Does anyone know where Kerry stands on radio getting charged performance royalty fees?

[beachmom]

Don't let the technical sounding "performance royalty fee" term fool you. This is a huge issue, and it pits two industries we all love to hate against each other: the recording industry and the terrestrial radio industry. I can't stand either. The recording industry has been whining for nearly a decade now that the internet killed their business, not the fact that they have so commercialized their "product" that they have lost the art of music in the process (with, obviously, some choice exceptions). They are most famous for declaring war on their own customers, going after grandmothers who downloaded songs. Then there is broadcast radio for which there has been so much consolidation of media companies that no matter where you live, radio sounds the same: the same formats with the same songs with a non-descript DJ whose voice is often manipulated by technology to sound local. Radio's famous moment was when the Dixie Chicks dared to criticize the President, and in response, their music has been banned from country music radio ever since. Also notable, was that Bruce Springsteen's album which had that song "Last to Die" on it got just about zero radio play on terrestrial radio because "it didn't fit in their format". They would only play his old stuff as "classic rock" but not his new stuff, because, oh, I don't know, it didn't sound like Britney Spears? Although I do think politics had something to do with these bannings, I also think it had to do with the narrowness of radio these days. Dixie Chicks started doing crossover music; politics was a good excuse to not play their newer stuff which did not adhere to the narrow view of what "country music" should be. Ditto Bruce Springsteen.

So amidst all of the problems with these two industries, there is now a piece of legislation being considered in the House and Senate:

http://online.wsj.com/article/BT-CO-20090804-719057.html

Pop percussionist and one-time Prince protege Sheila E was the latest artist to come to Capitol Hill Tuesday to plead with lawmakers for legislation requiring radio stations to pay royalties to performers.

Sheryl Crow, Herbie Hancock, will.i.am and Dionne Warwick were among the other A-list musicians who have come to Washington seeking performance royalties from broadcast radio.

"Radio is the only part of the music business where our work is used without permission or compensation," Sheila E, whose 1984 single "The Glamorous Life" topped the U.S. dance charts, told the Senate Judiciary Committee at a hearing. Disco star Gloria Gaynor also was in the audience.

...

Broadcast radio stations now pay song royalties to songwriters and producers, but they don't pay performance fees for playing the artists' music.

In contrast, cable, satellite, and Internet radio pay performance royalties.

Both the House and the Senate have bills pending that would compel performance payments, but the legislation is a long way from becoming law.

The House bill passed the House Judiciary Committee in May, but it is unclear when it will see a floor vote. Senate sponsors warned Tuesday that the bill will see further action and urged the National Association of Broadcasters to engage in negotiations.

...

The bill has several high-powered lawmakers as supporters, including House Judiciary Committee Chairman John Conyers, D-Mich., and House Foreign Affairs Committee Chairman Howard Berman, D-Calif. In the Senate, the legislation is sponsored by House Judiciary Committee Chairman Patrick Leahy, D-Vt., and Sens. Orrin Hatch, R-Utah, and Dianne Feinstein, D-Calif.

Interesting group of Senators and Congresscritters co-sponsoring, isn't it?

Now here is why I bring up Kerry. If you notice above, internet radio is now paying royalties. Isn't that under the jurisdiction of Kerry's subcommittee in Commerce? Well, the internet radio royalty drama only concluded on July 7th!! How dramatic was it? Internet radio almost shut down; they did 24 hours of radio silence to protest legislation that made them pay up to 70% of their revenues! So what happened?

http://www.nytimes.com/2009/07/08/technology/internet/08radio.html?_r=3&hp

Internet radio, once on its deathbed, is likely to survive after all.

On Tuesday, after a two-year battle, record labels and online radio stations agreed on new royalty rates that cover music streaming.

Many of the music sites had argued that the old rates were so high that they were being forced out of business. That could have come back to haunt the record labels, since for many people the sites are becoming a useful way to discover music.

