No, not that kind of briefs. Legal briefs, silly. The briefs are part of webcasters' appeal before the U.S. Court of Appeals for the District of Columbia Circuit to overturn the Copyright Royalty Board's monumental March 2007 mistake raising far beyond reason the copyright royalty rate on internet radio.

From The Radio And Internet Newsletter (RAIN):

According to the timeline currently in place, the briefs of the various webcasters are due on Feb. 25.

The brief of the CRB, represented by the Department of Justice, is due on April 25, and SoundExchange’s brief is due on May 15. The reply briefs are due on June 12, but oral arguments have not yet been scheduled. Such a calendar suggests that the appeal will be decided at the end of 2008, at the earliest.

Until then, the parties may continue to negotiate and reach agreement outside of court, as has already occurred. SoundExchange, representing the music industry, has shown a desire to achieve separate agreements among the parties, rather than a comprehensive settlement that covers all parties…

The royalty rate legislation that is before Congress, if enacted, may ultimately nullify the Court of Appeals’ decision and any agreements SoundExchange has entered.

Still, what is needed is a rate structure that is technology-neutral…

Read bout it in the New York Law Journal via KurtHanson.com.

Labels: capitol hill, copyright royalty board, crb, digital freedom, electronic rights, house of representatives, HR 2060, S 1353

Ars Technica reports that EMI, one of the Big Four Labels, is considering cutting funding for recording industry trade groups -- including the RIAA.

The RIAA campaign of intimidation via lawsuits against file sharers has been a financial disaster and an even greater public relations disaster. This may be why EMI is considering reallocating the funds used by the RIAA to invade their customers' privacy, sue their target audience, sue dead people, collude on price-fixing, and make false and/or misleading statements.

Via it's front group SoundExchange the RIAA is also responsible for the precarious place (financially and legally) webcasting is in right now thanks to the ridiculous Copyright Royalty Rate hike on internet radio earlier this year.

If EMI pulls funding it would stand to reason that the rest of the Big Four would follow suit. Could this mean the end, or at least the declawing, of the winner of the 2007 Worst Company In America award, The RIAA? I'm not getting my hopes up, but man does that thought make me smile.

A tip of the headphones to Ars Technica via Gizmodo via State Of The Day.

Labels: copyright royalty board, crb, HR 2060, internet radio equality act, riaa, savenetradio.org, soundexchange

From SaveNetRadio.org:

Thank you once again for your support of the SaveNetRadio Campaign. On Wednesday morning, the Senate Commerce Committee will meet to hold a hearing on the future of radio in the United States. Representatives from broadcast radio, music industry, and Internet radio will testify before the committee about the current state of the radio industry and how royalty fees and other issues, like competition and innovation, affect the future of the industry. This is an unprecedented opportunity for Internet radio to explain its value to Congress, and we need your help to make sure they are listening.

Please take a moment to call Senator Boxer at (202) 224 - 3553 and ask her to attend this important hearing. The Internet Radio Equality Act is still pending in the U.S. Senate and House of Representatives; this hearing will give Members an opportunity to learn more about this legislation - make sure they don't miss it. Please call now.

It is helpful when calling your congressional representatives to give the following information:

* I am a constituent, and an Internet radio listener calling to ask that as a member of the Senate Commerce Committee, the Senator attend Wednesday's hearing on the future of radio.

* Internet radio has been a revolutionary force in the music industry since its creation and now empowers artist, consumers, and music lovers of every kind. The Copyright Royalty Board's unprecedented and ill informed decision to increase royalty fees for Webcasters by more than 300% has threatened to bankrupt this important industry and we need the Senator's help.

* The real future of radio for music lovers, artists, and the music industry as a whole is online. To save this industry and allow it to prosper, there must be parity and equality between webcasters, satellite radio, and broadcast radio. Today Internet radio pays a recording royalty fee more than twice that of satellite radio, and terrestrial radio pays none at all. To fix this unfair and inexplicable inequality, please cosponsor the Internet Radio Equality Act, S. 1353, pending in the Senate today.

Again, please call Senator Boxer at (202) 224 - 3553 and ask her to attend this important hearing. Thank you once again for your support of the SaveNetRadio campaign, this issue could not have gotten the attention it has without your support and cannot move any further without your continued efforts.

Labels: capitol hill, copyright royalty board, crb, house of representatives, HR 2060, internet radio equality act, riaa, S 1353, savenetradio.org, soundexchange

This week SoundExchange, the organization created to disperse royalty payments from internet radio to artist, unveiled a new settlement offer to small webcasters. This "offer" is a joke. For a small webcaster looking to strike a fair deal it is completely useless.

The offer is a smokescreen intended to make it appear to Congress, the media, and the public that the RIAA is negotiating in good faith with webcasters. Perhaps the pre-recess threat by Senators Ron Wyden (D-OR) and Sam Brownback (R-KS) to bring the Internet Radio Equality Act to the Senate floor inspired this latest non-starter of an offer.

