(August 20, 2008)

"EMI/Virgin Sues Platinum Band, Never Payed Band A Dime"  Says Mike Masnick:
EMI/Virgin Records has sued the band '30 Seconds To Mars' for $30 million. The band is a success. Their last album went platinum, but the band has never been paid a dime. So why the lawsuit?   (Read Mike Masnick's entire article here)
(Read '30 Seconds To Mars' response here)

(August 20, 2008)

"Music Industry Digging Its Own Online Grave"   Says Cyndy Aleo-Carreira:
If the RIAA has it's way, every music app, with the exception of basic consumer sales sites like iTunes, will be gone. In it's zeal to recreate the past with a sales model that had the labels rolling in money and the industry controlled by the complicated and often incestuous relationship between radio and the labels, the RIAA would completely eliminate the technology that could make even the long tail of recorded music profitable.
(Read Cyndy Aleo-Carreira's entire article here)

(August 18, 2008)

"A Last Stand For Webcasting"   Says Pandora's Tim Westergren:
Pandora will soon face "a pull-the-plug kind of decision," because of the high CRB royalty rates, founder Tim Westergren told The Washington Post. "We’re losing money as it is…The moment we think this problem in Washington is not going to get solved, we have to pull the plug because all we’re doing is wasting money." Pandora has indicated this due to the current CRB webcaster royalty rates, which reportedly costs 70% of the company’s revenue. This is the strongest rhetoric the Internet radio service has yet used todate.
(Click for full details by RAIN/Kurt Hanson)

(August 11, 2008)

"Labels Will Take At Least 50% of Webcaster Fees"   Says Fred Wilhelms:
"But Simson's op-ed never mentions it." Last week, RAIN ran a link to an op-ed piece written by or for John Simson (Exec. Dir. SoundExchange) on the need for a terrestrial radio performance royalty. The piece ran in the San Jose’s Mercury News ...about terrestrial radio cheating artists. In taking his passion for the well being of artists directly to the public, Mr. Simson apparently doesn’t feel it is necessary to let the public know that at least 50% of those revenues will go to the labels, and 90% of that money (based on current estimates of terrestrial radio playlists) will go to the four RIAA labels.
(Read Wilhelms comments on RAIN/Kurt Hanson)

(August 1, 2008)

Outspoken artist representative Fred Wilhelms has posted his thoughts on Tuesday's Senate Judiciary hearing on Internet radio music royalties. Wilhelms stated: "...artists deserve to be compensated when their music is played by webcasters, but [musicians] can't be compensated if the webcasters aren't there to play the music." (read Fred Wilhelm's full comments here).   Also, Performance royalties rights group musicFirst complained yesterday about the recent $24 billion privatization deal of Clear Channel, stating that: "...casts a spotlight on radio's failure to compensate the artists and musicians".   (Click for full details by RAIN/Kurt Hanson)

(July 31, 2008)

A new point of view, based on the analysis on the RAIN/Kurt Hanson team, is that the committee hearing went quite well after all. There was near-universal agreement among the senators and speakers (except, of course, for the record company representatives, who did not come off as credible) that the CRB decision, with its $500-per-channel "administrative fees" and effectively 75% to 200% royalty rates was a failure that needs to be unwound by legislation or negotiated away. Furthermore, almost everyone seemed to agree that the "willing buyer / willing seller" standard for setting royalty rates was unworkable.

Perhaps most importantly, there was a magical moment relatively late in the Q&A when Sen. Feinstein seemed to have an "Aha!" moment after listening again to pro-webcasting recording artist Matt Nathanson. She said something to the effect of "this is a conflict between an old way and a new way."
(Click here for details by RAIN/Kurt Hanson)

(July 30, 2008)

The Senate hearing, July 29th, concerning the disastrous webcaster royalty rate hikes by the CRB did not go very well for webcasters. Labels argued to the ignorance of the senate committee, who simply do not understand the technical nature of the medium. These current CRB rates are 'not' market driven rates. Small webcasters cannot pay the rates, and large over-the-air and satellite stations just negotiate around them, so how are they fair market rates? In addition, over-the-air radio pays nothing, and satellite radio pays just 7.5 percent, a fraction of the CRB webcaster rates that will take 75 (seventy-five) percent of webcaster gross revenues, with multiple increases over the next few years.
(Click here for details by RAIN/Kurt Hanson)

(July 3, 2008)

From RAIN/Kurt Hanson:  Pandora founder Tim Westergren hopes a successful outcome in the U.S. webcast royalty dispute will become a “template” for similar debates overseas. He reiterated, in a recent VNUnet interview, that Pandora will not be able to survive, much less stream overseas, under the current CRB royalty rates. “The royalty rates are just not allowing internet radio to exist… There is no business to be had (under these rates).”
(Click here for details by VNUnet)