“This is definitely the agreement that we’ve been waiting for,” said Tim Westergren, the founder of Pandora, one of the most popular Internet radio sites with 30 million registered users.

In 2007 a federal royalty board ruled that all so-called webcasters needed to pay a fee, set to increase to 0.19 cent a song next year, each time they streamed a song for a listener.

Webcasters said the fees would eat up most of their revenue, which generally comes from advertising on their sites and in their music streams, as well as from subscriptions and fees they earn when a listener clicks to buy a song from a digital music store.

This is the most troubling paragraph:

Small sites with less than $1.25 million in revenue, like AccuRadio, Digitally Imported and RadioIO, will pay 12 to 14 percent of it in royalties. All stations will be required to pay an annual minimum fee of $25,000, which they can apply to their royalty payments.

Think about that for a moment. What $25,000 for small sites means is that unless you have that kind of dough, no amateur will be able to start a radio station on the internet again. Or put it this way: the entry to get into the business just got a lot harder.

So back to broadcast radio, this diarist works for a radio station, and fears that if this law goes through, he is out of a job:

http://www.dailykos.com/story/2009/8/1/760540/-What-the-hell-is-this:-Oppose-the-performance-tax.-Save-local-radio

I sympathize with him, and agree with him that the music companies have repeatedly screwed over artists, and they should complain to them if they are not being paid enough. Oh, so true. OTOH, broadcast radio is very, very, very bad. I mean, I am in the Atlanta market: 5 million people for goodness sake. No good radio stations, except NPR. The rest is garbage. I will continue switching stations for something tolerable only to throw on a CD. So he says "save local radio". What local radio? Maybe in some markets it exists, but nowhere I have lived in a long time. And there is another wrinkle in the whole affair. Internet radio is backing this new law. Why? Because they feel it will create a level playing field with broadcast radio (satellite pays already):

Kurt Hanson, founder of AccuRadio, said he hoped that Congress would eventually change the law so that all forms of radio pay the same royalty rates.

“Internet radio is one of the few bright spots in the music industry, giving airplay to dozens of genres and thousands of artists that never received airplay before,” Mr. Hanson said. Webcasters, he said, make it easier for listeners to buy music than any other form of radio does.

http://blog.pandora.com/pandora/archives/2009/07/important_updat_1.html

There continues to be royalty-related activity in Washington DC. On the heels of the above resolution, there is a new effort in Congress to fix the broader issue of how musical artists are compensated across all forms of radio. The system as it stands today remains fundamentally unfair both to Internet radio services like Pandora, which pay higher royalties than other forms of radio, and to musical artists, who receive no compensation at all when their music is played on AM/FM radio. We, along with the artists whose music we play, strongly support the establishment of a level playing field, a truly fair system, as articulated in a new bill called the Performance Rights Act (H.R. 848).

It has been an extraordinary couple of years. Believe me, I never thought I'd be donning a suit and tie to walk the halls of Congress lobbying for a bill. Thanks to all of you for your continued support. It is incredibly exciting for everyone at Pandora to see the vision for the company truly beginning to take shape. We are all looking ahead with renewed vigor to the future.

Cheers.

Tim (Founder)

Now, due to the above Dkos diary, someone mentioned in the comments that they listened to Pandora radio. So I checked it out. Wow, it is awesome and a lot of fun. Better than satellite radio IMO for music:

http://www.pandora.com/

And basically free (there are times you have to pay, but for most people it is free). As is another really good one:

http://www.radioparadise.com/index.php

Plus a kazillion more.

The advent of the iPhone and smart phones is that these internet radios can play on them. And then be plugged into a car radio or headphones at home. So, um, goodbye crapola broadcast radio for sure. Unless, they give up the media consolidation, and truly go local. Which can't happen if they are weighed down by big royalty payments to the record industry.

So I personally feel conflicted on this one. Internet radio and even Satellite radio is running circles around the godawful radio broadcasters. But I don't see why the recording industry has to always be rewarded. And I would feel bad if guys like the diarist lose their job as a result or hamper any movement toward true local radio. OTOH, it isn't fair if internet and satellite radio have to pay up but radio broadcasters don't.