Such an offer is also part of a divide and conquer strategy -- webcasters big and small, interactive and non-interactivem have remained largely united in this fight. Now that the RIAA (through it's front group SoundExchange, through it's front group musicFIRST) is trying to extend this performance royalty fee to terrestrial radio, the coalition will grow in both size and power. I look forward to having the National Association of Broadcasters on our side in this battle.

Back to the "offer" at hand:

*SoundExchange insists on an annual revenue cap of $1.25 million to define "small webcaster." The revenue cap for over-the-air broadcasters to be considered a small business is $6.5 million -- why such a disparity? Why any disparity?

What this revenue cap effectively does is punish successful internet radio stations for being ...successful! If Webcaster A has revenues of $1,249,999.99 million, Webcaster A pays a percentage of that revenue to SoundExchange and stays in business. If Webcaster B earns $1 more than Webcaster A, the royalty rates increase to those set in the fatally flawed March 2, 2007 Copyright Royalty Board rate hike. Webcaster B would owe more in this one fee than was earned all year, which puts Webcaster B in debt and out of business. Damn that extra dollar earned.

This is SoundExchange insisting that webcasters accept a disincentive to grow as part of the deal.

*The SoundExchange offer only covers the music of its 20,000 members, not the hundreds of thousands of recording artists getting played on internet radio, so if webcasters play anything by anyone not on their member list, the bankruptcy-level Copyright Royalty Board rates come back into play.

*This settlement offer sunsets in 2010, at which time webcasters will have to go through all of this again and not be allowed to mention this deal as precedent when the RIAA once again attempts to gouge and ultimately control what gets played on internet radio.

Please, Congress: re-write the Digital Millennium Copyright Act, or section 114 of copyright law, to update the misguided provisions written into law over a decade ago (which is forever in computer chronology -- most people didn't even have at-home access to the internet in 1998!).

Update (8/23): an interesting take on the motives for the recent SoundExchange smokescreen.

Labels: copyright royalty board, crb, house of representatives, HR 2060, internet radio equality act, musicFIRST, riaa, S 1353, soundexchange

As previously reported here, last Thursday the four mega-conglomerate major labels (under the pseudonym SoundExchange) agreed to allow webcasters to continue to pay royalties at the pre-CRB rates past the July 15th deadline if we continued to negotiate new rates in good faith. Just hours later the major labels started negotiating in bad faith by introducing an unreasonable post-agreement condition -- that webcasters invent and impose digital rights management (DRM) technology on our streams that will prevent stream-ripping (copying).

It is impossible to negotiate an reasonable agreement when one side keeps moving the goal posts. Under these conditions the current efforts towards a settlement are pointless -- this is precisely why we need the Internet Radio Equality Act passed. We must fix the source of this problem, namely the Digital Millennium Copyright Act, which opened up this copyright royalty loophole way back (1998) before anyone knew what internet radio would look like. Only then will webcasting be safe from the digilliterate dinosaurs whose idea of saving the movie industry was outlawing VCRs.

Besides the issue of bad faith negotiations, the major labels' DRM demand is a red herring, something that distracts attention from the real issue. For me and others I know, stream-ripping is used to time-shift programs. Like when people record a TV show on a VCR or DVR so it can be enjoyed some other time, people use stream-rippers to record their favorite internet radio shows like my (shameless plug!) award-winning "480 Minutes" program, Fridays, 9am - 5pm Pacific Time.

Copying internet radio is the a lot like copying FM radio in three main ways -- it is really easy to do, the resulting recording is lousy, and (with current technology) it is impossible to stop.

Wait! I have an idea! If the major labels can convince over-the-air radio to invest in and invent a way to prevent the recording of FM radio, webcasters will do the same for internet radio. Over-the-air radio has a 30+ year head start on us, and that still sounds fair.

Jokes aside, if anyone is willing to build a music library by copying my 64kbps stream (CDs are 320kbps) well, those few folks weren't ever going to fork over $18.98 for the new White Stripes CD, anyway. Keep in mind too that, like those mixed tapes I used to make from WLIR by leaving the record and pause buttons pressed on my boom box in the 80s, these recordings will include cross-fades between songs, public service announcements, and DJs yapping over top of them.

Despite the major labels' efforts to pin fault for their failing business model on webcasters, it is apparent to just about everyone (inluding the promotions departments at the major labels!) that airplay on internet radio promotes artists. If not us, then who could be responsible for the decline in sales? Perhaps CD sticker-shock all these years later has something to do with declining sales. Had the majors not colluded to price-fix CDs throughout the 1990s when music sales and profits were through the roof, maybe people would feel more guilty about stealing music from them? Sounds plausible.

Read the DiMA reaction to this latest major label sidestep, and check out how quickly things can turn ugly.

Labels: copyright royalty board, cr, crb, HR 2060, internet radio equality act, riaa, soundexchange

The July 15th due date for collection of the new crippling copyright royalty rates has come and gone. SoundExchange has promised not to collect these fees for an unspecified period while a fair rate is negotiated. The public statements from SoundExchange (aka the RIAA, aka the major labels) spokespeople have been inconsistent and sometimes contradictory, which is worrisome from an organization we hope is negotiating in good faith. The fact that late last week the subject of imposing Digital Rights Management restrictions on streaming media suddenly became part of the SoundExchange demands is troubling, to say the least.

