Copyright Royalties and Internet Radio

Copyright Royalty BoardInternet radio has become a great way to hear bluegrass in the last few years. I talk with more and more people who listen online. Now the RIAA has successfully convinced the Copyright Royalty Board (CRB) to adopt at "per play" rate for internet broadcasts. This will result in increased royalty fees for the use of master recordings by internet radio broadcasters.

The new rates are effective retroactively to the beginning of 2006 and continue to increase each year for the foreseeable future. The retroactive rate for 2006 has been set at $.0008 per performance. The rate for 2007 is $.0011, the rate increases to $.0014 in 2008, $.0018 in 2009, and in 2010 the rate will be $.0019.

This doesn’t look to bad until you realize that a "performance" is defined as "the streaming of one song to one listener." That little piece of news sheds new light on these rates. If a broadcaster had 1000 listeners, then the royalty due would equal $1.10 for each song played. There is a $500 minimum fee imposed per channel per year as well.

Non-commercial internet broadcasters are granted a reprieve with their fee being a simple $500 per channel for up to 159,140 aggregate tuning hours per month. Anything beyond that level will require they pay the commercial rate.

Based on our hypothetical 1000 listeners, that limit would equal each listener tuning in for a total of 159 hours per month. That’s over 5 hours a day, every day. But if you had 2000 listeners, that number would be cut in half.

The fees will be collected by SoundExchange, a digital music fee collection agency created by the RIAA.

These fees are separate from, and do not diminish, the fees due ASCAP, BMI, or SESAC for royalties due the songwriters for the compositions themselves. Before this announcement, a system was in place which varied the rate based on a percentage of gross revenues, which is similar to the way royalties are calculated for satellite radio providers XM and Sirius.

The potential fall out of this decision is a substantial increase in operating expense for bluegrass internet broadcasters who have large audiences.

I spoke with Jen Hitt, the Music Content Manager, for BluegrassCountry.org, and asked for her thoughts on this change in the way royalties would be calculated.

As an internet station with a global audience we are extremely concerned about the recent CRB decision and its impact on the future of BluegrassCountry.org given the decision’s projected crushing impact on providers of web-delivered music.

We feel that public internet radio enhances the musical community by connecting listeners with music that they love, music that is increasingly difficult to hear via traditional terrestrial radio models.

We hope that we will be able to move forward using technology that is readily accessible to our audience, while at the same time providing a model by which musicians can make a living and receive appropriate compensation for their art.

  • Hi all:

    At BluegrassRadio.org, we are very concerned about the new rate.

    Here is our situation. We are a part of Colquitt Community Radio, Inc., a Georgia not-for-profit (and soon to be 501(c3)) corporation. We were incorporated shortly after we launched BluegrassRadio.org in 2004. We have been paying out licensing fees to BMI, ASCAP and SECAC on an annual basis. These originations are fair in their fees to us and for that we thank them, and gladly pay these fees.

    Then there is Sound Exchange. This is a corporation that was formed by Congress to collect royaltys for the record companies and the preforming artist. Since we are a non-commercial webcaster, we are paying the $500 minimum fee for up to 146,000 listening hours and 0.0052 cents per TLH above that. Until recently we were averaging about 202,000 listening hours per month. this meant we had to pay Sound Exchange an average of an additional $300 per month. That has been tough for us. Now that we have grown our audience by hundreds, we are approaching 300,000 listening hours per month. The new rates allow us 159,140 hours per month for our annual payment (I have no idea where they come up with that number). Doing the math, we are over by 140,860 allowed hours and will be required to pay the commercial rate for those extra hours. This would average to about $1.50 per hour over the maximum allowed or $211,290.00 per month. WOW, you see where this is heading..??

    Yes, I do indeed love this music, the artist and this station, BUT unless the congress wakes up to what they have done, the mafia wing of the recording industry known as the RIAA will kill ALL internet radio. This may be what they want..!! They intend to make it impossible for you as a listener to Bluegrass Radio to hear any music “Free”. COME ON RECORD COMPANIES, you are chopping off the hand that feeds you..!! Bluegrass is a niche format at best and not many outlets to get the music in front of potential buyers. STOP THIS MADNESS..!