So, as I ponder this very important legislation, I wonder where Senator Kerry stands on it.

[beachmom]

1. Hitting close to home in Boston. A Tale of Two Radio Stations

First, this just happened:

http://www.rollingstone.com/rockdaily/index.php/2009/07/16/the-rock-of-boston-wbcn-falls-victim-to-rock-radio-decline/

For the third time this year, an iconic rock radio station in a major city is shifting formats: Boston’s 104.1 WBCN, “The Rock of Boston,” will leave the airwaves on August 13th. The rock station had been broadcasting for 41 years. According to Billboard.biz, WBCN was a victim of CBS Radio’s desire to launch an all-sports talk radio station on the FM dial. The company’s Adult Top 40 Mix station will make the jump from 98.5 to 104.1, with the sports station taking over at 98.5. WBCN will live on off the radio waves as a Web and HD-radio broadcast.

The Boston rock radio market still has BCN competitors like WAAF and alternative station WFNX. WBCN had been broadcasting New England Patriots games since 1995, however it maintained a reputation as the city’s leading big rock-radio brand. New York’s biggest rock station, 92.3 K-Rock, shifted into the Top 40 WNOW in March, and it’s clear a pattern is developing — radio companies are following the music industry trends: While CD sales are plummeting, digital singles are on the rise, making a Top 40 format more appealing to advertisers because it attracts listeners in the target demographic. Rock fans have largely turned to satellite radio, the Web and Net broadcasts of rock radio stations in other cities in response. Just today, Internet radio station WOXY.com announced a new move to Austin, where it will be broadcasting live from the Austin Theater.

And then an internet radio station that exclusively covered unsigned Boston bands abruptly shut down in '07 because of those performance royalties:

http://www.sooz.com/2007/03/14/internet-radio-royalty-hike-aka-more-stupidity/

A few details to clarify: Exploit Boston isn’t a music blog but it does include an event blog, internet radio station, photo collective and monthly board game night. Exploit Boston Radio has a couple hundred bands in rotation with 524 songs in the library. And there are dozens of listeners per day not total/overall. (What a sad day that would be if 24 people total listened to the station in one month. Ha!)

I’m all in favor of artists being paid for their work. But the way this rate increase is structured means there’s a $500 per station minimum and it is only charged to internet radio broadcasters and not terrestrial radio. Obviously this means small broadcasters are likely to go off the air and they are the ONLY STATIONS playing new/emerging/independent bands in regular rotation. Awesome. So if you are tired of hearing the same Top 40 bands on regular radio, now you can tune into internet radio and hear the same music over and over.

She had a follow up post here in July of '07:

http://www.sooz.com/2007/07/13/goodbye-internet-radio/

Senators and Representatives have limited time left to pass the The Internet Radio Equality Act. If they don’t get their act together in time, SoundExchange wins and internet radio stations around the country will pay a huge increase in fees (retroactive through 2006) and/or be shut down.

The deadline is Sunday, July 15th.

My Exploit Boston Radio station focuses on all Boston area (mostly unsigned and indie) bands and I’ve been thinking about turning it into a podcast. But it’s pretty much impossible to duplicate the existing station that I’ve got set up at Live365 with 604 songs and over 24 hours of music.

Her site is still up, but all the links to her radio station don't work anymore. This is what the music industry already has done to internet radio.

The Boston Globe:

http://www.boston.com/business/technology/articles/2007/03/14/royalty_hike_could_mute_internet_radio/

Royalty hike could mute Internet radio
Smaller stations say rise will be too much
By Hiawatha Bray, Globe Staff | March 14, 2007

Susan Kaup is on the air -- but perhaps not for long.

Kaup, 34, of Allston, runs ExploitBoston.com, a music blog that includes an Internet radio station that plays music from Boston-area rock bands like Three Day Threshold and Bang Camaro. Kaup, who blogs under the name Sooz, has been at it since 2003. But she worries about her station's future under a plan to sharply increase the amount Internet radio companies must pay to broadcast recorded music.