While hundreds of stations have decided to go dark, BAGeL Radio and many other webcasters (including our good friends SomaFM, Pandora, AccuRadio, and Live365) have decided to continue broadcasting through this precarious period. Personally, I feel like we are still looking down the barrel of a gun -- at any moment negotiations could break down and that gun could go off.

Short term and disparate deals may seem attractive because the industry has been placed into such peril, but such deals will only leave us back in this very same situation before long. Check out this article about copyright royalty rates from five years ago -- it reads much like recent news articles on the subject. No one wants to go through this again in another 18 months, or even 5 years -- who wants to invest their time (and money) in a venture standing on such uncertain footing? We need a more permanent solution.

Thanks in large part to the SaveNetRadio coalition we have made great progress in educating government officials, artists, the mainstream media, and listeners about this issue. Most people now realize that if the RIAA gets its way, the vast majority of artists ("dead webcasters pay no royalties"), listeners (vast decrease in stations to choose from), and (obviously) webcasters all lose. This now common knowledge, reflected in the media coverage and in the outpouring of support from internet radio listeners, has given our side great momentum.

We will use this momentum to continue our fight to pass the Internet Radio Equality Act (HR 2060). SoundExchange may continue to cloud the issue with smokescreens (CD sales are down, it must be internet radio's fault) and falsehoods (webcasters make money from music but don't pay royalties), and we will remain vigilant in challenging and exposing these misleading statements. Only when it is protected by law will internet radio be safe from the huge corporations which already control so much of the music industry and seek to dominate the rest.

We're still streaming. Thanks for listening.

Update: Read another take on the current situation.

Labels: copyright royalty board, crb, internet radio equality act, riaa, savenetradio.org, soundexchange

Kurt Hanson of RAIN reasons that the actual goal of SoundExchange, which represents/ fronts for the RIAA, which represents/ fronts for the four major labels (EMI, Warner, Sony-BMG, and Universal), is bad for most artists and lables. If their current strategy of hiking statutory licenses to bankruptcy levels takes root, radio of all shapes and sizes will be forced to cut direct deals with the labels. This will (a) cut the artists out of their share of monies collected, (b) give the major labels say over which stations can and cannot stay on the air, and (c) create a "reverse payola" situation by offerring certain of their artists to stations "royalty free" if the stations agree to play the labels' prirority records.

Read all about it in Kurt's excellent essay on the subject.

Labels: copyright royalty board, crb, internet radio equality act, soundexchange

Today is the internet radio Day of Silence. BAGeL Radio will be running a series of Public Service announcements about our plight, interspersed with BAGeL Radio band station IDs and jingles. Please tune in and listen to find out what this is all about, and also tune in to leading NPR affiliate KCRW.com for a Ruth Seymour-hosted one hour round table discussion (in which I participated) of the issues. The show will air hourly all day on the KRCW streams and twice on the air: from 2pm-3pm Pacific Time, then again from 6:30pm-7:30pm Pacific Time.

Also check out the stories in today today's LA Times, SF Chronicle, and this Washington Post blog.

The future of internet radio is in immediate danger. Royalty rates for webcasters have been drastically increased by a recent ruling and are due to go into effect on July 15 (retroactive to Jan 1, 2006!).

To protest these rates and encourage you to take action by contacting your Congressional representatives, BAGeL Radio is taking part in the Day of Silence by silencing our (music) programming for today. Please take action to ensure that this national event is a success.

If you are having trouble getting through to your representatives Washington offices, try calling their local offices. You can find the numbers at VoteSmart.org, where you can enter your zip+4 and get their names and contact info.

We ask that you excuse the interruption of our normal programming, apologize to all of the bands who are not getting exposed to new ears today, and ask that you (listeners, readers, and musicians alike) take action to help ensure this silence is not made permanent in mid-July when the crushing new rates are scheduled to come due. Please call your Congressional Representatives today. Click the link for instructions how. Thank you.

Regular BAGeL Radio programming will return on Wednesday, June 27th, at 12:00a.m. PT...at least until July 15th, when the permanent Silence of the Streams may begin.

Ted

Labels: copyright royalty board, crb, HR 2060, internet radio day of silence, internet radio equality act, riaa, S 1353, savenetradio.org, soundexchange

The May 22nd SoundExchange (SX) press release appears to be little more than PR fluff. No substance, just a misdirection to make it seem like they are working things out with webcasters. "No crisis here, move along, nothing to see..."

SX is trying to slow an effective and grassroots effort with this acceptable-looking-at-face value but short-term deal with small webcasters.

Their press release says, "offered to extend to small webcasters through 2010 the terms of prior legislation known as the Small Webcaster Settlement Act (SWSA) with some minor modifications."

These minor modifications include a revenue cap and a usage cap, details of which are not provided. Both of those are likely to be deal-breakers -- if this was an honest proposal it would not contain such vagueries, and would have been presented directly to small webcasters (as their other press releases claim) and not in the form of a puff-piece press release.

