Senate Judiciary Committee Approves RIAA Bailout Radio Tax

Wed, Oct 14th 2009 8:18am

Filed Under:
bailout, performance rights act, radio, webcasters

Companies:
pandora, riaa, soundexchange

77 Comments | Leave a Comment..

Pandora Continues To Push Users To Vote For Shameful Radio Performance Tax

from the can't-compete? dept

We mentioned back in July how Pandora was urging its users to support the Performance Rights Act, which is effectively a government bailout for the RIAA by taxing already struggling radio stations for the right to help promote the RIAA's music. It's a travesty. The only reason Pandora supports it is because Pandora was pressured into its own ridiculous webcasting rates and wants to help bring down radio too. While I like Pandora as a service, I think it's shameful that it's now using the political process to burden competitors with a government created tax, that goes straight to the RIAA.

Apparently, Pandora has once again ramped up this effort to have the government tax its competitors. A whole bunch of you have been forwarding these ridiculous emails from Pandora that urge people to contact their elected officials in support of the RIAA Bailout bill. Most of those submitting those emails to us have said that you'll be doing the exact opposite, and are offended that Pandora is pushing you to support such a thing.

Yes, Pandora, it sucks that you got stuck with ridiculous webcasting rates that will make it difficult to remain profitable, but that's no excuse for trying to get the government to dump an unfair tax on your competitors.

Politics

Tue, Aug 11th 2009 1:55pm

Filed Under:
bailout, high school radio, performance rights act, piracy, radio

Companies:
fcc, musicfirst, riaa, soundexchange

29 Comments | Leave a Comment..

Why Is The FCC Even Giving The Time Of Day To RIAA's Bogus Radio Witchhunt?

from the waste-of-resources dept

Earlier this year, MusicFirst, a lobbying group that is run by the RIAA and pushing for a special tax on radio stations for daring to promote songs, came out with its latest in a long list of bizarre claims, demanding that the FCC investigate the fact that radio stations were supposedly boycotting musicians who supported the Performance Royalty tax. There were numerous problems with this claim. First, we thought it was rather hypocritical of MusicFirst to demand that radio stations play these artists, when it was the very same MusicFirst that was also claiming that radio was "a kind of piracy" for playing the music of these very same artists without paying a performance tax.

So, apparently if a radio station does play these artists, it's piracy. If it doesn't play these artists, it requires an FCC investigation.

Beyond that, MusicFirst failed to note that many of the artists topping the charts (including the Black Eyed Peas, who topped the charts at the time) were some of the most outspoken artists in favor of this tax. If there was some big conspiracy to not play these artists on the radio, someone forgot to tell... well... pretty much every radio station around.

That highlighted the third problem: MusicFirst didn't happen to point to any radio station that actually did this. The only one that could be dug up was a small high school radio station that had publicly boycotted artists supporting such a tax (which would have shut down the radio station), but only did so for one month and that month happened two years ago, and was a clearly supported expression of free speech.

And that brings up the final point. The recording industry has no right to demand that radio stations play certain artists. A radio station is free to play whatever artists they wish and run whatever commercial they wish. This is a pure free speech issue, and it's quite troubling that the recording industry is targeting radio stations when they have no right over this.

Based on all of this, you would hope that the FCC would simply laugh off the petition... but tragically, it's opened up a consultation on the matter and is asking for public input (found via Michael Scott). The article linked here goes through all of the First Amendment questions raised by this, and notes (thankfully) that the FCC seems to recognize those issues as well. But, if that's the case, why even bother holding this investigation in the first place?

News You Could Do Without

Tue, Jul 14th 2009 12:34pm

Filed Under:
bailout, performance rights act, radio, webcasters

Companies:
pandora, soundexchange

75 Comments | Leave a Comment..

Pandora: If We're Getting Taxed So Heavily By SoundExchange, Radio Should Be Too

from the strange-bedfellows dept

Well, this is rather disappointing. Just days after caving in and agreeing to new webcaster rates that will harm pretty much everyone, Pandora has gotten right into bed with the RIAA/SoundExchange in supporting the Performance Right Act (the RIAA Bailout Act) to extend a similar unnecessary tax on radio. Pandora's reasoning is no surprise: basically it's saying that if it has to pay such a silly tax to help promote musicians, it's unfair that radio stations get away without paying something similar. But, still, it's disappointing. Rather than looking at adding value to the overall market, Pandora has basically decided that it's "enemy's enemy is a friend" and is supporting such a law simply because it will harm radio stations. This makes me think significantly less of Pandora.

