concerned about these matters, so I kind of had to take it on. I'd really much rather be soldering something than dealing with these licenses. I truly have a feeling that one of the licensing parties is going to get bent at us for lack of doing something, but I've laid out all the rules as I seem to understand them, including reporting, so someone else needs to pick that part up. I wish it could be trusted to the students to take care of the reports, but that just isn't realistic.

[SorceryKid]

Has your school sought the advice of an attorney? It seems that would be a justifiable expense for matters of a legal nature.

--Randall

[Greg_E]

Not yet, but we really should. I was hoping the IBS would help us out, after all that is part of why you pay them. I haven't taken the time to track down the PO and make sure they were really paid, but I'm pretty sure they have. And with the "new" reporting clause that happened in October, they probably haven't figured things out yet. Schools used to be able to pay an additional $25 to avoid the reports, but that seems like it has finally ended.

[SorceryKid]

I'm not too familiar with the IBS, but I do know they are a member of the National Association of Broadcasters, which supposedly provides various legal resources for over-the-air broadcasters as well as simulcastors. You might try contacting the NAB directly, as I'm sure they'd be more than glad to point you in the right direction.

--Randall

[Greg_E]

We are a member of the NAB and the SBE, they really don't care much for eductional needs. In fact they both worked to stop the micro FM class license which would have replaced the old class D license and changed the number of clear adjacent channels to open up more space. Like everything else, the are only interested in protecting th big broadcasters, any little people can go pound salt.

[SorceryKid]

Well, that's how things play in the world of politics and business I'm afraid to say.

Even the Small Webcaster Settlement Act was just a backroom deal struck with the RIAA by a group calling themselves the Voice of Webcasters that consisted of a mere thirteen online broadcasters all of which had their own personal agenda and none of whom were even representative of the small Webcaster community.

http://www.theregister.co.uk/2002/10..._of_net_radio/

--Randall

[rockouthippie]

Originally posted by SorceryKid
Even the Small Webcaster Settlement Act was just a backroom deal struck with the RIAA by a group calling themselves the Voice of Webcasters that consisted of a mere thirteen online broadcasters all of which had their own personal agenda and none of whom were even representative of the small Webcaster community.

I think you're griping about nothing. The deal ended up being a lot sweeter than anyone expected.

If the RIAA manages to take enough profitability out of internet broadcasting, then no one will do it. Then nobody gets paid.

Frankly, unless you are one of the established shoutcast stations, I don't think you have the chance of a snowball in hell of starting a monetarily successful shoutcast station today.

The RIAA thinks their content is worth more. The inability of broadcasters to make a profit shows they're wrong.

They can probably kill XM radio, shoutcast, et all. Then people just won't buy music or video.

I am just about at that point.

[dotme]

Originally posted by rockouthippie
The RIAA thinks their content is worth more. The inability of broadcasters to make a profit shows they're wrong.

Amen to that. Plus, if the revived PERFORM act passes this time around, it's possible that webcasters will also have to shell out cash for DRM-enabled streaming, in addition to already high hosting and royalty expenses.

If the reason for the need to increase rates is because they feel their revenue is down, why not maintain the current rates but increase enforcement. Seems counterproductive to me to squeeze more money out of those that play by the rules, while 90% of the music streaming that takes place on the web today isn't licensed at all...

Heaven help any independent webcaster that's trying to be legal and do anything more than simply break even each month.

[SorceryKid]

I think you're griping about nothing.

No gripes intended. It was merely informative, as I welcomed the passage of the bill. However, it goes without saying that certain major players (not the RIAA, but Yahoo! and friends) are the ones intent on squashing the small commercial Webcasters.

--Randall

[Greg_E]

Frankly, unless you are one of the established shoutcast stations, I don't think you have the chance of a snowball in hell of starting a monetarily successful shoutcast station today.

Well, our station is a not for profit college station, if they squeeze harder, we will just disappear. We never had hopes of making a profit, the only reason to have a stream is to give our students an outlet for their content. Thios station is part of our curriculum, not just a club, so we are teaching the DJ, station managers, etc. of tomorrow. With no outlet, the classes become somewhat meaningless.

Now I know what you are thinking, why not just buy a transmitter and go on the air. If it was that easy, we would be doing it. But the sad fact is that there are no open channels in our area. It's stream or nothing. That's why I am so concerned.

Now if RIAA wants to squeeze the for profit streams, I really don't mind. But squeezing the little guy doesn't make as many dollars. The previous small non commercial and educational webcasting settlement made a lot of sense to me. Even if they triple the yearly blanket fee, I'll grumble and pay up. But what they are pushing towards is farther than that. They really want a per listen payout, and that is too complex to keep track of, and probably a lot more money in the long run.

