Monday, April 09, 2007

71,000,000 Blogs, 0 Radio Stations

We are perhaps as little as 45 days away from losing one of the greatest treasures the world has ever known, Internet Radio.

Even as I write this blog entry hundreds of Internet Radio stations are shuttering their streams. Faced with retroactive royalties in the millions of dollars, many private enthusiasts are facing personal bankruptcy.

These are all music lovers who wanted to share (legally) their vast collections of music with like minded music fans around the world. And, as a general rule, they shared music that is otherwise totally unavailable to the public, except through the lifelong collection of music.

While you personally might not be interested in Polka music from the 1930's or authentic folk music from the Ozarks in the 1920's or the music created by small theaters (and often individual organists) to play during silent films, these are all treasures that today you can hear with the simple click of a mouse.

It's more likely you would enjoy a radio station of all Celtic and Irish music, or all dance/techno/trance tracks or all Christmas music (in April).

However, the
RIAA and it's member major record labels see absolutely no value in any of these collections, except as perhaps a historical footnotes in a museum. And they greatly fear the exposure being gained by independent artists who can promote their own music on-line without the benevolent assistance of the RIAA.

The RIAA is outspoken in their desire to eliminate the small and independent broadcaster. The fact that they willing to kill an entire class of broadcasters is tragic. That they are able to do so through large Hollywood contributions to Senators and Congress members is frightening.

I want to encourage all my readers to go to the blog of legendary musician and Talking Head's frontman David Byrne and read his spirited assessment of the RIAA and their short sighted assault on Internet Radio: Your Government Working for You.

I would be remiss if I didn't point out that Byrne is a fellow broadcaster at LIVE365 which hosts my three Internet Radio Stations. Like me, Byrne might well be forced off the air by the Copyright Royalty Board decision.

I've edited Byrne's essay for both style, content and emphasis. I again urge you to read his essay as he wrote it on his web site. linked above.

Web radio is different than broadcast radio in that the hosting costs increase precisely as the listenership increases. With streaming web radio, information on the exact number of listeners accessing the stream at any given moment or period is available, and easy to obtain, unlike broadcast radio which is just out there and no one knows how many people are listening.

The more listeners you have the more you pay in hard costs — some server’s gotta host the stream. Of course stations like mine and the network of NPR stations that have no commercial revenue eventually run into a financial wall once that audience figure reaches a certain amount.

With royalties it gets more complicated. 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.

Web radio, however, along with satellite and cable services, does pay performance royalties — these are the rates that are being raised now. (If this discrepancy sounds illogical, it’s because it is.)

With the proposed changes the royalties can no longer be based on a percentage of revenue, but on a fee for each listening hour — how many folks are listening and for how long — and there will be a minimum fee per radio “channel”. So now there will be no distinction between a large-scale non-profit station (like KCRW or WXPN) and Z100. The threshold for non-profits is proposed to be 159,140 listening hours per month. Where did this bizarre number come from?

For perspective, on my web radio I get an average of about 40,000 listener hours per month. At present I pay small mechanical royalty fees that go to ASCAP, BMI and SESAC (presumably these dribble down to the artists whose songs I stream); performance royalties that get dispersed via a company called SoundExchange....

I pay about $2,000 a month, based on the above listening hours. That’s rent for an apartment for many people (at least in some cities.) I can afford it, I enjoy doing it, and people seem to like it, so it’s OK for me that I’m out of pocket.

I do however realize that I am in a special position — not just anyone can afford to start a streaming web radio service if it has this many listeners.

If this ruling goes through... It’s estimated that the per-play rates will put many webcasters out of business, all but the largest and most commercially successful.

For NPR stations it is a different story as they have wider listenership than I and would pay the same royalty rates as commercial broadcasters. KCRW estimates roughly that as this ruling is retroactive they would owe $130,000 in additional fees for 2006 and $237,000 for 2007. WXPN in Philly estimates $1,000,000. In some worlds this is not a big deal but as one can imagine many of these stations barely eek by as it is, so this could very likely shut down the webcasting side of many of them. That would be a shame, as these stations are the only source of, well, good music, alternative sounds and innovative and informative programming in the U.S.

It would be a loss for, well, democracy, as democracy depends on availability of many points of view untainted by commercial concerns and pressures. A truly informed populace, in other words.

It points to another victory for the oligarchs — the big 5 record companies and the media companies that own them. Count one more for the big guys.

Who is this agency that is proposing making this change? They are not an elected body — the Copyright Royalty Board is made up of a few people appointed by the Library of Congress Copyright Office. They used to be a group of arbitrators but since 2004 they are a group of judges. (I wonder if Gonzales, Cheney etc. have any pals in there?)

The new rates are being appealed — to join a petition (against the rate changes) or learn more about this, go to

It is exceptionally striking to me that one of the greatest strengths of the Internet has turned out to be the Seventy One Million ..... 71,000,000 .... voices of individuals around the world who write and publish their thoughts through blogs, journals, myspace and similar venues. That we would willingly lose the same diversity in radio broadcasting, trading it in for four or five huge corporate conglomerates like Clear Channel, is tragic.




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