"I'm not sure if I'll be able to continue as an Internet radio broadcaster," Kaup said.

This month, a three-judge panel created by Congress to set digital music royalty rates decided on a big increase, retroactive to 2006, for companies that stream music over the Internet. The increase will apply not only to small broadcasters like Kaup, but also to major companies like Yahoo Inc. or Time Warner Inc.'s AOL and to Internet "simulcasts" of traditional over-the-air radio stations, which could see their royalty payments increase by millions of dollars under the new scheme.

Mark Lam, chief executive of Live365 Inc., a major Internet broadcast service, says the new rates will kill off most Internet broadcasters. "As the current law stands, we are out," he said.

That would mean the end of ExploitBoston and about 10,000 other Internet audio streams carried on Live365. Most of these streams are run by amateurs with specialized tastes in music, such as heavy metal, folk , or 1960s bubblegum rock. They create their own playlists, send them to Live365 for broadcast, and pay a monthly fee to cover Internet hosting costs and music royalties.


Both of these radio stations were shut down for reasons that are very disturbing.

I hope that Senator Kerry is broadly shown all the angles to the current legislation, especially as it affects his own state. Yet these Boston stories are mirrored across the country.

Now imagine, if suddenly, "royalties" need to be paid every time we have to link to a news article (the newspaper industry would LOVE that). Then goodbye small blogs. Only the biggest would survive. That makes me shudder.

[beachmom]

2. Some more legislative information about the internet radio situation:

http://www.extremetech.com/article2/0,2845,2349006,00.asp

The Senate on Wednesday approved a bill that gives Internet radio stations and rights holders more time to agree on royalty payments.

The Webcasters Settlement Act of 2009 gives both sides 30 extra days from the date of enactment to hash out acceptable terms.

The bill amends a bill President Bush signed into law in October 2008 that says Congress must honor any royalty rate agreement reached between online radio stations and copyright holders. That bill took the decision out of the hands of the government-run Copyright Royalty Board (CRB) and gave both sides until Feb. 15, 2009 to come up with a royalty rate agreement - a deadline that came and went without a deal.

So it was this CRB that almost killed internet radio. I don't know anything about them, but that's pretty bad. That Senate vote was 6/18/09.

I have tried in vain to find the roll call. Can anyone find the vote, and how everyone voted?


Oh, wow, Diane Feinstein is something else. Just wow. In response to the initial royalty hike for internet radio (that would have put out of business all but the biggest sites), read her letter:

http://boingboing.net/2007/04/30/internet_radio_crisi.html

(Ed note: Full text of Senator Feinstein's response after the jump. Short version: webcasters, feel free to crawl off and die.)

Dear XXXXX:
Thank you for writing to me with your concerns about the Copyright Royalty Board's recent decision on the statutory rate for music webcasting. I understand your concerns and appreciate the opportunity to respond.

Under the Copyright Royalty and Distribution Reform Act of 2004, Congress - at the behest of webcasters - created the Copyright Royalty Board which consists of three judges. By law, the judges are a venue of last resort and are required to periodically set rates for various statutory copyright licenses in the event that webcasters and copyright owners are unable to reach voluntary agreements. In the absence of an agreement, the judges set a rate designed to approximate the fair-market value that webcasters should pay to artists and performers for streaming their music for the years 2006-2010. The new rate that was established is less than a 5 percent increase of the rate in effect from 1998-2005.

Although a few webcasters have recently claimed that the process was unfair, it was not arbitrary and allowed representatives from all sides to make their cases. The judges began the proceedings in 2005, and heard testimony from dozens of witnesses and conducted a comprehensive review of tens of thousands of pages of evidence submitted by all interested parties over an 18-month period.

While some webcasters may choose to pay this rate, independent negotiations between the parties are still possible and this new statutory rate would serve as the ceiling. Additionally, if it appears that the new rate will reduce the overall amount of webcasting - as well as the overall income from this stream of revenue - the copyright owners may still have an incentive to offer webcasters a rate less than the statutory rate.