(June 25, 2008)

The National Association of Broadcasters (NAB) now has a House majority of 219 co-sponsors for their 'Local Radio Freedom Act'. The act opposes a performance royalty fee for broadcast radio, which was proposed by the record industry. This is an important development, as it sets the stage for contextual reviews surrounding the disastrous web radio performance royalty rate hikes set by the Copyright Royalty Board (CRB).  (Click here for additional details)

(June 13, 2008)

WEBCAST ROYALTY RATE DEBATE GETTING PRESS: The Webcast Congressional hearing on Wednesday has quickly expanded into areas concerning the high webcasting royalty fees partly thanks to the efforts of Pandora. Pandora is pushing legislators to support the 'Internet Radio Equality Act', a measure setting royalty fees at 7.5% of webcaster's revenues.

Meanwhile, Rep. Zoe Lofgren (D-CA) reportedly stated, “If we’re going to take a look at the disparity across platforms, it would be a real mistake not to use the opportunity to take a look at Internet radio. If we wait too much longer, we’re not going to have a discussion because [Internet radio is] not going to exist anymore.”  (Click here for details from Kurthanson.com)

(June 12, 2008)

WEBCAST RATES ENTER RADIO ROYALTY DEBATE: At least one member of Congress held an open ear to internet radio’s pleas, at yesterdays hearings (June 11). That was Rep. Zoe Lofgren (D-CA), who expressed a desire for congressional action to change net radio’s performance royalty rates. She stated, “The industry that’s really in trouble today is Internet radio.” Her position may be due to Pandora’s chief executive Joe Kennedy and founder Tim Westergren's lobbying efforts about the disparity between net and satellite radio royalty fees. Westergren states that 70% of Pandora’s revenue would go towards paying performance fees, meanwhile satellite and cable radio pay 6% to 15% of their revenue. Kennedy also expressed an expectation that other webcasters such as LIVE365 and AOL Radio will now “beef up their own lobbying efforts.”  (Click here for details from Kurthanson.com)

(June 11, 2008)

The Congressional Subcommittee on Courts, the Internet, and Intellectual Property will hold a hearing today (June 11, 2008) about the proposed performance royalty fee for terrestrial radio. Musicians like Nancy Sinatra will argue on the side of the new fee, while broadcasters will argue that radio's power to influence record sales already benefits recording artists.   This is an important hearing, as it can set context between the possible terrestrial radio rates and the current disastrous web radio rates which were put into effect by the Copyright Royalty Board (CRB).  (Click here for details from Kurthanson.com)

(June 5, 2008)

As many more people realize the stark unfairness of the Copyright Royalty Board (CRB) rate hikes against webcasters, Congress has begun solid steps to address the issue. Pandora chief executive Joe Kennedy has traveled to Washington D.C. three times to personally lobby against the performance royalty rates set by the CRB. Kennedy sights that the CRB fees unfairly take 70% of web radio revenues compared to satellite radio's 6%.

Meanwhile, SoundExchange executive director John Simson points to surging growth, citing a Bridge Ratings report that projects Internet radio advertising revenue at $20 billion by 2020, and an estimate by JP Morgan reporting $500 million in ad revenue during 2007. Kennedy would argue that this growth would be a boom for SoundExchange, as they would take 70% of those revenues, and that under the 'standing' CRB ruling SoundExchange will collect $2 Billion against only $500 million in 'current' gross revenues.  (Click here for details from Kurthanson.com)

(May 29, 2008)

A Billboard legal columnist says Royalty Logic's recent motion challenging the constitutionality of the appointment of the three Copyright Royalty Judges isn't "far-fetched". Should the Court agree, it's possible all CRB decisions, including the most recent determination of webcast royalty rates, could be null and void.  (Click here for details from Kurthanson.com)

(May 15, 2008)

From Kurthanson.com: At a Senate Judiciary committee hearing this morning, Sen. Sam Brownback (R-KS) proposed adding the 'Internet Radio Equality Act' as an amendment to the 'Orphan Works Act' copyright bill. Committee chairman Sen. Patrick Leahy (D-VT) had words of support for webcasters, but suggested that his committee review the issue in June in the context of broadcast radio performance royalties.  (additional details here)

(May 4, 2008)

P2P Net News reports that SoundExchange, the self-proclaimed nonprofit organization that boasts collections of licensing fees on behalf of beleaguered musicians, has stated that they have lost all information on 40,000 musicians on whom they owe collected performance fees. It is extremely unclear to many professionals who follow these issues just how this can happen. In an era of ubiquitous, standardized, computerized, information management, it is surprising to hear that a modern nonprofit can misplace, or not find, a massive databank of easily accessible information on clients served by their core-function. Well, it seems that their core-function is to serve the 4 major labels, not necessarily these 'lowly' musicians. (see the entire article here)