    Can anything be done about this? The recording industry had a HUGE lobby in DC and I do not know of a thing an ole country boy in South Georgia can do to stop this insanity.

    Folks, the future of Internet Bluegrass Radio is indeed in jeopardy.

  • Jon Weisberger

    A couple of things are worth pointing out here, the first of which is that it’s not the RIAA which is involved, but SoundExchange, an organization which was originally created by the RIAA but which has been independent for some years. SoundExchange represents not only major labels, but also independent labels as well as artists, including non-featured performers, a/k/a sidemen. The royalties received from webcasts go to all of these parties, including sidemen.

    With respect to the cap at which a non-commercial webcast’s flat fee ends and the per-play royalty begins, the 159,140 ATH (aggregate tuning hour) figure derives from a survey of streaming NPR stations conducted in 2004 as part of the negotiations for the previous webcast royalty rate proceedings. It represents the upper end of the average number of listeners to the bottom 80% of streaming NPR stations – an average of 218 simultaneous listeners in every hour in a month. The basic idea is that above this level a non-commercial station is competing at the level of commercial stations, and ought not to be given the competitive advantage of a discounted royalty rate.

    For non-commercial stations that exceed this cap – in other words, that have listenerships roughly at the level of the top 20% of the non-commercial webcasting market – the royalty rate will be $.0008 per play (after the $500 annual flat fee royalty is recouped). Figuring an average of 15 songs per hour, that’s $.012 an hour per listener – roughly a penny per hour per listener.

    Let’s assume for the sake of argument that the average listener is tuned in to such a station for 8 hours a day, five days a week – 40 hours a week, or roughly 160 hours a month. That listener then accounts for $1.60 a month in required royalties. That hardly seems unconscionable, and it seems well within the reach of any non-commercial big enough to be drawing listeners at this level to raise an average of $1.60 per month per listener – especially when we’re talking about bluegrass fans, noted not only for their devotion to the music but to their willingness to support it financially. Sirius and XM both have considerably more listeners than an average of 218 per hour, and those folks are willing to pay 6 or 7 times that $1.60 per month in subscription fees.

  • Let’s take a closer look at this math using as close to real numbers as we can. We’ll start with the ones Clyde provided us. He says they are close to 300,000 ATH per month. With the allocation of 159,140 for the flat rate, that leaves them with 140,860 ATH to pay for.

    I don’t know how many songs per hour they average, but let’s use Jon’s postulated number of 15 for our example. The rate this new CRB ruling sets for 2007 is $.0011 per song per listener. At 15 songs per hour that’s $.0165 for each of those 140,860 ATH’s Clyde needs to pay for. That sum is $2,324.19 per month in licensing fees that Clyde will now have to pay.

    Clyde currently does pay his bill, which he tells us has historically been $300 per month. So this new rate amounts to an increase of more than 600% in his monthly royalty expenses.

    Ouch!

  • Jon Weisberger

    Actually, Brance, if I understand the CRB’s determination correctly, a non-commercial webcast exceeding 159,140 ATH per month would be responsible for paying the 8/100ths of a cent per play royalty not on the plays constituting the excess, but on all plays – though it would be allowed to recoup the initial $500 flat fee first. So taking your example, that would mean a royalty fee closer to $5000 per month than $2324.

    But while the increase may be large, the (or at least a) question to be asked is, increase from what? The CRB’s determination suggests that it’s an increase from an artificially low rate that has essentially required copyright holders, including performers, to subsidize webcasters, including (but not limited to) non-commercials – and though they’re the ones who are supplying the most essential element of those webcasts (the music), they’re the only ones who have been so required.

