Royalty Update: The Internet Radio Equality Act Introduced (Apr 28, 2007)

On March 21st, I wrote you regarding the initial ruling by the Copyright Royalty Board (CRB) announcing catastrophically high new royalty rates as well as a $500/year minimum per station. Despite the outcry of nearly all webcasters, the CRB denied the request for a rehearing and has proceeded with their original ruling.

In response to these new and unfair fees, Representative Jay Inslee (D-WA) introduced the Internet Radio Equality Act (HR 2060) on April 26th. This bill will provide immediate relief from the proposed new rates and can save thousands of Internet radio stations from going off the air.

Read about the Internet Radio Equality Act (HR 2060) Here.

Live365 and the other members of the SaveNetRadio Coalition fully support this proposal and are working diligently to see it turned into law. The next step is to line up cosponsors for HR 2060, but time is running short.

We ask that you IMMEDIATELY:

CALL your Representative and ask them to cosponsor HR 2060 -- the Internet Radio Equality Act. Click here to find your Representative's number.

NOTIFY -- YOUR LISTENERS, ARTISTS, and FRIENDS -- and have them call THEIR Representatives with the same request to cosponsor HR 2060.

We thank you again for all of the great support so far. Let's keep the momentum building into a crescendo that everyone can hear.

Sincerely,

Jason Stoddard
Director, Broadcasting
Live365.com

Day of Silence for Internet Radio (On May 8, 2007)

"PS. It looks like Live365 will be observing the "Day of Silence" on May 8th. More information to come..."

And some added information from JT, Live365 Director of Engineering, in one of the live365.com forums".

"We are hammering out the details on the Day of Silence, currently scheduled for May 8th. We are coordinating with many of our friends and competitors across the Internet radio spectrum to present a united front. As important as it is to get the message out, at the same time we are sensitive to needs of our business customers and paying VIP subscribers, which may differ from the needs of the Live365 ad-supported website and our brand. There are also, as you might imagine, contractural obligations that need to be worked through as well.

"Please bear with us for a few more days while we sort out these important details. It looks right now that all non-VIP stream launches from the Live365 website will be automatically routed to a special audio stream on the Day of Silence. We may be looking for some help from our broadcaster community with writing and recording the messages that will be delivered on that special stream. The stream will have an external address as well, for PROs and others with external links who want to participate in this protest who have their own websites. We will also try to make available the audio and graphics used for the protest.

"So, stay tuned."

Looks like if you're a listener of DFSX and are not a VIP member of live365, you will get a "day of silence" stream on May 8th. More details later.

CRB Update: Call your Rep TODAY! (Apr 28, 2007)

Kurt Hanson: With yesterday's introduction of the Internet Radio Equality Act (H.R. 2060) to Congress, the time to contact your Representatives is NOW. SaveNetRadio.org has prepared a list of simple "talking points" for callers to reference when calling their Representatives, which we've reproduced in today's issue. Also, a RAIN Analysis from Publisher Kurt Hanson argues that the Internet Radio Equality Act should satisfy the needs of all parties affected by the CRB ruling, as well as safeguarding the interests of artists and record labels supported by webcasters. Also in today's issue: A look at the sponsors and cosponsors of H.R. 2060 Radio analyst Mark Ramsey breaks down the recent Bridge Ratings report on digital music, which he says paints an extremely favorable outlook for Net radio and wireless music delivery. Read more about contacting your Representative in Congress in today's new issue of RAIN, available now at http://www.kurthanson.com.

Spin City SoundExchange Style (Apr 28, 2007)

I may be a foe of AOL, Yahoo, Clear Channel and Microsoft for their acts of dominance, but in this case, SoundExchange is using their press release spin to drop in the names of these mega-multiplex services to convince their readers to turn against these four named coporations in order to get HR2060 defeated.

Richard Ades and Gregg Perry fabricated a "news release" suggesting that the listeners turn against Clear Channel and are using the music artists' needs to brainwash the readers into getting their House representatives to defeat HR2060.