If the price and requirements get too high, our station will either vanish, or will only play music from the artists/recording companies that we can license for little or no money.

[WebRadioWorld]

Originally posted by rockouthippie
They can probably kill XM radio, shoutcast, et all.

I do not think it would kill shoutcast as shoutcast is international and a law passed in the US as little effect on broadcasters outside.

Canada for example has not followed in the footsteps of the US, actually very funny to call up SOCAN and ask for a price to send your internt stream into Canada.

So they might kill internt broadcasting in the USA, but I think then it will thrive in places like the UK (who are already pretty set in their ways) Europe, Russia and the new stations popping up in Africa (who I am sure could careless what hhappens in the US)

I dunno just my 2 cents on a sunny Saturday afternoon.

Cheers

[Goodtimez]

Everyone Prepare to move their stream source overseas! Hehe, but seriously though I think WebRadio is correct, it will be a blow to us streamers, but in most cases, you could just move your stream source over sea's, granted this may mean copying a bunch of music, but I am sure we will find a way to work around this legislation.

[fc*uk]

heh. anyone actually have a rough breakdown of where the majority of the streams in the yp originate from? Or is it pretty much split up evenly across the world.

I always thought that the majority were in the states. Specifically because, living in the states I was not blocked from the listening (a lot of servers in UK have been geolocked now) and streams that I could get into over seas seemed to buffer like mad...

[Greg_E]

Ummm, that locking technology only works in certain circumstances. If you have a link to the actual stream, most often the UK streams still work. If you go to the web page to listen, the browser will lock you out. There are of course ways around that too, but not for polite discussion.

[Jeeper One]

Hi everyone:

Originally posted by Greg_E

It's strange that ASCAP, BMI, SESAC don't seem to follow the same trend as the evil RIAA. The rates for schools are very reasonable, so I can't understand where the RIAA gets off???

Because the RIAA wants to make LOADS of $$$ at our expen$e. Why? Simple. To pay their fat cat executives the fat lofty salaries they make so they can in turn enjoy the fat lofty lifestyle they are ANYTHING but grateful to have.

I'd give anything to see the next "Katrina" wash all that away and knock these people down a few socialogical pegs. Maybe then, they'd be more appreciative and thankful for what they've got.

Then again, maybe not. They'll just simply buy another condo, yacht and/or whatever else they lost & simply move on (After writing it off on their taxes of course).

Okay, I've ranted enough now. But it felt good to get it off my chest.

Cheers

Pat (ala Jeeper One)

[RadioRevolt]

My thoughts:
Wtf is this Stalinist Russia? China? no, no it is not.

Down with the FCC, up with the people.

[Greg_E]

The FCC has nothing to do with this.

[cityboy]

Hope nothing goes away. I just spent the last several months funbling through the setup process. I'm totally new to webcasting, and I felt a great sense of accomplishment once my station was added to the directory, and I could send my stream into the ether. My compliments to the ones responsible for Winamp and the users who have contributed so much to the ongoing developement of same.

[ericthered]

Originally posted by Greg_E
Well, our station is a not for profit college station, if they squeeze harder, we will just disappear. We never had hopes of making a profit, the only reason to have a stream is to give our students an outlet for their content. Thios station is part of our curriculum, not just a club, so we are teaching the DJ, station managers, etc. of tomorrow. With no outlet, the classes become somewhat meaningless.

Now I know what you are thinking, why not just buy a transmitter and go on the air. If it was that easy, we would be doing it. But the sad fact is that there are no open channels in our area. It's stream or nothing. That's why I am so concerned.

You could also consider going on campus only. Using a microwatt transmitter that only covered the campus, or hardwiring to each dorm and having a smaller transmitter in each, it would only cover the campus, be unregulated by the FCC, and would allow students to listen in thier rooms over a regular radio. One school I went to operated this way in the 70s.

Another option is to see if the cable TV is on an on campus operation, or if the college has it's own local information station. You can work out a deal with them to be the music for that station, and just run a line down. Same goes if your campus has a TV station that doesn't run all day. At the last college I went to, our student run TV station only ran after 6 PM, so from 8-6 every day, we had a 2nd radio station besides our FM on that TV station. Only cost us a wire.

You could also run a wire to the student union and cafeterias, if they already play radio.