    But back to the numbers. If we stick to the 300,000 ATHs of listening per month, and figure 15 songs per hour, that yields an approximate $5000 a month royalty bill, as we’ve discussed. But that royalty bill is being generated by some number of listeners. If all listeners are listening 24/7 every month, there would be 416+ of them, but that’s not very likely . If you figure that listeners are tuning in for an average of 4 hours a day, 5 days a week, then there would be an average of 15,000 of them; if they’re tuning in for twice as long – 40 hours a week – then that would work out to 7500 of them. That means that the royalty works out to less than a dollar a month per listener.

    Is it really unrealistic to ask webcasters to monetize their listening audience to the tune of less than a dollar a month per listener? Think of the millions of people who contribute to non-commercial TV and to non-commercial terrestrial radio to the tune of considerably more than a dollar a month; think of the hundreds of thousands of subscribers to satellite radio, who are paying 10 times that in subscription fees; think of the millions (if not billions) of dollars spent on non-commercial radio and TV by underwriters every year. In light of that, these royalty rates don’t seem out of line at all.

  • Barry

    Since you don’t think it’s out of line for the RIAA to charge these new rates I would like to know if the songwriters are going to get a raise from 9 cents a song? This is what this is supposed to be about, right? The artists and songwriters?

  • Jon:

    With all due respect, your math is a bit fuzzy. I will rely on the calculations of the attorneys that have indeed read the entire ruling and have advised us of our situation. Also, your assertion the we, or any other Bluegrass Music internet stream, is somehow rolling in money is also incorrect. Our monthly income via donations is less then $1000. The so called “public” radio and TV stations are professional beggars and we are not and will not become one.

    What I will be forced to do is cut the amount of people that can connect and listen to keep our TLH’s below the minimum. This will be a hard decision to make after we have worked so hard to grow our audience to what it is today; the most listened to Bluegrass stream online. This will be like McDonalds closing their doors at noon because that have to mush business.

    I truly do think that these artists deserve to be fairly paid for their work. I’m just not sure that internet radio and not Clear Channel and other large broadcasters should take the entire hit. Do you realize that these huge broadcast companies pay NO royalties? Where is that fair.

    Every day I get several CD’s from bands that want us to play their project on Bluegrass Radio. For the most part, we do play them. Should we ask them to pay us for that? NO..!!
    Should we ask the record companies to pay us for playing their artist? (BTW, Payola laws do not apply to internet radio). But somehow you see it is fair for us to pay the record company. I find that ridiculous.

  • As Jon pointed out, the ATH number they came up with is based on figures from NPR stations taken in 2004. In internet years that makes those numbers antiques. I would wager to guess that most NPR stations have considerably more online listeners today then they did 3 years ago. And probably not that much more financial support.

    If you want to insist that these new royalty rates are reasonable, then you’ll have to live with many internet broadcasters taking the path Clyde has indicated and limiting their stream, or quiting altogether.

    That won’t amount to any more royalty dollars reaching the pockets of artists, just fewer people listening to the artists’ music. How is that a good thing?

  • One more thought.

    Assume, for the sake of argument, that you truly believed this new rate to be reasonable. Is the implementation reasonable?

    If the numbers Jon and I have arrived at are correct they amount to an increase of over 1000% in monthly royalty payments for Clyde. Clyde has other numbers provided by his attorneys and those numbers are even worse.

    Would a “reasonable” business practice be to increase rates that much at once? Or would it be better to gradually increase them, giving broadcasters time to figure out a new business model, raise additional listener support, or raise their own advertising prices if they are a commercial entity?

    The CRB, SoundExchange, and the RIAA have not done that. They have raised the rate 1000% or more at once. And what’s more, they have made it retroactive to the beginning of last year (yes, it’s a slightly lower rate for last year, but it’s still a rate hike). That means not only will Clyde’s monthly bill go up over 1000%, he’ll also be faced with a large cumulative bill for last year. How is he supposed to cope with that?

    It doesn’t sound reasonable to me. It sounds more like a plan to put Clyde, and others like him, out of business.