While this deal from SoundExchage looks like good news at first glance, it is not. Small webcasters will find ourselves in this same position in just two short years, and without the momentum we have now with our making headlines and making it's way through Congress. Also, in 2009, SX will be able to say "Look, Congress, we worked it out in 2007, we'll work it out again now, no need for you to get involved" further diminishing the effects of all the hard work that has gone into drafting and working The Internet Radio Equality Act (H.R. 2060).

Personally, I believe we need to let our current momentum carry us forward. Kurt Hanson (of Accuradio) has an interesting take on the press release here.

Funny how just a few short weeks ago SoundExchange gloated over their CRB victory. They called it a "fair" and unbiased ruling, yet now they are offering (albeit very temporarily, and with undisclosed modifications) something many small webcasters proposed in the first place. It walks like B.S. It talks like B.S. ...

Labels: crb, HR 2060, internet radio equality act, riaa, S 1353, savenetradio.org, soundexchange

A quick update on the internet radio royalty rate battle:

• On 4/26/07 Representatives Jay Inslee (D-WA) and Donald Manzullo (R-IL) introduced the Internet Radio Equality Act (H.R. 2060), legislation that would keep internet radio alive and allow it to thrive. As of this week the bill has over 60 co-sponsors.

• On 5/10/07 Senators Ron Wyden (D-OR) and Sam Brownback (R-KA) introduced companion legislation in the Senate.

Despite repeated misleading and false statements released to the press by SoundExchange, the vast majority of coverage has seen through the smoke. Editorial has been firmly on the side of small webcasters and internet radio in general.

The most recent misinformation efforts from SoundExchange attempt to portray the fight as artists (SoundExchange) against megacorporations (AOL, Yahoo!), but that bogus narrative has yet to gain any traction.

This all looks good for the future of internet radio. The one-sided victory handed to SoundExchange/The RIAA by the Copyright Royalty Board may prove in the long run to be a positive for webcasters. The CRB decision brought the webcasting community together. Webcasters discussed the issue and potential solutions and ultimately produced the Internet Radio Equality Act. If this act becomes law, it will finally leave internet radio on sound business footing after years of "gee, what will they decide to charge us for promoting their records next?"

Labels: crb, HR 2060, internet radio equality act, riaa, S 1353, savenetradio.org, soundexchange

On March 2nd, 2007, the Copyright Royalty Board (CRB) dramatically increased the copyright royalty rate webcasters must pay. The CRB is the entity in charge of determining sound recording royalties paid by internet radio stations. After hearing evidence from SoundExchange (a proxy for the RIAA) and webcasters, the CRB came down firmly on the side of the RIAA.

The decision was so one-sided that the staggering new rates are retroactive to January 1st, 2006.

When these retroactive royalty payments come due in mid-July many webcasters will be silenced by a financial burden even the biggest online broadcasters cannot afford. For independent artists and labels, the silence will be deafening and deadly.

Legal internet broadcasters already pay sizeable annual fees to ASCAP, BMI, SESAC, and SoundExchange. The fee structure already in place makes it so difficult to stay afloat that last year even WOXY.com -- one of the most popular, respected, and longest-running internet radio stations ever -- was forced to cease operations because of financial constraints. WOXY was later acquired and reanimated by the good folks at LaLa.com, but “[the new rates] absolutely would have killed WOXY as a stand-alone operation without a doubt,” said Bryan Jay Miller, general manager of the Cincinnati-based online radio station.

Many over-the-air stations also stream their broadcasts online -- this copyright royalty rate hike will likely force most if not all of them to silence their streams as well.

The Internet Radio Equality Act (H.R. 2060)

On April 30, 2007, representatives Jay Inslee (D-WA) and Donald Manzullo (R-IL) introduced the Internet Radio Equality Act (H.R. 2060), legislation that would keep internet radio alive. The bill has dozens of co-sponsors in the House of Representatives, and there is now sister legislation in the Senate known as S. 1353.

You can find out if your representative is a co-signer by visiting SaveNetRadio.org. Enter your zip code and if your representative’s contact information will appear, along with a notation as to wheter or not they are already on board.

RIAA=SoundExchange=CRB Puppetmasters

How did the RIAA get the Copyright Royalty Board to sign off on such a clearly one-sided decision? According to the New York Times, during the proceedings a CRB judge asked if the term “albums” could refer to CDs as well as vinyl records. That quote would seem to imply a Ted "the internet is a series of tubes" Stevens-like misinformed understanding of the internet.

Why would the RIAA want to silence independent internet radio?

SoundExchange represents the four biggest record labels. These labels have controlled the music industry for years. Their ability to dominate the landscape year after year was due in large part to the unfair playing field on which smaller labels and independent arists were forced to compete.

The majors have dominated access to over-the-air radio and other music promotion outlets for decades. Then a new technology appeared that threatened to level that unfair playing field -- internet radio. Independent labels and independent artists suddenly had myriad outlets through which to get their music played widely heard.

