http://www.live365.com/info/royalties.html
As with all of the other similar activist websites, Live 365 is asking that people write their elected representatives. However, Live 365 is asking that people make the following points in their messages:
- Congress void the retroactive $500 per channel minimum that threatens to drive Live365’s small webcasters out of business.
- Congress reinstate the Small Webcaster Settlement Act. The CRB declared that the 2002 SWSA would not be extended despite the Small Webcaster contracts SoundExchange offered on its website and signed with Small Webcasters for 2006 and 2007.
- Stop the retroactive, ex post facto royalty payments for 2006 mandated by the CRB, until all appeals have been heard.
- Create a level playing field by bringing the Internet radio per performance rates into parity with traditional and satellite radio. Unlike internet radio, traditional radio does NOT pay royalties to record labels or artists for songs performed over the air.
The $500 per channel minimum is very important because both of my service providers host many channels - Live365 has thousands of channels and LoudCity has hundreds. Some of these channels are VERY small.
For instance, a good friend of mine operates Radio Moscow a Live 365 hosted station which streams vintage Russian recordings from the 1930s and 1940s. He mostly promotes the station to his fellow World War II reenactors. Currently his station only streams a few hundred listening hours per month. Even under the ridiculous new royalty rates, such a tiny audience would amount to maybe $10 per month in royalties at the most - which is about what he is currently paying Live 365 to carry the station. If Live 365 was charged a $500 minimum per channel, it would have no choice (assuming that it will still even in business to begin with) but to pass that charge along to him.
Since my friend is a college student on a budget, he would have no choice but to close the station down. And if that were to happen - well, I think that would be a huge loss. Before his station came along, I had no idea what Russian music from that period was like. Now I do, thanks to his station and the time and effort he put in making it available. Today, anybody who happens to be curious is able to simply tune in an check it out.
There is NO other purpose of the $500 channel minimum than to make sure that networks such as Live 365 and LoudCity which focus on serving small operators such as Radio Moscow or even Radio Dismuke, which has a vastly larger audience, do not exist.
SoundExchange certainly cannot come out and say that additional channels constitute an additional expense for them because it is station owners who are responsible for the very significant burden of preparing the mandated reports and logging listenership patterns. Any additional costs involved in tracking and keeping up with the paperwork requirements for additional channels rests entirely with station operators and not SoundExchange.
Live 365's message about a level playing field between Internet broadcasters and AM/FM broadcasters is also worthy of comment. Unlike most countries, AM/FM broadcasters are not required to pay any performance royalties to record labels. They have for decades been completely exempt from them by law.
Personally, such an exemption has never made sense to me. My understanding is that the logic behind it is that, especially in the aftermath of the "payola" scandals of the 1950s, airplay on radio stations was considered to be free publicity for the record industry's products.
My big problem with all of it is that, with the advent of new mediums such as satellite and Internet radio, Congress has allowed a definite double standard to exist by continuing the exemption for AM/FM broadcasters but requiring broadcasters who use emerging technologies to deliver their programing to pay.
If airplay on a terrestrial station is considered as "free publicity" then why is the same recording being streamed on Live 365 somehow not considered "free publicity?"
Justice requires that there be consistency. If the exemption that AM/FM radio enjoys does, in fact, constitute unjust mooching on the intellectual property of record labels, then that exemption needs to be abolished - and, once that happens, the new statutory rates that the Copyright Office puts out need to be consistent across the board regardless of the particular medium that the music is distributed over. Imagine, for example, if ASCAP, BMI and SESAC, whose royalties over-the-air broadcasters are responsible for, decided to pressure the Copyright Office to set establish a rate structure that was significantly different for AM stations than for FM stations. It would make no sense whatsoever. Neither does it make sense to discriminate between terrestrial stations and satellite and Internet stations.
If, on the other hand, the legal exemption for AM/FM radio is somehow justified - then on what basis would it not be justified for satellite and Internet radio as well?
I am not especially knowledgeable about the various legal and property rights issues involved - but my off-the-cuff guess is that all broadcasters, including AM/FM stations, probably should be paying royalties for the copyright recordings that they play. If so, and if our laws required that the Copyright Board devise a royalty scheme that was applied evenly to all broadcasters, regardless of the specific technology they use to deliver their programs to listeners, I guarantee you that we would not be seeing such astronomical royalty rates.
Imagine if all FM broadcasters were in the same boat right now as the Internet broadcasters and faced with the serious likelihood of having to end all musical programming within weeks. Do you really think that the RIAA would allow that to happen? Obviously the record labels need the FM stations - as evidence by the latest round of new "payola" scandals. (As an aside - I do not have a problem with "payola" and think FM operators should be free to accept it if they wish. So long as competition in the form of alternative mediums such as Internet and satellite radio is allowed to exist, such practices on the part of station operators will eventually cause their programming quality to suffer and drive audiences to other sources where music is programmed based on what listeners want to hear and not what a bunch of salesmen want people to hear. )
Never forget that the whole reason we are having to fight this battle in the first place is because the RIAA is desperate to preserve the dominance of major metropolitan FM radio stations as the trendsetting force in determining which recordings become popular and which do not. Only the major labels which control the RIAA have the financial means and clout to get through the door and exert influence on program directors at such stations. Such stations rarely give independent labels and artists who self-promote the time of day.
In a couple of years, when Internet radio becomes available in people's automobiles and drivers will have thousands upon thousands of stations to choose from and trends in popular music are no longer determined by a handful of major FM stations - well, the advantage the major labels will have in promoting their artists over independent artists will be significantly diminished. When that happens, there will be little, if any, reason for the major record labels to exist other than to collect what money they can from reissues of musical acts that still have an audience leftover from their glory days before they became technologically and economically obsolete dinosaurs. For the RIAA this battle is all about holding that day off for as long as possible.
As for the "the retroactive, ex post facto royalty payments for 2006 mandated by the CRB," I will have more comments on that in a future posting.
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