SoundExchange isn't telling the complete truth. A business has the right to make a fair amount of money. They don't mention the fact that small webcasters like radioparadise.com and kurthanson.com simply cannot afford the artificially high royalty payments demanded by SoundExchange, while the big companies which have other business interests not related to Internet radio might be able to afford the higher royalty rates. Would it be better for just four businesses to exist as webcasters where you're lucky to hear an independent artist get streamed and paid a royalty through SoundExchange if the royalty rates keep going higher and higher each year?

When the rates are high, the amount of buyers are few. When the rates are low, the amount of buyers are high. That's basic economics. If the price is too high, people just won't buy. That's what SoundExchange doesn't understand.

If you want more than just AOL, Yahoo, Clear Channel, and Microsoft to be able to stream music for a fair royalty rate, the same rate as those afforded by satellite casters and terrestrial broadcasters (the traditional non-streaming portion of their signal) and to help maintain a growing business model of Internet radio, then write your representative now and tell them to support HR2060.

Now we don't know for sure if HR2060 would strip the retroactive artist payments and the artists would have to repay SoundExchange the royalty payments that have already been received if HR2060 passes.

The windfall of $50 million isn't a windfall. It's a fair return of the excessive amount of money that has been extorted by SoundExchange from the businesses to the artists. This is like returning the excess tax payments from the IRS to the business depending on the size of their payments, except that in this case, the passage of HR2060 and signed by President Bush would help the many small webcaster businesses much more than it would help the large business webcasters get the money back to where it belongs before the unfair retroactive rates took effect by some rogue SoundExchange organization that doesn't understand the business model of webcasting music.

SoundExchange puts a spin that the CEOs and top executives of the four named megabusinesses would get paid millions of dollars. We don't know for a fact how the money would be distributed. It's none of their business to criticize how much a CEO gets paid.

SoundExchange states that "less than 2 percent of all royalty payments in 2006 came from small webcasters.” What source did they get that information from? How many small webcasters comprise two percent of all royalty payments? A thousand? Ten thousand? The 98 percent came from the four big corporations? Fairly 98 percent since they're the ones streaming the music and helping to publicize the musician's works with their massive website models. If the rates go up and up, you can bet that Clear Channel, Yahoo, AOL, and Microsoft would end their streaming business in order to satisfy their bottom lines.

HR2060 needs to be passed in order for all webcasters to stay in business.

If HR2060 fails, think of the millions of artists whose musical works will no longer be publicized. Imagine all those commercially-released recordings by the big four labels that would no longer be heard to help their bottom lines. You won't be able to hear the independent artists on the Internet anymore, and their small indie labels would go belly-up if the business of streaming music, which exposes their artists, comes to a screeching halt if HR2060 isn't signed by President Bush.

Along with millions of copyrighted music that earns millions of dollars in royalties, there are millions more of independent music that are dying to be heard and to become successful on their own merits, and they become successful thanks to streaming radio. This is how Gnarls Barkley made it big on the radio.

SoundExchange should stop the spin of their press release and tell the truth about their real motive.

The streamer businesses, both small and large, benefit from using the copyrighted and independent recordings for their progamming. The listeners win when they hear the kind of music they want to hear. The artists win when their unheard-of songs get streamed to the listeners. In order for this business model to continue, the rates to stream the copyrighted recordings must be in line with reality or else there is no business of streaming, the artists don't get played, and the listeners don't hear what they like to hear. If HR2060 fails, everybody loses, while nothing happens to SoundExchange one way or another, except far fewer royalty recepients to process because fewer broadcasters exist.

"The bill enriches the big webcasters" they say, but it also enriches the small webcasters too. This is also omitted by SoundExchange.

"...it raises questions as to who is really behind the SaveNetRadio Coalition" says the press release. Are they suggesting that Clear Channel is behind this. Well, supporters of HR2060 include the non-affilliated live365.com streaming radio service. Why don't they mention that small webcasters are behind this coalition as well? I'm not sure if Clear Channel is behind this myself.