More people gained easy access to hearing music from these independent artists and niche genres, more people spent their entertainment dollars on this music, money to which the major labels believe they entitled.

The Spread of Internet Radio

Desperate for an alternative to the boring, bland, repetitive, lowest-common-denomenator programmed stations hosted by shouting know-nothing DJs on their FM dials, computer savvy music lovers were all over internet radio. They found hundreds, then thousands of stations offering a previously unthinkable number of genres, bands, and programming choices. People listened, they liked, and they clicked on over to the iTunes Music Store, Amazon.com, and band websites to buy this new and interesting music they might not have otherwise learned even known existed.

Then there are the bands that are a little too noisy or edgy or outspoken or experimental or lyrically controversial to ever get played on regular radio – internet radio stations have provided platforms for such artists to reach new fans.

These stations included pioneers like SomaFM and Radio Paradise, as well as thousands of hobbyist-run stations streaming through the Live365 network.

Internet radio is the medium music lovers turn to hear new music. As such, internet radio has evolved into one of the best promotional tools available to independent artists and record labels who are otherwise shut out of the corporate owned networks of terrestrial radio, television, and satellite radio.

My Station, BAGeL Radio

BAGeL Radio began playing bands like Silversun Pickups, Cold War Kids, TV on the Radio, Clap Your Hands Say Yeah!, months and sometimes years before over-the-air radio started playing them.

Current BAGeL Radio staples you are likely to hear on terrestrial alternative radio in the next 12-18 months include Birdmonster, Cloud Cult, Sea Wolf, Snowden, Division Day, Blitzen Trapper, Saturna, and The Wombats.

BAGeL Radio’s local, national, and global listenership has helped numerous local acts get heard beyond the local club circuit, resulting in people attending their shows far and wide and spurring online music sales. Bands have returned from the road with stories of first-time visits to cities where people in the crowd knew the words to self-released songs having heard them on internet radio.

Local and touring bands drop in for interviews and in-studio live on-air performances including Bound Stems, The Grates, The Heavenly States, Lemon Sun, Birdmonster, Bon Savants, Matt Lutz, and more.

BAGeL Radio has also booked hosted dozens of shows featuring mainly local talent, bringing together acts that work well together musically to help them share and grow audiences. BAGeL Radio hosted series have included The California Homegrown Music Series, [RockScene], and various BAGeL Radio Presents… events.

The Big Lies

In it's presentation to the CRB, SoundExchange claimed that internet radio provides no promotional benefit to artists...if that is the case, would someone please tell me why labels send me, a small webcaster, dozens of CDs a week? The folks in the promotions departments of the labels are aware that internet radio can provide a great deal of promotional benefit to artists.

With the help of internet media, an independent band called Clap Your Hands Say Yeah! managed to sell a couple of hundred thousand copies of their debut album without the help of even a small label.

The RIAA claims that internet radio allows people to copy music for free. Well, yeah, it does...just as FM radio has done for decades! A cassette (or digital) copy of FM radio will sound an awful lot like a cassette (or digital) copy of my internet radio stream. The RIAA used the phrase fallacious phrase "perfect digital copies" (and obscenely off-the-mark description) to convince Congress to include this copyright royalty fee for internet radio (but not terrestrial radio) during the drafting of the Digital Millenium Copyright Act in 1998.

Lies-by-omission seem to be a specialty of SoundExchange, whose Executive Director John Simson said of the last time royalty rates were decided (2002), "we had the same exact response: that this is terrible, it's going to put everybody out of business. But the industry grew."

Conveniently omitted is that the now-expired Small Webcaster Settlement Act of 2002, enacted by Congress after it became evident that the new rates were murdering internet radio in it's infancy, is what enabled the industry to grow. There are no small webcaster stipulations in the SoundExchange-penned new royalty rates.

The industry argument is that copyright holders should make more money from their songs being played on internet radio. Why not terrestrial radio as well? Oh, right, because terrestrial radio, with it's two decade-long slow fade into oblivion, provides promotional benefit to copyright holders, whereas internet radio, where listenership is growing by leaps and bounds, does not.

The rapid spread of broadband internet plus the ubiquitousness of iTunes has put internet radio within a simple double-click of the vast majority of the music buying public, computer saavy or not. Did you know that 1 in 5 U.S. consumers aged 12 and over listen to internet radio?

According to Bridge Ratings & Research, the number of monthly internet radio listeners increased from 45 million at the end of 2005 to 72 million in early 2007. It really is no wonder why the majors, so used to dominating media outlets, want to do away with independent internet radio -- a medium that promotes independent bands and indie labels, local music scenes, niche genres and not, generally speaking, NSYNC and The Backstreet Boys.

Webcasters are hoping that the aforementioned tens of millions internet radio regulars are paying attention and will sign our petition and contact their Senators and Representatives. Sensible, fair legislation that refelcts the public interest, is what is needed now.

Read more detailed information at Broadcast Law Blog, SaveNetRadio.org, Live365, SomaFM, and the Radio And Internet Newsletter. For a legal look at music royalty obligations for internet radio, click here.