Overhype

Fri, Jul 10th 2009 5:15pm

Filed Under:
copyright, royalties, webcasting

Companies:
live365, pandora, soundexchange

67 Comments | Leave a Comment..

Why The New Webcasting Rates Are A Death Sentence For Webcasters

from the plainly-ridiculous dept

When the announcement came out this week that webcasters had somehow "come to an agreement" with SoundExchange over webcasts, what was unbelievable was that many presented this as a "victory" for webcasters. Hell, even SoundExchange made public statements about how it was disappointed by the rates, but it was an "experiment." But when you looked at the actual numbers, this made no sense. The rates are ridiculously high when compared to royalty rates for traditional radio or satellite radio. Michael Robertson breaks down the numbers and explains away the myths of this deal. It will almost certainly bankrupt nearly every webcaster out there. Robertson focuses on the big webcasters, and points out that the 25% royalty rate promoted by the press isn't accurate at all, and for a company like Pandora the real rate will be north of 40% of revenue -- which is not even close to sustainable.

Meanwhile, small webcasters don't get much of a break either. Live365 is pointing out that these rates will basically kill off every webcaster it hosts by requiring a $25,000 fee. As the company notes, the guy running the Armenian folk music station for $10/month isn't going to pay $25,000 and certainly isn't going to make enough revenue to pay up.

Make no mistake: these new rates are effectively going to kill off a significant portion of online webcasters. The recording industry, of course, doesn't find this problematic, because they don't like the fact that they can't control webcasters the way they can radio, so they are fine with taxing them out of business. But what a waste of what technology allows. These days, anyone can and should be able to effectively express their own musical views by webcasting what they like. And that's about to become prohibitively expensive for no reason other than that SoundExchange/RIAA have a gov't granted monopoly over any kind of broadcasting.

Culture

Tue, Jul 7th 2009 5:33pm

Filed Under:
performance rates, promotion, royalty rates, webcast

Companies:
pandora, riaa, soundexchange

60 Comments | Leave a Comment..

Why Should Webcasters Pay 25% Of Revenue To Promote Musicians?

from the how-is-this-possibly-good? dept

After years of back and forth negotiating (and more than a couple public spats), it appears that SoundExchange and music webcasters like Pandora have finally worked out an agreement on webcasting rates. If you don't recall, the Copyright Royalty Board assigned absolutely ridiculous royalty rates a few years ago, which seemed to have no bearing on reality (random aside: no one has yet explained why we feel it's okay for a small group of judges to determine what is a "fair rate"). The original rates would almost certainly put most webcasting operations completely out of business. But before delivering that death sentence, SoundExchange, the RIAA-spinoff that gets to collect the money (and has a long history of hanging onto it for longer than necessary and having trouble "finding" the artists it owes money to), thankfully agreed to hold off enforcing the new rates while everyone negotiated.

Since then, there has been a wide variety of back and forth details until the official agreement was put in place today... and even though many of the news stories present this as SoundExchange somehow backing down and "Pandora" winning, the details, frankly, seem so out of touch with reality it's difficult to see how it makes any sense at all. The main issue is performance rights, which radio stations already don't have to pay because radio is helping to promote artists. The idea that webcasters/broadcasters should need to pay artists for the right to promote them to fans just seems bizarre and borderline incomprehensible in the first place.

Also worth noting is that the royalty rates that traditional broadcasters do pay (to composers/songwriters/publishers) averages out between 3 and 4% of revenue. So, if you really had to come up with a reasonable rate to pay performers as well, you might think that it would start around that same 3 or 4%. Even that would be a pure bonus for performers who are used to getting nothing as a royalty (tax) from radio. But... no. The agreement is an astounding 25% of revenue as a bare minimum, with a requirement to kick-in $25,000 just to be a webcaster at all.

Pandora claims they're happy about this because it keeps Pandora in business (and settles a big legal dispute, which hopefully allows them to go raise some money to stay in business). But it's a stunningly large percentage of revenue that will make things prohibitively expensive for most webcasters to really stay in business. You now have to have huge margins to get anywhere in a notoriously competitive business.

Who loses? Well, just about everyone outside of SoundExchange/RIAA. Already, despite being happy about this deal, Pandora has announced that it's sharply curtailing its free service, and if you listen to more than 40 hours per month, you'll need to start paying. Most webcasters now have a huge expense that will make it difficult for many of them to remain in business at all. Musicians are severely harmed as well. While a few top musicians might get a new royalty check from SoundExchange (when and if it gets around to "finding" those artists), most musicians will now get less exposure, making it that much more difficult for them to put in place the successful modern business models needed to succeed today. This basically just rewards the RIAA/SoundExchange and a few large artists who will get an extra royalty check. Everyone else is worse off.

Some might say the NAB and traditional radio stations also make out nicely, in that since these rates may harm webcasters, it takes away some competition, but even if the radio stations are happy in the short-run, it's a bad deal. These rates, certainly, will likely influence any eventual "performance right" that's added to terrestrial radio, and could significantly jack up the cost of running a regular radio station as well.