  • Jon Weisberger

    I am truly shocked to learn that bluegrassradio.org’s devoted bluegrass listeners are collectively unwilling to spend even $1000 a month – at 300,000 ATH, that’s 3/10 of a cent per hour *total* – to listen to bluegrass. That suggests to me that while having fewer of these people listening to the artists’ music might not be a good thing, it probably won’t be a bad thing, either; where is the evidence that these are folks who are willing to spend any money on bluegrass?

    Clyde, you may look at fundraising by non-commercial stations as “begging,” but if you’re not “begging” listeners to support the music that they’re enjoying, then you’re “begging” copyright holders – the ones who actually make that music – to support your listeners’ entertainment. No matter how you slice it, unless you are going to pay all costs out of your own pocket, non-commercial means you’re going to be “begging” somebody.

    Brance, the fact is that webcasters have been asking for copyright holder royalties to be kept artificially low in order to “figure out a new business model” for years and years and years, and every time an impartial body has been asked to look at the situation – whether it’s the Congress that originally passed legislation, the courts, the CARP or the CRB – it has come down largely on the side of copyright holders. Webcasters have acted over and over to delay the implementation of royalty payments, and then complained when they’re asked to pay them retroactively; even a reasonably smart webcaster should have been able to see the trend, or at least the possibility, and given some attention to “figuring out a new business model” and setting some money aside for retroactive royalty payments along the way. This isn’t something that came out of the blue.

    At the end of the day, this new royalty rate is still 8/100ths of a cent per play, or roughly 1.2 cents per hour per listener. If a business can’t generate that kind of income, whether through advertising, subscriptions, underwriting, contributions, or whatever, then why should it be considered a business rather than a hobby? And why should copyright holders be the *only* ones to subsidize that hobby? I’m guessing that bluegrassradio.org doesn’t get to avoid paying its electric bills, or get to pay an artifically low flat fee for electricity regardless of how much it uses, or get to pay a percentage of its revenues for electricity instead of paying a usage rate. I’ll bet the same is true with respect to its internet connection, its software, its computing power – it’s paying market rates. Why are those who are providing what the service is supposed to be all about – the music – the only ones expected to play by different rules?

    Now, I will say that I think it is, indeed, unfair that terrestrial-only broadcasters are exempt from paying royalties to SoundExchange (though, of course, their webcasts aren’t), and I think that exemption ought to be ended. But on the other hand, satellite radio services aren’t exempt, as commercial services they pay the royalty rate from the first listener (as opposed to small non-commercial webcasters, who pay a flat fee up to the ATH cap), and they have gotten hundreds of thousands of subscribers to pay monthly fees far in excess of what will cover *all* their royalty payments, including to SoundExchange. So it’s not like it can’t be done.

  • Jon, in response to your first paragraph above, I listen to Pandora, or BluegrassRadio.org, or any number of other internet broadcasters from time to time. Am I willing to pay for that service? Probably not. Given that option I’ll just listen to music I’ve already paid for and have in my iTunes library. Of course that means I won’t be hearing music I don’t already own. But apparently you think I’m to cheap to pay for it anyway and don’t want me for a listener. Your loss…

    Finally, my question is this. Is radio no longer viewed as a promotional tool for your music, but rather as a revenue stream? And if so, what if they won’t cooperate? What if they just stop, or switch formats to talk or sports or something music free? Are you willing to accept 0% of nothing and be happy with that?

    As I said in an earlier comment. If you believe this new rate to be reasonable, which you clearly do, then be prepared to live with the fact that many, if not all, internet broadcasters will cease operations.

  • Jon Weisberger

    Pandora’s a commercial webcast with advertisers, so they don’t need – though they might want to adopt – a subscription model. As I’ve pointed out before, hundreds of thousands of people subscribe to satellite radio when they could be listening to terrestrial broadcasts or webcasts for free; tens of millions of people pay for cable TV when they could view broadcast TV for free. One size doesn’t fit all here. If you stop listening to webcasts, that doesn’t have to mean you won’t be hearing music you don’t already own. Did you not hear music you didn’t already own before webcasting came along?