The beauty of that is for the DJ, they can't look at a shoutcast monitor and see there are only 3, or even worse, no listeners! I bet the DJs would feel more enthusiastic with an "invisible audience."

Of course, if you are a community or primarily commuter college, your milage may vary.

[fc*uk]

seems like a setup only accessable via the campus lan is a little more reasonable... block the outside world from it, the RIAA et al will never know about it and you can keep on doing what you are doing...

[Greg_E]

We already do the cable to everywhere thing, but having outside connection is fairly important. We're a community college, so most of our students commute each day. Legal micro power FM is a joke, not really very useful (been there, tried it), so I'll be building a legal micro power AM soon. Info on legal micro power transmitting can be found here http://www.part15.us/

[wildun]

This was posted on the Broadcast Law blog. Doesn't sound good.

Copyright Royalty Board Releases Decision - Rates are Going Up Significantly
The Copyright Royalty Board decision on the royalties for to be paid by Internet Radio stations for streaming music during the years 2006-2010 was released to the participants in the proceeding today. And the rates are going up significantly over the next few years. More importantly, especially for smaller entities, there are no royalty rates based on a percentage of revenue as were in effect for small webcasters under the Small Webcasters Settlement Act. Instead, all royalties are given as a per performance number, i.e. a payment for each song every time a listener hears that song

In a 100 page decision, the Board essentially adopted the royalty rate advanced by SoundExchange (the collective that receives the royalties and distributes the money to copyright holders and performers) in the litigation. It denied all proposals for a percentage of revenue royalty (including a proposal that SoundExchange itself advanced). The Board also rejected any premium for streams received by a wireless service, as SoundExchange had suggested.

The rates set by the Board for commercial webcasters, including broadcasters retransmitting their over-the-air signals on the Internet, are as follows:

2006 - $.0008 per performance

2007 - $.0011 per performance

2008 - $.0014 per performance

2009 - $.0018 per performance

2010 - $.0019 per performance

The minimum fee is $500 per channel per year. There is no clear definition of what a "channel" is for services that make up individualized playlists for listeners.


For noncommercial webcasters, the fee will be $500 per channel, for up to 159,140 Aggregate Tuning Hours (one listener listening for an hour) per month. Noncommercial webcasters who exceed that level pay at the commercial rate for all listening in excess of that limit.

The decision is subject to Motions that confidential information be redacted to the public, so it is not yet released for public review. A request for rehearing of this decision can be made by any party to the case within 15 days. The Board can also make technical corrections to the decision (not affecting the rate). The decision is to be published in the Federal Register within 60 days. Appeals may be filed with the US Court of AppeaIs in Washington, DC within 30 days of Federal Register publication. As this decision may well significantly impact webcasters, large and small, there is no doubt that more will be heard on this decision in coming months. We'll have more details on this decision in coming days.

[fc*uk]

*sniff* *sniff* *sniff*

yep. That's the smell of impending doom alright.

[rockouthippie]

Is that gonna kill Loudcity?. I didn't mind spending $50 to put up my temporary Christmas channel last year. $500 bucks, well that isn't gonna fly.....

Man, the record industry is gonna keep me from spending my money with them no matter what I do.

[wildun]

There's a good chance.. it will be.. appealed. I am setting up a website for broadcasters to pull together and fight this. The best way to combat this type legislation is for the people to speak out against it. I'll provide a mp3 for broadcasters to play outlining the loss of broadcasters due to associated costs and why. If we don't all work together we could see the end of the majority of broadcasters in the near future. I personally feel it's wrong and am willing to put forth an effort to try and stop it. Our biggest assest is our listeners. We need to let them know.

[fc*uk]

I could not agree more wildun.

Make sure you post your site when you have it put together in SHOUTcast discussions.

Let me know when you get that done. I'll definately support it.

[wildun]

Thanks fcuk. I'll post it there as soon as it is ready. I'm putting it out in other broadcast forums as well. We will literally need every webcaster large and small involved to get the word out and change this.

[MegaRock]

http://webcastersunited.com/forum/forumdisplay.php?f=28

If you are a broadcaster or a listener then take this VERY seriously. It appears if this is allowed to happen royalty rates will nearly triple and threatens to shut down the vast majority of internet radio operations from small webcasters to the FM conglomerates.

We all better get ready for one hell of a fight and I'll be damn if I go down without the fight of my life. I hope you feel the same way.

I am working to get banners and PSA's available for all webcasters. Time is of the essence on this one and if you don't take immediate action kiss this all goodbye. Forever.

[jwhalen]

thanks for spearheading this, Rob.

People had better take this seriously!