We're living in an era of amazing technological progress, where it's easy for anyone to go out and promote musicians to others and help get those musicians and a larger audience, and all the RIAA has done, time and time again, is work as diligently as possible to prevent anyone but itself from promoting artists. What a shame. This "deal" does nothing to help up-and-coming artists and will significantly limit their ability to get their music noticed.

Politics

Fri, Apr 3rd 2009 8:48am

Filed Under:
copyright infringement, lobbying, lyrics, musicfirst

Companies:
musicfirst, riaa, soundexchange

37 Comments | Leave a Comment..

Yet Another Copyright Lobbying Group Caught Infringing

from the always-seems-to-happen... dept

These days, it's nearly impossible not to infringe on copyright in one way or another during your regular day -- but it's always amusing when big-time copyright supporters are caught infringing (and it seems to happen quite frequently). The latest is musicFIRST, the lobbying group funded (potentially illegally) by the recording industry, which has been pushing a campaign claiming that radio is piracy and demanding that radio stations pay even more royalties than they already do.

But, of course, when it comes to licensing or paying royalties itself... well, you know... that's a different story.

Billboard has noticed that MusicFIRST appears to have quoted the entire lyrics to the Beatles song "We Can Work It Out" in a mocking press release it put out earlier in the week -- but failed to get the necessary license. Now, of course, many of us believe that quoting lyrics like that is perfectly reasonable fair use. But... the recording industry (you know, the folks behind MusicFIRST) doesn't believe that, which is why they've shut down plenty of people for posting lyrics on the web and even thrown people in jail for posting lyrics on the web.

But, when they do it? It's fine? Funny how that works...

Legal Issues

Mon, Mar 23rd 2009 2:11pm

Filed Under:
collections, money

Companies:
choruss, soundexchange

47 Comments | Leave a Comment..

How Come SoundExchange Is Holding Onto Over $100 Million?

from the questions,-questions,-questions dept

We've talked about the ridiculousness of the various music collections societies being involved in the discussions on new music business models. To them, the answer is always the same: add another license and let us collect it. They're middlemen and they take in tons of money and would only be all too happy to take in more. Some got upset with us in the comments, by noting that some of these collections societies are non-profits. In fact, the new Choruss offering, which we've already explained why it's a bad idea that's more of a bait-and-switch than anything useful, has been described as a similar "non-profit" collections group.

But, as we've noted in the past, supposedly nonprofit collections groups such as SoundExchange (a spinoff of the RIAA) are notorious for not finding artists to pay -- even some of the biggest names in the business. Oh, and did we mention that if the royalties go "unclaimed" the recording industry (via SoundExchange) often gets to keep the money? Given that bit of info, it's perhaps no surprise at all that P2Pnet is noticing that SoundExchange's own tax returns note that the nonprofit was sitting on over $100 million at the end of 2007, a pretty significant leap over previous years, and a somewhat startling sum for a supposed "nonprofit" in charge of both collecting and distributing funds.

It seems like those musicians sure are difficult to find.

The P2Pnet report also points out that it will be interesting to see how much SoundExchange has spent on lobbying efforts. SoundExchange is actually barred from lobbying the government, but has been ignoring that for years by funding musicFIRST, a recording industry lobbying group that's trying to add a new license for radio stations to pay (collected by SoundExchange, of course) by claiming that radio is actually a form of piracy.

So, even if Choruss or these other collections societies seem to be designed with the best intentions in mind (and I'm sure they are), it seems that they're wide open to abuse -- which is yet another reason to be quite worried about simply handing over the entire industry's business model to such an operation.

Culture

Wed, Feb 18th 2009 1:18am

Filed Under:
copyright royalty board, radio, royalties, webcasting

Companies:
nab, soundexchange

28 Comments | Leave a Comment..

Traditional Radio Stations Agree To Webcasting Rates; Internet Only Webcasters... Not So Much

from the battle-still-brewing dept

While the big radio stations, represented by the NAB seem to have worked out a deadline deal on webcasting rates, it appears that internet-only webcasters have had their talks break down. This is bad news, of course. The whole situation is something of a farce. Rather than letting the market work the issue out directly, the Copyright Royalty Board (basically some internet-illiterate judges) basically gave the recording industry everything it wanted when it declared what the rates should be -- and made them quite high. Many online radio stations noted that the rates were so high that they would shut down. And, of course, the whole process would make RIAA-spinoff SoundExchange tons of money in administrative fees while separately benefiting the major labels that make up the RIAA by driving the smaller indie webcasters (who play less RIAA music) out of business. A win-win! And, of course, protesting by playing non-RIAA music wouldn't help. SoundExchange gets to collect for that music as well.