I am a strong believer in intellectual property rights and believe that artists and performers have earned the right to be fairly compensated for the broadcast of their works by webcasters who benefit - financially and otherwise - from their talents. Without fair compensation, these artists would not create their works.

Once again, thank you for writing. Should legislation addressing this new rate or the rate-setting process come before the Senate, I will be sure to keep your concerns in mind. In the meantime, if you should have any additional questions or comments, please do not hesitate to contact my Washington, DC staff at [phone] .

Sincerely yours,
Dianne Feinstein
United States Senator

Again, this debate, I think, will have a direct effect on the newspaper debate. Again, without independent websites, nobody would have heard half the music.

Why is Sen. Feinstein full of it?

http://somafm.com/blogs/rusty/2007/04/senator-dianne-feinstein-has-wrong.html

Wow, talk about dancing around the numbers. For large webcasters which had revenues in excess of $5 million, or otherwise chose not to work under the percentage of revenue option in the Small Webcasters Amendment, the rates per song per listener increased only 5% from 2005 to 2006. But they go up 38% from 2006 to 2007. And more each year, until finally in 2010, they will be 150% higher (or 2.5 times more) than they were in 2005.

Year Rate Year to Year Increase Increase since 2005

2005 0.000762
2006 0.0008 5% 5%
2007 0.0011 38% 44%
2008 0.0014 27% 84%
2009 0.0018 29% 136%
2010 0.0019 6% 149%

The other thing she doesn't take into consideration is that the fact that small webcasters pay royalties based on a percentage of revenue, not per song per listener, but are no longer allowed to pay based on a percentage of revenue. These small webcasters (like us) are facing royalty payments that are several times our annual gross revenues!

And finally, this same writer, as an internet radio guy, makes a compelling case for why the terrestrial radio should NOT pay these performance royalty fees:

http://somafm.com/blogs/rusty/2007/04/david-byrne-on-net-radio.html

When the original copyright laws were written, Congress realized it was granting a legal monopoly to the copyright holder. So in order to balance out that government-given monopoly it also added provisions for fair use and public rights, such as copying for personal use, exemptions for libraries, and exemptions for radio broadcasters. Fair Use is These public rights are an important part of the American way. We are one of the few countries in the world that have it fair use and other public rights defined in our law. Like freedom of the speech, it is a foundation of our culture. But the RIAA wants to change this, and they're doing it by chipping away at the law.

Can you imaging the outrage if over-the-air radio suddenly was forced to pay huge amounts of money to play music? Music radio would go away, and become all talk radio. Payola would return in a new form: the only music you would hear on the radio is music that the record labels granted permission for broadcasters to play. The labels would then control the music that got played over the air to the public - which is something they have always wanted to do anyway.

He ends by saying that this is really what the record industry wants. Much moreso than the money. But control.

[TayTay]

3. Excellent work on these posts and this thread.

And I have no idea on this. I will try and find out.

There is a fundamental problem here: artists deserve to be paid for their work and they need to be promoted. The promoters need to have enough money to operate their stations. These two things are in opposition.

I greatly fear that the copyright people will win out. I hope they understand the concept of "getting what they wished for" because this would mean fewer markets for music.

[beachmom]

4. Thanks. I think the important thing to keep in mind is that unlike

so many other issues, this is not a partisan issue. Democrats are split and Republicans are split. There are competing interests going on here: both big corporate and little guys, on either side.

I have reflected some more on this issue, and the one thing that interests me is fairness among the three categories of radio: satellite, internet, and terrestrial.

Just remember there are two types of royalties: publishing (to whoever wrote the song) and performance (the actual recording).

The way it swings out is here:

1. Terrestrial radio: pays publishing royalties only. Currently pays 0 for performance royalties.
2. Satellite radio: pays both publishing royalties and performance royalties, but at a more reasonable rate.
3. Internet radio: pays both publishing royalties and performance royalties, at a much higher rate than satellite.