    With respect to radio as a promotional tool, I guess I’d say that promotion and revenue generation aren’t mutually exclusive. In many parts of the world, where broadcasters have been paying performance royalties for years – and making a profit, by the way – radio acts as both. T-shirts, bumper stickers and other kinds of merch act as both.

    If webcasters can’t find business models in which 8/100ths of a cent per play spells the difference between profit and loss, then perhaps webcasting’s not a viable business. There’s no law that says it has to be. My bet is that if the current crop of webcasters can’t figure out how to make a profit (or, in the case of non-commercial webcasters, break even) while paying royalties for the recordings that are their core product, another one will come along.

  • Barry

    I still would like an answer to the question of will the songwriters be getting a raise from 9 cents a song? Isn’t this rate increase supposed to be about the music? How is there music without songwriters and composers? Can you answer this Jon? And if webcasts are forced to shutdown or cut back doesn’t this negatively effect songwriters by not getting their songs played as much? I think this is just anoter example of the government ruling with lobbyists that are after one thing. More money for the already rich.

  • Jon Weisberger

    Barry, I think you’re a little confused about songwriter royalties. The $.091 rate (which, by the way, just took effect recently, up from $.08x – can’t remember the fraction) is the statutory mechanical rate for phonorecord copies. It has nothing to do with airplay royalties.

    I would also argue that the SoundExchange royalty isn’t “more money for the already rich.” In fact, it is the only royalty of which a part goes to “non-featured artists” – that is, sidemen, session players, etc., in addition to featured performers and record labels.

  • Barry

    Thanks for the reply. It just sounds fishy to me. I would hate to lose the internet bluegrass radio, especially there is no radio station in my area that plays bluegrass. At least that I can pick up plain enough to listen to without all kinds of interference. Before you say that I should be willing to subscribe and pay a monthly fee let me say I buy enough CDs to make up for a subscription. A lot up and coming bands now depend on the internet to advertise their music and may lose sales if the stations are forced to shut down. What about those bands? Or will they be forced to rely on the big labels to publicise them?

  • Hi Jon:

    Although I feel your thinking is flawed, I do respect it.

    The amount of money donated to our cause just pays the cost of the stream hosting only, nothing else. No advertising, no web hosting, and no web page maintenance. The licensing fees have been paid by me. You can see why I’m very concerned about the rate increase. This would not be possible if I did not own and run a successful business. I really do not want to get into ‚Äúbegging‚Äù to support our cause.

    Here is what I have decided to do until Sound Exchange wakes up from it’s comma, Effective today, I have reduced the available Window Media listening slots to only 200. The iTunes (shoutcast) will remain at 500. This should keep me under the “magic” number of TLH’s for the month. This is the only way I can continue to stream this music I dearly love.

  • I agree that all parties involved with the creation of the music need to be paid for their efforts – songwriters, sidemen, and artists – I just don’t think that this is going to accomplish this in the end. I question whether any record label will go back and give money collected to a sideman on a project who agreed to record the project for an agreed upon amount.

    The vast majority of artists, especially in niche markets like Bluegrass or Gospel music, don’t make a living from CD sales due to smaller markets and, in many cases, contracts that favor the record label (which is a whole other topic, I realize.). As Brance said, there was a time when this was considered a promotional tool. And to take it a step further, it could be argued that the survival and eventual “Bluegrass boom” during the folk revival would not have occurred had it not been for the then college students who were allowed to set up tape recorders in front of the stage for the purpose of passing on the music to other students.

    I don’t think it is coincidence that the “attack” on Internet radio comes at the same time as the “pre-litigation settlement” letters went out to colleges and universities.