Labels: crb, HR 2060, internet radio equality act, riaa, S 1353, savenetradio.org, soundexchange

The Internet Radio Equality Act (aka H.R. 2060) now has 51 co-sponsors, putting us about 1/3 of the way to where we need to be. Here is an update list of co-sponsors. If your representative is not on the list please give them a call and tell them you are a constituent and you want them to support the bill.

Thanks.

Ted

Labels: crb, HR 2060, internet radio equality act, riaa, S 1353, savenetradio.org, soundexchange

Entertainment attorney Fred Wilhelms says, SoundExchange: Show us your work!

Do you remember taking math tests? Specifically, do you remember the warning you always got before you started?

As I remember, the idea was that the teacher would be able to tell if you understood the concept or just guessed the answer (or cribbed it from the smart kid in front of you). You had to demonstrate that you had some grasp of the subject, and just weren't making things up as you went along, hoping to guess the solution without knowing the reasons why.

It's time to tell the SoundExchange, SHOW US YOUR WORK!

This time the test is all about the real impact of HR 2060, the Internet Radio Equality Act (IREA), introduced this week in the House of Representatives. If IREA becomes law, it'll prevent the Copyright Royalty Board (CRB) royalty rates from taking effect on May 15.

Almost everyone thinks this is a good idea. That is, almost everyone who doesn't work for SoundExchange, with the exception of senator Dianne Feinstein and Ben Newhouse, the clearly befuddled editor at RoyaltyWeek.com who thinks that because *he* thinks large webcasters provide enough choice for *him* everybody should agree with the CRB, because it has finally stamped out "free" Internet radio.

In his passionate, and increasingly lonely, defense of the CRB Internet Radio royalty rates, John Simson, SoundExchange's executive director, has started throwing around some remarkable numbers. If he's right, HR 2060 will put every US recording artist into debt to the big bad webcasters who are going to get a gigantic rebate on their 2006 Internet royalty payments.

It should be remembered that Simson, in common all the top executives at SoundExchange, used to draw a paycheck from the RIAA. So when he talks about artists being in debt to large bloodsucking companies, he should know what he's talking about.

Let's look beyond the fact that the last time he quoted a number, that stuff about Internet radio having $500 million in revenue last year, he was off by at least a factor of five, according to the author of the study Simson was "quoting." Simson's misrepresentation of that report might just be a mistake, so we can't say he did it on purpose, even if he's never acknowledged the error.

Half the money SoundExchange collects goes to record labels, yet all Simson can tell us is the IREA is "anti-artist." If I was a label who signed up with SoundExchange, I might think the organization really didn't care about me and the other labels, what with all this pro-artist rhetoric, and never mentioning the poor labels who will get shafted by IREA, too.

But then I'd look around, and I'd see SoundExchange is still clearly controlled by all those RIAA alumni, and I'd feel a lot better. I'd realize the SoundExchange spokespeople are smart enough to know the public isn't going to shed any tears if the major labels are actually going to get hurt, so it's better not to mention them at all.

I mean, the new royalty rates are going to mean millions of dollars a year to the members of the RIAA, yet we haven't heard a word from any of them since the CRB announced its decision. They aren't the shyest folk in Washington when it comes to protecting their interests, so I have to conclude they're happy with the job SoundExchange is doing as their mouthpiece, letting them sit back in the shadows while we're told how "anti-artist" the IREA is.

But sometimes the old RIAA rhetoric just slips out, even from as experienced an operative as John Simson. He was apparently able to keep a straight face when he blamed the crashing of CD sales on the rise of Internet radio while ignoring every other possible cause.

That kind of tunnel vision is hard to overcome, I guess.

You'd think that the RIAA would be running to the defense of such a loyal ally as him in such an important debate. But their silence is deafening. It really is ironic that Simson is reduced to publicly suggesting small webcasters may be being used to do the bidding of the big webcasters as if, given his own organization's close ties to the RIAA, he thought this kind of subterfuge was a bad thing. Let the poor artists be your poster children, even if you've demonstrated you would be happier dealing with far fewer of them.

Nevertheless, beyond all that, is Simson right about IREA? Is it going to be a disaster for artists? He gives us numbers that support his argument that it will be. But are they real numbers? Nobody knows, because *he isn't showing us his work*.

And he doesn't have to.

You see, SoundExchange is a private, not-for-profit, organization. Other than some very fundamental and general numbers that they have to give the IRS every year to maintain their tax-free status, they don't have to tell anyone outside their boardroom *anything* about their finances.

* They don't have to tell anyone how much money really comes in.
* They don't have to tell anyone how much money they pay out to
labels and artists, or how they decide who gets what.
* They don't have to tell anyone how many labels and artists are registered with them. This is actually funny, because the numbers keep shifting.
* They don't have to tell anyone what their operational budget is, or how that money gets spent.

And they seem to like it this way. Their handling of the "unfound artists" fiasco last year makes it clear that the less anyone outside the organization knows about what they do, the better they like it. They still haven't made a public announcement on what happened with the forfeited money from that campaign, although SoundExchange spokespeople did have to back off from claims that it would go
directly to other artists.

