If you switch on your favorite radio stream and hear something unusual — people talking about Internet policy, ambient sounds, or nothing at all — you’re getting a glimpse of a world that could be here by next month. To illustrate the devastating effect new US royalty rates could have on online broadcasters, broadcasters large and small are making today, Tuesday, June 26, a “day of silence.” They’re not just being dramatic: online broadcasters from public radio stations to big services like Rhapsody have said they simply won’t be able to swallow the new rates. Small broadcasters don’t have the money, and big broadcasters can’t justify losing money to shareholders. (Worse, the rates are retroactive, so this could really damage already-beleaguered American public broadcasting.)
Here’s why the rates are bad, and how to take action today.
New Rules: Bad for Music Creators
As many readers do, I believe in fair royalties for artists. Getting royalties from online broadcasters is good for musicians. But musicians need a rate that makes sense for them. This makes sense: “Give me 50 cents for each dollar you make off my music.” This does not make sense: “Give me three dollars for each dollar you make off my music.” You can debate the former figure, but by the time you get to the latter, the other party is going to simply drop you. And this isn’t an exaggeration, either. AccuRadio, RadioIo, Digitally Imported, Radio Paradise, and 3WK recently illustrated the millions they would owe in CRB Royalties, which increase the percentage of their income that go to royalties from 11% to around 300%. Public radio is in a similar boat.
For just one example, see CDM’s interview with Pandora’s founder.
And that, of course, assumes royalties are the main source of income for musicians, when the opposite is true. I’ve talked to musicians informally — some of them pretty high up the food chain — and gotten the same response. Their biggest income source is often things like live tours. The knee-jerk response of the Interwebs to music income is oversimplified, it’s true — pundits with no experience in trying to live off their music will just say, “oh, it’s publicity, it should all be free.” In fact, I don’t think musicians should have to give up royalties if they don’t want to: they own the music. In this case, though, it’s the worst-case scenario: give up the royalties and the exposure to new audiences (because these outlets will simply go away rather than pay such punishing fees).
I think there is a lot of good debate to be had around how to charge for music, how to promote music, how to define and protect intellectual property. In this case, though, the issue is so clear-cut I feel obligated to advocate for one side. We can’t have any of those other debates if we start out with a crippling rate that makes no sense. And even if you want Creative Commons-licensed music that is royalty-free, that music will take time to flourish; if you cut off the ecosystem before it can grow, it’s in trouble, too.
The Solution: Internet Radio Equality
Fortunately, today is not the day to just sit around and get depressed. Today is a day for action. For the reasons above, and based on your feedback, I believe most musicians and composers will support fair rules for royalties.
If you’re in the United States, call your U.S. Representative and your two Senators, and ask them to support the Internet Radio Equality Act. The Act would protect webcasters from unfair rates, and set a rate that benefits music creators and webcasters alike. And even if you’re not, you’ll find plenty of good resources — and you can help spread the word on your blog / site to people who are in the US.
Contact Your Senators and Representatives Now to Save Net Radio
Day of Silence at Radio and Internet Newsletter (Lots of links)
H.R. 2060 Full Text and Cosponsors (Check out the Internet Radio Equality Act for yourself. If you agree with it, take action. If your Representative is on the current cosponsor list, thank them. If not, encourage them to cosponsor and to support the legislation.)
D-Day for Webcasters Terrific coverage and discussion at KCRW Radio Los Angeles
CDMers for Internet Radio Equality
If you’ve contacted your Rep and Senators, leave us a note in comments and let us know what they say. We’ll keep a running tally through the day of how things are going for pro-equality CDMers throughout the US. And if you’re from around other parts of the world, feel free to post links to your commentary on your site here.
As a performing muscian and writer of over 30 years standing I think there's an urgent need for a realistic approach to broadcast royalties. Demanding too much will kill the goose which lays the golden eggs and stifle new impulses. It's very likely to most benefit those who least need it and will reduce cultural diversity. Of course, this may be the idea.
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It's unfortunate that the savenetradio people don't mention that the bills they are pushing cut the current (not new) rates substantially, despite the fact that viable businesses are already operating under those rates.
Another thing I hear that bothers me is "we just want rates comparable to satellite", which I have seen in several articles and I believe on the savenetradio site itself. Small broadcasters that qualify for the percentage of revenue option currently pay 10-12%. Satellite pays 10%. The bill gives everyone a 7.5% of revenue option regardless of size. That is a bigger difference from satellite than the current (not new) rates (for small broadcasters).
You might then argue that large broadcasters don't get that benefit, but the bill also specifies that a per listener hour rate that is less than a third of what it is under the current rates.
The one good thing about the bill is that it changes the $500 per station administrative fee (entirely unreasonable for pandora or live365 type sites) to $500 per provider, which is much closer to reality, I think.
Don't get me wrong, the new rates are a disaster, but the proposed legislation is just a money grab in the opposite direction.
Who cares about giving money to artists. Why don't you do art for arts sake? I've been doing this since i was a kid. The whole idea of making money for your art is a capitalistic idiots nightmare created by people like rupert murdoch to make money.
i agree, this is a very good article. This fight should not be shouldered by the internet radios alone. One way or the other, though we may not have the passion to listen music from them, we will still be affected with this thought. i just hope that our voice will be heard..
Internet Radio Day of Silence…
Peter Kirn has a good article on the Internet Radio Day of Silence, which is today. There’s a huge service-killing hike in the pipe for web radio royalties.
I want to care about this but I don’t listen to web radio, I’m not…
[…] Today, I found an eye-opener article in the net written by Peter Kirn titled Today is Internet Radio Day of Silence; Join Musicians in Support of Fair Rates. As I read through the article, I realized that everything in this world has its own price. It is only now that it came to my understanding the need to support the Internet Radios with their battle for fair rights and price with the music that they deliver to us. It never came to my senses that these free online streaming radios, who’s doing the music industry a favor would pay too much of what they don’t deserve. This fight is not for Internet Radios alone but for every music lover and musician who gets nothing but the benefit of Free listening and promotion, respectively. Help us spread this unspeakable truth… […]
@ctx: I agree that that's troubling … but I can't find the 10% rate for satellite radio, only 7.5%. Where did the other 2.5% go?
In terms of what this means versus current rates, that seems unclear since you have to do the math to convert per-song rates to per-revenue; it definitely seems like a drop from the current rates based on many of the numbers RAIN is putting forward.
It does seem like a 10% income rate would be better. Of course, this is the bill we've got, and thanks to the fact that CRB has blocked all other legal recourse, locked out webcasters from the discussion, and set a deadline, it seems like it's either this bill or nothing.
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