Internet radio is targeted unfairly here because its digital medium was viewed as a "perfect copy" of a CD, which it is not. It is not a download, but streaming; however, copyright law from the '90s does not make that distinction. I find this ridiculous. Especially since internet radio (even the big corporate ones like AOL or Yahoo) is far superior to Satellite and Terrestrial in terms of quality programming and incredible variety.

I guess to me, if performance royalties are here to stay, then they should be shared among all three radio platforms equally. So I would support the terrestrial radio performance royalty only if an amendment was added that this is regardless of platform. Why should greedy record companies take advantage of a loophole and target one medium above the others? Make the rate reasonable and put in a lower rate for smaller radio stations, for internet radio and local FM radio (Satellite is only big companies).

Edit:

To be clear, I am talking about music here. Clearly, Sat Radio is about more than music, and for long commuters I would think Sat Radio is a must have for the car if you can come up with the $12/month.

[beachmom]

5. A long opinion piece in the Philly Enquirer today in favor of the performance royalties

http://www.philly.com/dailynews/features/Pay_for_play_082509.html

Getting radio stations to pay for the entertainment value and audiences that recording artists summon up is hardly a new cause. Major pieces of legislation were introduced in the 1970s and 1990s to bring the United States into parity with broadcast performance royalties in place almost everywhere else in the world. (Only our fair-minded friends in Iran, North Korea, China and Rwanda join the U.S. in not paying up.)

Nancy's late dad, Frank Sinatra, was a big advocate, back in his day. While acknowledging he didn't need the dough, Frank argued the unfairness that other talented singers who'd sold millions of recordings were destitute. A similar argument was recently made by Duke Fakir, an original member of the Four Tops. "Many (aging) artists can't even pay their hospital bills," he noted, "yet their music is played all over the world."

Ironically, American artists can't get any of the royalty money being collected for them in foreign lands, because of the lack of reciprocity. If we're not giving it up for their artists, they're not gonna give it up for ours.

That foreign component is particularly interesting. Now here are the numbers:

As stipulated, the money would be apportioned with 45 percent going directly to the featured performer and 5 percent to the backing musicians on the recording date, without any intermediaries getting their notoriously sticky fingers on the transaction.

The remaining 50 percent goes to the owner of the recording master, usually the person or entity that funded the project.

Yes, the latter is often the record company, and yes, a couple of the biggies are foreign-owned.

But as Smashing Pumpkins' Billy Corgan recently testified, more and more artists today fund and own their masters, and so would "doubly benefit" in the payout.

I really hope the performers get the money. As John Mellencamp said recently, record companies are notorious for breaking their word, which is why they are constantly sued. And here is an irony alert:

And for the most dedicated music listeners, FM and AM are now passe. Their interest lies in their iPod, or in the deep and, in some cases, bottomless catalogs offered by customized music-streaming services like Pandora, music-subscription services like Sirius-XM and Rhapsody, plus the literally thousands of Internet radio stations and dozens of audio streams popping up on the high channels of cable- and satellite-TV service.

While few, if any, of these alternates are making money today, all (ironically) are paying "blanket" royalties to the performers, as well as to the songwriters they feature, as stipulated in the Digital Millienium Copyright Act and then hammered out by the U.S. Copyright Royalty Board and a rights-representing organization called SoundExchange.

Oh, and guess who else is paying performance royalties for streaming on the Internet? Over-the-air broadcasters, when putting their channels on line. So far, it doesn't seem to be killing them.

You know, my bottom line is I am fine with these royalties IF they don't destroy radio. If the rates are too high then they could kill both industries in one full swoop. Frankly, I don't care a whole lot about AM/FM radio, as it is so bad. But it could get worse, if it is starved even more.

This will continue to be a big under the radar piece of legislation in Congress. I think America should get in sync with the rest of the world and pay these royalties, especially since internet, cable, and satellite radio are already paying.