One good reason for that secrecy is that it permits them to make up numbers when they need them. Like right now, when all the hard work they've put in trying to cut Internet radio down to size is at risk of going for nothing because a lot of people don't agree with John Simson that there are too many Internet radio stations.

John Simson says the IREA is going to be a $50 million dollar windfall for "big webcasters."

How was that figure calculated? Does that mean they're going to be asking for, and getting, $50 million back from SoundExchange for payments already made? Is it just that they won't have to pay that much more that would have been due under the CRB? Is that windfall just for 2006, or does it go through 2010?

Is that total calculated with regard to the possibility that those big webcasters would probably end up signing direct licenses with the major labels that would permit the webcasters a discount from the CRB rates and permit the labels to cut out the artists completely?

I guess the prospect of those direct license cut-out deals aren't "anti-artist" enough to get Simson onto his white horse.

Simson says passage of IREA means that artists are going to have to write refund checks.

If the checks for 2006 that've already been paid to the artists were on the basis of royalties already paid, how does the failure to get an increase on the previous rates result in the need for a rebate? This sounds like the basest of scare tactics.

Will SoundExchange executives and staff be rebating any of their salaries or bonuses?

Simpson says "small webcasters" only paid 2% of the royalties in 2006.

Extrapolating SoundExchange's 1st Quarter 2006 royalty statistics, total 2006 royalties were approximately $56 million. Two percent of that is about $1.1 million. Live365 claims to have paid, just by itself, over $1 million to SoundExchange.

They can't both be right. I know who I believe.

Simson says artists, on the average, received $360 in royalties last year?

Maybe he meant $360 was the median, or the mode, rather than the mean. Maybe he meant something else entirely. The number he's quoting now just doesn't match up with other numbers they've used in the past. It is impossible to tell which is accurate and which is made up unless they SHOW THE WORK.

p2pnet's Jon Newton noticed something strange about the SoundExchange press release about distributions in the First Quarter, 2006. He saw the reserve for unregistered artists and labels was $5.7 million, which was more than ten time higher than the amount that SoundExchange claimed was at risk when it started that half-hearted attempt to find people before the royalties for webcasts before March 31, 2000 were forfeited on December 15, 2006.

It just don't add up. By Simson's "average," that $5.7 million reserve would be sufficient to cover over 13,000 "average artists" or over 4,000 more than SoundExchange admitted they couldn't find in October, 2006.

Furthermore, that $5.7 million is a full 40% of the entire royalty pool.

In other words, SoundExchange is admitting it can't pay out 40% of the money it's collected because it hasn't found the people who earned it.

Simson is fond of saying SoundExchange is just like a bank when it comes to dealing with artists. I suspect that there'd be a major run on any real bank that admitted it couldn't find 40% of its depositors.

It'd be educational for everyone if SoundExchange would tell us how much of that reserve is still there one year later and how many qualified claimants have come forward. Of course, any explanation would have to SHOW THE WORK, so I'm not expecting an answer anytime soon.

Simson has said he seeks transparency in SoundExchange affairs.

This is the time and place to start, if he was serious. That test is still going on. Whether or not SoundExchange deserves a passing grade depends on just one thing.

They've got to show their work.

from http://p2pnet.net/story/12086

Labels: crb, HR 2060, internet radio equality act, riaa, S 1353, savenetradio.org, soundexchange

Labels: crb, HR 2060, internet radio equality act, riaa, S 1353, savenetradio.org, soundexchange

From Live365.com:

SX: Dear SoundExchange Members and Friends:

I'm writing to tell you about the webcasting decision from the Copyright Royalty Board (CRB). Some people in the webcasting community have mischaracterized the decision and its potential impact on the internet and in the press, resulting in hyperbolic claims of the demise of internet radio. To combat this misinformation campaign I am asking for your active support through letter writing, contacting Congress, blogging and speaking out.

L365: It is not just "some people in the webcasting community," but rather, everybody in the entire Internet radio industry that the new CRB royalty determination threatens with demise. Internet radio services – large and small, public and private, mainstream and niche – have been alarmed by this decision, including the Digital Media Association (Yahoo, AOL, Live365, RealNetworks, Pandora), Small Webcasters (AccuRadio, Digitally Imported, Radioio), National Public Radio, Intercollegiate Broadcasting System, and other radio broadcasters with an Internet establishment (ClearChannel, Bonneville, National Religious Broadcasters).

The CRB panelists mandated a minimum fee of $500 per station per year, which was intended to cover SoundExchange's administrative costs. To the extent that this minimum fee is uncapped and indiscriminately extends to all Internet radio services, it will greatly exceed the total royalties that most services would otherwise owe. Since Live365 aggregates all of the performances streamed through our service into a single report, we would be paying millions of dollars to SoundExchange to 'administer' our four quarterly reports when we actually do all the work. On top of that, the new minimum fee would more than triple Live365's royalty obligation for 2007 and, retroactively, 2006. Yahoo!, RealNetworks and Pandora will each have minimum fees that exceed $50 million, although their combined 2007 Internet radio revenues will not approach even $100 million.