(April 15, 2008)

Critics of the royalty system warn of an online music industry dominated by the same giant media companies that presently dominate traditional radio broadcasting. They point to CBS Broadcasting Inc.'s recent takeover of the Internet radio operations of Time Warner Inc.'s AOL as a harbinger of an Internet radio market rendered bland and predictable.  (see the entire article here)

(March 14, 2008)

From Kurthanson.com:   One year after the CRB rate hike decision the royalty mess is far from resolved. The Boston Globe has turned its attention back to the issue with a look at operators who have been forced to silence their streams in the wake of the CRB decision. The article focuses on former Mobile Beat Radio operator Barry Cedergren, but also quotes Pandora founder Tim Westergren and Live365 GM Johnie Floater on their respective business’ struggle to pay reasonable royalties. The article also speaks to the royalty disparity between platforms, quoting DiMA chief Jonathan Potter, who says “If Pandora can’t make it, if Live365 can’t make it, then… CBS, Clear Channel, and Entercom are going to take over Internet radio.”  (see the entire article here)

(January 13, 2008)

Pandora's massive UK music royalty rate triggered an IP access shut-down to Great Britain. The entire commercial radio industry in the UK, after 35 years experience and with 31 million weekly listeners, far outstripping even Google’s online reach, makes 2.57p per listener/per hour. For online radio, the UK music industry wants royalty rates that are 2.434p per listener/per hour, which will eventually shut down the entire UK web-only radio industry.  (see details here)

(January 9, 2008)

A new debate over a royalty paid by interactive and on-demand streaming services is flaring up, with publishing groups moving to make their music unavailable to those services represented by the Digital Media Association (DiMA). The move is likely a response to a recent request by DiMA that the Copyright Royalty Board not require interactive webcasters to pay a reproduction royalty in addition to their performance royalty obligations.  (see details here)

(December 19, 2007)

Members of the Senate and House Judiciary Committees have introduced a proposed bill that would force terrestrial broadcasters to pay a performance royalty, the first royalty obligation of its kind for AM/FM radio. These rates announced for "small" and non-commercial broadcasters again raise the question of "fairness" between platforms, particularly with regard to rates paid by similarly-sized webcasters.

Even before plans for the legislation were announced by Rep. Howard Berman in October, broadcasters and record labels have been engaged in heavy campaigns surrounding the issue. Now, with the introduction of a bill, observers should expect the issue of performance royalties to draw heavy media attention, perhaps even more than the issue of webcasting royalty rates has garnered since early 2007.  (see details here)

(November 20, 2007)

In an interview with industry news source AllAccess, SoundExchange executive director John Simson predicts that a broadcast (over-the-air) radio royalty will prompt "special royalty deals" between radio and copyright holders, which would encourage radio to play more new music. This possibility has been described by some as "reverse payola." Also, the U.S. Court of Appeals for the District of Columbia has issued due dates for appeals to the CRB webcast royalty decision.  (see details here)

(October 28, 2007)

"The attack is multifaceted", says a new Seattle Times article. The Times goes on to say: "... Internet radio is in danger because of a proposed new royalty scheme that would wipe out the budgets of many Internet stations. The elimination of Internet radio would allow for the big record labels and corporate radio to continue their cozy relationship without any competition ..."  (read full article here)

(October 24, 2007)

Webcasters are hopeful that todays Senate hearings will renew interest in their negotiations with the recording industry. Delays in negotiations with SoundExchange have left webcasters very impatient. "We made a proposal (Aug. 23) and have not heard back ..." said Jonathan Potter, executive director of the DiMA. "With this hearing we're now working to gather support for the Internet Radio Equality Act ..." says Potter. The House version has 143 sponsors, and it's Senate counterpart has five.  (see details here)

(October 14, 2007)

Presidential hopeful Hillary Clinton made a broad statement of support for continued negotiations between webcasters and SoundExchange, in an email sent to New York constituents who emailed her office in protest of new online radio royalty rates that are causing all kinds of problems for webcasters.  (click here for her full statement)

(September 19, 2007)

Kurt Hanson reports that Virtually no small commercial webcasters accepted the terms of a SoundExchange (SX) offer that expired yesterday (Sept 18), a deal that would cap revenues, listening hours, and force webcasters to remain very small businesses.  (see details here)

Nonetheless, in SX's efforts to convince Congress that they are offering webcasters viable alternatives to the CRB-determined rates, SX is touting the 24 webcasters it convinced to sign as "significant numbers," and offering disingenuous explanations as to why other small commercial webcasters DIDN'T sign. Considering that there are over 15,000 webcasters in the United States alone, SX is hardly making the kind of progress that they claim.

