SoundExchange, Internet Radio, and the Noisy Silence
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It's been a roller coaster week these past seven days. Coming off a Day of Silence that saw partial internet radio participation and a slew of publicity releases about SoundExchange, you'd have to believe this was all a dream because now everything appears to be over, running normal, the same as before. It's not!
It's time to bring to light a few of the items left on the table between SoundExchange and the internet radio community. Some have been not so obvious to the masses, who usually only read headlines.
The Real Deal
On March 2, 2007, the Copyright Royalty Board handed down its mandate that the internet radio industry begin paying fees which are many times more than what the vast majority of online radio stations generate in revenue. From SoundExchange's view, those who fought the increase were trying to take money out of the pockets of artists, that they were getting a ride on the backs of creative types who provide the music.
I loved the scenario posed by SoundExchange, where it brought up how no musicians benefitted from the sale of Last.FM to CBS, and I'm wondering why it did not mention that no musicians benefited from the record industry's consolidation. It's the same logic: The companies made money, so they should pass it on to the artists who made those companies targets for takeover.
Internet radio station owners saw another side to this rate increase, though, in that it was substantially higher than what any other music-based media were paying - and that made it simply unfair. That's why internet radio has pushed for and received an "Internet Radio Equality Act," which has stalled in both homes on the Hill.
Without a rescindment of this CRB rate increase, most online stations will have to shut down. That's as true today as it was in March.
The Offer(s)
Having a public relations machine second only to those used by Sirius and XM in the early days of satellite radio, SoundExchange made sure that publicty releases appeared regularly carrying its slant on each story. No complaint, that's how business is done. But...
Being what they are today, radio trade journals mostly printed the publicity releases as news, offering no investigations into what the true offers were. Hence, the release of June 29 read: "SoundExchange Offers Cap On Minimum Web Royalties; DiMA Responds." You'd think by this headline (appearing in Radio & Records) that SoundExchange was a pretty good Joe in offering to cap a $500 per channel rate imposed by CRB. But, reading through the story you find this "cap" is only for 2 of the 4 years of CRB's rate schedule, and hardly anything that a sane webcaster would accept (knowing they'd be buying two years of building their station only to be financially ruined in 2009 and 2010 when their full slate of channels would be subjected to a $500 fee, each). That point about the offer being only two years wasn't played up. The headlines are what people remember.
The last time SoundExchange came back with an "offer" was on July 13. It resulted in this headline at R&R: "Report: Webcasters Shouldn't Fear Deadline." While this one looks more promising, it contains a request that webcasters become involved in aiding the war on stream ripping and that SoundExchange would be not pursue "legal action" for any station(s) in "bona fide negotiations." As it turns out, stations are required to continue paying rates at the old CRB fee for that legal action protection. Both points are acceptable by webcasters.
But another SoundExchange request, within this last offer, concerns the need for webcasters to "become much more compliant in their reporting obligations..."; quoting SoundExchange's John Simson, "...only three of the top 20 webcasters are in perfect compliance, and only 11 have even tried." Sounds like the internet radio industry is trying to skirt this "reporting" issue. Consider that the originally requested number of data fields needing to be reported was 24; they have now been whittled down to 11. Glance at them, and keep in mind that no other music-based media is anywhere near reporting so many data points. (Why? Because this involves busy work that's not essential for paying artists.)
(1) The name of the preexisting subscription service or entity
(2) The channel
(3) The sound recording title
(4) The featured recording artist, group, or orchestra
(5) The retail album title (or, in the case of compilation albums created for commercial purposes,
the name of the retail album identified by the preexisting subscription service for purchase
of the sound recording)
(6) The marketing label of the commercially available album or other product
on which the sound recording is found
(7) The catalog number
(8) The International Standard Recording Code (ISRC) embedded in the sound recording,
where available and feasible
(9) Where available, the copyright owner information provided in the copyright notice on the
retail album or other product (e.g., following the symbol, that is the letter P in a circle)
or, in the case of compilation albums created for commercial purposes, in the copyright
notice for the individual sound recording
(10) The date of transmission
(11) The time of transmission
That is the information required for each song played, and all items need to be reported to SoundExchange.
I've filled out my share of BMI and ASCAP station reports; in comparison, this recordkeeping is simply unmanageable. It's too much data. It also ties up valuable storage and compiling time for each radio station.
With headlines like "Webcasters get Royalties Reprieve," perceptually SoundExchange comes out with that olive branch again and again.
One more point before closing, about the reports that you've seen on SoundExchange reaching out and talking to station owners.
A Hollywood Reporter article, titled "Web Royalty Deals Sought," went so far as to say: "Our [SoundExchange] continued outreach reflects our long-standing position that these are two businesses -- webcasting and creating music."
Until recently I was not aware of any company not in the top five that had been contacted by SoundExchange. I'm now only aware of maybe five of the more popular independent internet radio station owners that are in talks. (Note: I'm in the loop with these issues as a sitting member of the SaveNetRadio board.)
Here's what this all boils down to: Webcasters want equal treatment. They want to pay the same rates charged to broadcasters, satellite, and cable. And those recordkeeping requirements need to be cut back farther.
There has not been a time when SoundExchange press releases have been researched by the trades, or general media, for that matter.
Results are the same each time. SoundExchange comes off looking like it's extended more than what's been offered, and the webcasters appear a greedy lot that only wants to save money. Here is a list of SoundExchange publicity releases. See if you don't see the pattern.
Now the truth, and you'll not see it reported elsewhere: Nothing has been fixed, there are no solid deals in the works, and SoundExchange is not budging from its demands to collect the full royalty rate increase of 300%-1200% over 4 years, depending on the webcaster.
There are no winners. Nothing's been settled. Read only the headlines and it appears with each new press release that SoundExchange is throwing a life jacket to all webcasters. It simply ain't so.
This roller coaster ride is not over.
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From: Dave B.
Let's think of paying royalties to the artists. Can you imagine that with today's computer technology that it is not possible to register artists, and pay them on the basis of how much of their music is played. I can see that might involve a small annual fee to pay for the overhead . . . but the artists would benefit primarily. |
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From: Josef M.
Presumably it's impractical for Webcasters to negotiate directly with artists if their programming includes hundreds, thousands or millions of titles, and presumably SoundExchange performs a centralized service for Webcasters and artists alike. But does SoundExchange have a competitor? Could Webcasters and artists negotiate as groups through another agent or venue? |
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From: Walt L.
I don't understand how the artists can be put in the position of the bad guys when these stations use their songs as a product and sell ads, make a profit
by doing so. The same corporations pay Howard Stern 100s of million dollars and the payment to the artists is less than what is paid to Sterns manager.
This is how China treats copywritten material. Check out these policies in Europe. |
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