About the only reasonable thing was (despite the CRB's refusal to stay the ruling) that SoundExchange agreed to hold off new royalties while the parties negotiated. Time to work out a deal was supposed to end last fall, and despite SoundExchange and many webcasters asking for more time, the NAB lobbied hard to deny that extra time. Luckily they got it anyway, but even the extended period of time has ended. NAB and its big radio stations are fine with their deal, but internet-only webcasters still don't see anything reasonable. On top of that, SoundExchange made a separate offer to "small" webcasters, but most have found that to be way too onerous as well -- especially the part where if they ever get acquired by a larger player, they'll have to go back later and pay the higher rates even for the time when they were small and independent.

And, no one has yet explained why webcasters should need to pay so much money for helping to promote new acts in the first place. Radio, streaming online or over the air, is a great way for people to learn about new acts, giving them reasons to go out and buy products and merchandise or see those acts live. By forcing the very people who want to promote the music to pay ridiculous fees, all the industry is doing is shooting itself in the foot. Again.

Legal Issues

Fri, May 16th 2008 2:44pm

Filed Under:
appointments, constitution, copyright royalty board, copyrights

Companies:
soundexchange

13 Comments | Leave a Comment..

Is The Copyright Royalty Board Unconstitutional?

from the this-sounds-familiar... dept

Last month, we wrote about a Constitutional challenge to the patent appeals board. It was based on the theory that the Constitution clearly says that certain appointments can only be made by the President, the courts or the heads of a department. A legal change a few years back let the USPTO director appoint judges to the patent appeals board -- but the Patent Office director is not the head of a department. He reports to the Commerce Secretary who should be nominating the judges -- thus suggesting that all of the appointments over the last few years have been unconstitutional.

Of course, it didn't take long for folks to recognize that the same question may apply well beyond the patent appeals board. In fact, there's a court case challenging whether the current Copyright Royalty Board is constitutional as well. While the article doesn't go into details, it sounds like it's an identical issue. The CRB members are appointed by the Librarian of Congress rather than the President or the head of a department. This particular lawsuit has been filed by an organization that was hoping to compete with SoundExchange for collecting and distributing royalties. The CRB rejected the request. Given how many problems SoundExchange has had in carrying out its charter, it would seem like competition is a pretty good idea. However, rather than fighting that decision specifically, the company recognizes this same constitutional question. Funny how the boards involved in both copyrights and patents may be unconstitutional for the same basic reason.

Legal Issues

Mon, Aug 6th 2007 7:50am

Filed Under:
lobbying, music, radio

Companies:
riaa, soundexchange

15 Comments | Leave a Comment..

SoundExchange Caught Lobbying, Despite Strict Rules Against Using Its Money For Lobbying

from the somehow,-this-doesn't-come-as-a-surprise dept

SoundExchange, which is a "non-profit" spinoff of the RIAA is supposed to be a neutral party, simply in charge of collecting certain royalties and distributing it to the artists. Of course, things aren't always the way they're supposed to be. After all, SoundExchange is famous for having trouble finding many of the musicians it's supposed to pay -- which isn't all that surprising since it gets to keep the money that goes unclaimed. However, part of the law that governs SoundExchange's existence makes very clear that the organization may only use its money for three things: administration of collecting and distributing royalties, settling disputes about the royalties and licensing and enforcement. One thing clearly not on that list is building a PR campaign and lobbying Congress to expand its ability to collect royalties from other sources. However, Eliot Van Buskirk over at Wired has discovered that's exactly what SoundExchange is doing, and it appears to be breaking the law.

You'll recall the recent stories about the music industry claiming that radio stations are getting a free ride in not having to pay musicians' royalties, despite the fact that, for years, the record labels felt they needed to pay the radio stations just to get airtime. This came out as a new lobbying group and PR campaign kicked off -- including the ridiculous assertion that radio makes people buy less music. It turns out that the group behind this lobbying effort, musicFIRST, happens to be funded in part by SoundExchange. It makes sense why SoundExchange would do this. After all, it would be in charge of collecting those royalties. However, the law seems pretty clear that SoundExchange can't use its money for lobbying (especially lobbying to expand its own power). Van Buskirk got the run around from SoundExchange on this, with the executive director ignoring the question and simply repeating the laughable statement that radio stations (who are promoting the music for the record labels) are somehow getting "a free ride." A lawyer for SoundExchange then tries to explain the situation away by saying that the royalty money being used for lobbying was authorized to be used this way by SoundExchange members. That's like saying it's okay that they broke the law, because they gave themselves permission to break the law. Very convincing.

Up To Date

by Carlo Longino

Fri, Jul 13th 2007 12:23am

Companies:
soundexchange