Also, according to Senate records, SoundExchange has, this year, already spent over $50,000 in artist's royalties lobbying to kill the 'Internet Radio Equality Act', money it is currently legally allowed to pull from collected royalties.

(August 26, 2007)

The fractured matrix of agreements (see August 22nd, 23rd, updates) between SoundExchange and the various webcaster representatives will build a legal patch-quilt that will be detrimental to all webcasters. This latest offer will keep most small webcasters in business, but after 2010 the battle will start all over again. This is a strong effort by SoundExchange to avoid passage of the 'Internet Radio Equality Act', and cover regurgitated inequities with patchwork agreements.

Also, these new agreements have caps involved that will effect the larger of the small webcasters. These agreements only apply to SoundExchange members. For music rights owners who are not members of SoundExchange, small webcasters must 'also' pay the horrendous new CRB rates for that music. This will force small webcasters to, again, issue license waivers to non-SX rights owners or, even worse, simply not play that music.

(August 23, 2007)

The Digital Media Association (DiMA) and SoundExchange reached an agreement today, which will cap DiMA member minimum annual fees at $50,000 per year, per company. The DiMA represents the largest web broadcasters, with members such as Yahoo Web Radio, Google, 365Live, and Pandora. The per performance rate set by the CRB on March 2, and the smallest web broadcasters, are not effected by this agreement.  (see details here)

(August 22, 2007)

On Tuesday, August 21, SoundExchange made an offer to very small webcasters, that would allow them to operate on a percentage of revenues basis, through 2010, according to provisions in the 'Small Webcasters Settlement Act of 2002'  (.pdf of bill). This was in response to pressure from Congress to reach some sort of agreement with webcasters before September 4, 2007, and from the numerous inquiries from small webcasters, in limbo, who want information on compliance with the law.  (see details here)

(August 8, 2007)

Wired Blogs reports that Fred Wilhelms, a prominenet Nashville entertainment lawyer, has written a letter to SoundExchange executive director John Simson, asking how much SoundExchange has spent on lobbying and public relations efforts, that don't appear to be covered by the section Copyright Act that specifies how the organization can spend it's money collected in the name of its members, some of whom Wilhelms represents.  (see details here)

(August 3, 2007)

Senators Ron Wyden and Sam Brownback announced yesterday that they were ready to take "expeditious steps" to push the Internet Radio Equality Act to the floor for a vote unless they saw real webcast royalty negotiations before Labor Day.

The senators are the sponsor and original co-sponsor (respectively) of S. 1353, the Senate version of the IREA. In a press release yesterday, they pointed out "unfounded" minimum per-channel fees mandated by the CRB, and revealed their dismay that SoundExchange would use the fees as leverage to impose Digital Rights Management requirements on to webcasters.  (see details here)

(August 1, 2007)

Members of the House Judiciary Committee heard official testimony concerning new performance royalties for broadcast (air) radio (see details here). This is an extremely important side-development in terms of the web radio rate hikes. The musicFIRST Coalition is pushing to get air radio to pay performance royalties (of which they never have paid), and the air stations, through 'The Free Radio Alliance', are fighting back. If air stations succeed in this fight it could also include the destruction of the 'Internet Radio Equality Act', the pending bill that will save web radio.

The parties involved (big 4 labels, indie labels, web radio, air radio, satellite radio, major artists, unsigned artists), all want something different, and are starting to bash each other. The government wants negotiation between the parties, but that is looking more and more complicated every day. The party to keep a close eye on is air radio. They are the 20 Billion pound gorilla in the mix, but they are talking the least.

(July 23, 2007)

Reaction to the negotiating tactics of SoundExchange, the royalty collection agency of the big 4 record labels, are being greeted with foul language from the blogisphere. The recent insistence that DRM encryption is to be used by the web radio industry has been received with accusations of ignorance, stupidity, and underhandedness. DRM may slow down Stream-ripper programs, but they are just a few modifications away from rendering DRM completely useless.

(July 18, 2007)

DiMA and SoundExchange have been trading blows over the detail of the language offered within the negotiations, mostly over verbal offers made concerning the $500 minimum fees and DRM encryption requirements (see details here). Meanwhile, Massachusetts Congressman Ed Markey has taken a negotiating position within the battle between DiMA and SoundExchange.

(July 12, 2007)

SoundExchange said that they will not enforce any rate increases during the current negotiation period until an agreement is reached. But, shaking down a thriving $200 million a year infant industry by charging over $1.1 billion in annual fees, is nowhere near fair. Web radio is only getting a short break, just a few feet from the edge of the abyss.