Should this $500 per station minimum stand, Live365 and other aggregators of niche content will be forced to reduce the breadth and depth of content available to listeners. Artists in niche genres will be the worst-hit victims, because Internet radio provides the only access to such music for listeners who cannot get on the homogenized AM/FM and satellite radio. These stations are the only place thousands of artists are currently getting exposure and getting paid on royalties.

SX: It is disconcerting to see some of the mischaracterizations that have been floated around the internet and the press in the wake of the decision. These initial stories, promoted by a disgruntled minority, misrepresent the nature and economics of CRB's decision. Fanning the flames of this misperception are people and organizations that participated in the hearings before the CRB. They provided witnesses and economic analyses as well as their own testimony.

L365: We can't help but to ask to please tell us who are the "gruntled majority" of webcasters that are apparently very happy with this decision. The only ones happy are the RIAA lawyers, maybe Sirius/XM who want to merge into a monopoly and limit substitute distribution technologies, and terrestrial radio who wants to maintain their dominant position by eliminating competition and forcing homogenized programming on listeners.

Read the rest here.

Labels: crb, HR 2060, internet radio equality act, live365, riaa, S 1353, savenetradio.org, soundexchange

The RIAA (representing mainly the major labels) would have you believe that it has pushed impossibly high copyright royalty rates onto internet radio (fees that terrestrial radio does not pay) because artists get little promotional benefit from internet radio play. Looks like the major label finance and legal departments really ought to talk to their promotions departments:


Monday's mailbag (above)...those all contain at least one CD that someone
thinks will gain promotional benefit from airplay on BAGeL Radio.

Click the Save Internet Radio button to find out how you can help save the new, vibrant, creative medium of internet radio from the bastards who colluded to charge us all $16 for CDs for decades.

Labels: crb, HR 2060, internet radio equality act, riaa, S 1353, savenetradio.org, soundexchange

SoundExchange (aka the four largest record labels, aka the Recording Industry Association of America, aka the RIAA) issued a statement lauding the copyright hearing process as "fair." The RIAA arguments are insulting to anyone who knows anything about the Copyright Royalty Board's (CRB) decision to adopt the royalty rates proposed by SoundExchange.

The RIAA claims the new royalty rates benefit artists. That is a bald-faced lie. The planned result of the new rates will be to wipe out independent internet radio thereby allowing the big labels to once again control what we hear. The internet music landscape will be dominated by a few media conglomerates, companies more interested in the lowest common denominator than playing good music, just like terrestrial radio.

Getting some royalties from small webcasters is certainly better for artists than getting no royalties once small webcasting is killed off, isn't it?

How did the RIAA get the Copyright Royalty Board to sign off on such clearly one-sided rates? According to the New York Times, during the proceedings a Copyright board member asked if the term “albums” could refer to CDs as well as vinyl records. This guy is making decisions that impact the entire nascent industry of internet radio.

To give you some idea of how one-sided the decision is, the CRB even made the rates retroactive to January 1, 2006, putting most (if not all) independent stations into debt already!

Back to the point, SoundExchange represents the four biggest record labels. These labels have controlled the music industry for years, charging the public outrageous prices for CDs and shortchanging the artists who made the music. Their ability to continue to dominate the landscape was due in large part to the unfair playing field on which smaller labels and independent arists were forced to compete.

The majors have dominated access to regular radio and other music promotion outlets for decades. Suddenly a new technology appeared that threatened to level that unfair playing field -- internet radio. Independent labels and independent artists had outlets through which to get their music played and heard widely.

Desperate for an alternative to the boring, bland, repetitive corporate-owned stations on their FM dials, computer savvy music lovers were all over internet radio. They found hundreds, then thousands of stations offering a previously unthinkable number of programming choices. People listened, they liked, and they clicked on over to the iTunes Music Store, Amazon.com, and band websites to buy this new and interesting music they didn't even know existed. Bands like Clap Your Hands Say Yeah! managed to sell a couple of hundred thousand copies of their debut album without the help of even a small label.

Now the RIAA claims that internet radio provides no promotional benefit to artists...if that is the case, would someone please tell me why labels send me (a small webcaster) dozens of CDs a week? Is it because I'm a swell guy?

The RIAA also claims that internet radio allows people to copy music for free. Well, yeah, it does...just as FM radio has done for decades! A cassette (or digital) copy of FM radio will sound an awful lot like a cassette (or digital) copy of my 64kbps internet radio stream.

Oh, and those free music channels that come with Satellite TV? Recording those to VHS makes for a far better-sounding, higher fidelity copy than any method of recording my internet radio stream ever could.

The rapid spread of broadband internet plus the ubiquitousness of iTunes has put internet radio within a simple double-click of the vast majority of the music buying public, computer saavy or not.

The numbers are staggering -- according to Bridge Ratings & Research, the number of monthly internet radio listeners increased from 45 million at the end of 2005 to 7