Please go to http://www.live365.com/choice/ NOW to find a Representative of your's and tell them to sponsor HR2060.

I may be a complainer of Clear Channel, but in this case, Clear Channel is not the unfair party.

Radio Equality Act Introduced (Apr 27, 2007)

Congress Introduces Bill In Net Radio Royalty Debate. Congress has gotten involved in the ongoing fight to raise royalty rates for Internet broadcasters. Congressmen Jay Inslee (D-WA) and Don Manzullo (R-IL) have introduced the Internet Radio Equality Act, in an attempt to stop the Copyright Royalty Board's decision to increase the rates.

The legislation is said to "modernize" the copyright rules, putting royalties paid by public broadcasters of "sound recordings" under the same system as "musical works."

If passed, the bill would vacate the CRB's decision and set a 2006-2010 royalty rate at the same level currently paid by satellite radio services (7.5% of revenue); reset the royalty rules for noncommercial radio such as NPR stations that offer Internet radio music; and change the royalty rate-setting standard used in royalty arbitrations, so that the standards applying to webcasters would align with the standard that applies to satellite radio royalty arbitrations.

Organizations who have been fighting the CRB decision have reacted favorably to the bill. Andi Sporkin of NPR says, "This bill asks Congress to reinforce its historic acknowledgement that public broadcasting has a place in the media landscape by modernizing section 118 of the Copyright Act for the 21st century. The CRB Board would not consider the public service aspect of more than 800 stations across the country when it made its recent decision. But since 1976, Section 118 has recognized that public radio has a very different mission from commercial media and cannot pay commercial-level royalty rates. This bill will provide a long term resolution that is fair for all sides.”

Jake Ward of SaveNetRadio added, "Since the CRB's March 2nd decision to dramatically and unfairly increase webcaster royalty rates, millions of Internet radio listeners, webcasters and artists have called on Congress to take action. Today Congress took notice, and we thank Mr. Inslee for leading the charge to save music diversity on the Internet."

Late today, NAB Exec. VP Dennis Wharton said, "NAB is reviewing details of Rep. Inslee's bill, which would overturn the Copyright Royalty Board's disappointing decision to dramatically raise fees for companies that stream music over the Internet. We will work with Congress to craft a solution that helps ensure the survival of a fledgling audio platform."

Now that the bill has been introduced, the SaveNetRadio.org "call to action" is specific and direct: The site is now asking listeners to call their Representative and ask him/her to "cosponsor the Internet Radio Equality Act, introduced by Representative Jay Inslee." Once listeners click the "Call Your Representatives" button on the site and enter their zip code, they are given their Representative's House office phone number and a list of "talking points" to emphasize.

Read the PDF File Here for the Internet Radio Equality Act.

Please write and call your representative and ask them to co-sponsor this bill.

It takes 260 sponsors to get it to bypass committee and to the House floor for an immediate vote.

A) Nullify the Copyright Royalty Judges' ruling for new rates and terms.

B) Propose realistic rates and terms for all classes of Webcasters:

1) Per Performance - Approximately one-quarter of the current rate.

2) Percentage of Revenue (Option) - At 7.5% of service revenue.

C) Change the method for determining rates and terms going forward.

Simultaneous to this legislation will be a new Action Alert posted on the SaveNetRadio homepage urging all broadcasters and listeners to call their Representative to co-sponsor this new bill.

NOW is the time to take action. If Congress doesn't step in the world will lose a huge outlet for hearing music of any genre by May 15, 2007.

And in a related story:

Kurt Hanson: Over 30 webcasters, musicians, and independent record label executives have committed to petition members of Congress on behalf of the Internet radio industry in the Washington D.C. "Hill walk" taking place next Tuesday, May 1. The SaveNetRadio campaign is still looking for a few more participants, including members of the broadcast industry who simulcast AM/FM streams, to join the effort.