    In my opinion this isn’t about Internet radio at all, but rather an industry that is historically slow to change and they are finding it easier to sue now and figure out how to adapt later. We have seen the same kind of things for many years (the radio boom, the home cassette recorder, etc). The root of the Internet radio issue is the industries belief that if you stream music, everyone will copy the songs from the stream and they won’t buy CDs. They take (or try to take) the issue back to music piracy. I would go out on a limb and say a huge majority of people who listen to any form of streaming music doesn’t even know how to copy a song from a stream. Sounds like a lot of trouble to go through to me and I would rather have the CD or legally obtained digital copy of the song myself.

  • Jon Weisberger

    I agree that all parties involved with the creation of the music need to be paid for their efforts Рsongwriters, sidemen, and artists РI just don’t think that this is going to accomplish this in the end. I question whether any record label will go back and give money collected to a sideman on a project who agreed to record the project for an agreed upon amount.

    Eric, that’s not how SoundExchange royalty payments work. As long as each party is registered with SoundExchange, its share – the recording copyright owner’s, the featured performer’s and the non-featured performer’s – is paid directly to them by SoundExchange. For more information, see http://www.soundexchange.com .

  • ryanfbaker

    As most people in this thread seem to have a pretty high music business IQ, I would assume and hope that you all have read Frederick Dannen’s “Hit Men”. This detailed all the ‘legalized’ payola that saw the rise to power of the independent promoter. These people, as detailed in the book, are quite often ruthless extortionists, and while they no longer all look like two-bit mafia thugs, this arrangement of “Pay For Play” is still the rule of law when it comes to radio airplay.

    Spitzer’s recent crackdown notwithstanding, these independent promoters still have an enormous amount of clout on the business and make lots and lots of money. With this money comes lobbying power. Now, I’m not at all sure that they were active lobbyists for this legislation, and I don’t know how much coordination they officially do with RIAA lobbying efforts, but take a step back for a moment and think about how likely it is that they had something to do with it.

    Here’s what these fat cats are thinking. It’s no secret that the popularity of terrestrial radio is waning — has been since TV started, of course… most stations have become part of a system that has a major credibility problem. As wireless broadband becomes readily available in all metro areas (as it will be in less than five years), one can easily predict how the technology will adapt. Car manufacturers will be offering standard stereos that will allow browsing of and listening to thousands of Internet radio stations. You can be sure the Apple folks will have an IPod to take advantage of wireless broadband (it’s happening soon).

    The popularity of Internet radio will explode. The 159,140 non-commercial ATH will seem like nothing… which asks the question, does the legislation account for the guaranteed increase in listenership that places like bluegrassradio will experience in the boom? (I don’t know the answer) Once people find they have this alternative, they will tune in. And, they won’t be contributing to the site. The only sites that will survive are the ones that are run by the clearchannels of the world, and the ones with whom the infamous “independent promoters” are drinking martinis with. Follow the money, folks….

    I love the fact that musicians, especially people like Jon who do a lot of work as sidemen, are getting royalties through the SoundExchange system. However, if you think the CRB pushed this edict through so that musicians would get more money, you’re fooling yourself. This is the RIAA we’re talking about, not ASCAP/BMI/SESAC. They are part of the culture, along with Clearchannel and the indy promoters. Lots of people are scared to death of Internet radio, and this is the best thing they could come up with to combat its imminent explosion.

  • Jon Weisberger

    It is *not* the RIAA we’re talking about, it’s SoundExchange. They’re different organizations representing different (albeit overlapping) constituencies with different (albeit overlapping) interests. Personally, I have pointed this out often enough that I’m starting to get tired of people who persist in mis-stating the situation; it appears to me that they might be trying to appeal to emotion rather than reason by invoking the scary RIAA rather than being factual.

    Also, Ryan, you should be aware of the fact that even without this royalty increase, the trend in webcasting is very clear – the big players, like AOL and, yes, Clear Channel – are growing much faster than the smaller ones, and there’s no reason to think that radio promoters aren’t just as happy dealing with many of the same familiar faces they’ve been dealing with (or, for that matter, new ones). If you think this level of concentration is bad – and I’m certainly not saying it isn’t – then instead of trying to argue that copyright holders shouldn’t be compensated for their work, why not argue for restrictions on the number of streams that a webcaster can service at one time? That would be the functional equivalent of regulating ownership of terrestrial radio stations, which IMO is probably a good thing. If you’re trying to cure a problem, make sure that the cure actually targets it, and not something else.

  • The reason people equate SoundExchange with the RIAA is clear.

    Before its spin-off in September of 2003 as an independent organization, SoundExchange was originally created in 2000 as an unincorporated division of the RIAA.

    and

    It (the governing board) is comprised of one representative from each of the major label groups (EMI Music Group, SONY BMG Music Entertainment, Universal Music Group and Warner Music Group); independent labels (Tommy Boy Entertainment, a large independent, and Matador Records, a small independent); a designated executive from an independent label association; a designated executive from the Recording Industry Association of America (RIAA); and an equal number of artists and artist representatives…

    Emphasis mine, Quotes from the SoundExchange FAQ.

    I can see why people associate the two. SoundExchange was created by the RIAA, who still has a hand in governing the org. So yes, they are different, but yes, they do overlap. How much I’ll leave to the conspiracy theorists.

  • Jon Weisberger

    The reason people equate SoundExchange with the RIAA is clear.

    Before its spin-off in September of 2003 as an independent organization, SoundExchange was originally created in 2000 as an unincorporated division of the RIAA.

    Heh. As you said, Brance:

    …figures…taken in 2004. In internet years that makes those numbers antiques.

    Yeah, I can see why people associate the two, but that’s not what’s been going on here. Instead, there’s been a persistent confusion of the two. If it’s unintentional, it needs to be rectified, because there’s a clear difference; if it’s intentional, it’s not really conducive to clarity.

  • ryanfbaker

    If you think this level of concentration is bad Рand I’m certainly not saying it isn’t Рthen instead of trying to argue that copyright holders shouldn’t be compensated for their work, why not argue for restrictions on the number of streams that a webcaster can service at one time? That would be the functional equivalent of regulating ownership of terrestrial radio stations, which IMO is probably a good thing. If you’re trying to cure a problem, make sure that the cure actually targets it, and not something else.

    First of all, I’m sorry I was confusing RIAA with SoundExchange. However, I don’t believe it really matters which specific entity is involved here. Jon, I am glad to see that you agree with my basic point that the big boys are trying to crowd out competition. Please consider my following points and ignore the royalties issue for a minute (I know, it’s difficult, bear with me).

    Your idea of setting a kind of “ownership limit” by setting a max number of streams is an interesting idea. However, I don’t think that’s the solution. There is a difference between terrestrial airwaves and internet airwaves… there are only so many frequencies for regular radio, so having one or two companies control all of them would give them a monopoly on the publicly-owned medium. Thus the ownership limits, of course. On the Internet, as it stands now, there is essentially no limit to how many people can run a station and broadcast it. It becomes a purely demand-driven economy when Joe Schmo from Albuquerque has access to the exact same medium as Clearchannel. Heck, if AOL puts together the absolutely best Internet radio station on the planet, and people flock to it in droves, that’s completely fine with me! Good for them!

    Setting a limit on number of webcasts would not solve anything…. it would only try and hold back the torrent of technological progress; a fool’s errand. That kind of stuff has never worked — one can slow progress, but it will always find its way. Radio will be quite fully Internet-based in the future, and we need to try and find a way to solve this problem without setting any kind of artificial limits.

    As many have said, by installing this new royalty system the major media companies are ensuring that most of these small cats are going to be crowded out. It’s a strategic move for some forward-thinking capitalists, and it reeks of corporate elitism. I admit that I am a bit of a cynic when it comes to big business and media, but I do not believe my fears are unfounded. I think the idea Clyde mentioned about having Internet station owners contribute some percentage of gross profits to SoundExchange is one that would likely appease most who stand to benefit from the new royalty system. It is much more realistic and free-market based, and it would eliminate this artificial entry barrier that has been imposed upon this exciting and budding industry.