Why Does The RIAA Hate Webcasters? Webcasters Don't Play Very Much RIAA Music

from the nothing-like-a-little-competitive-pressure,-huh? dept

Back in March, when the word came out that the new royalty rates for webcasting were much higher than in the past, we were confused. After all, webcasting helps promote music — so why would the RIAA (and its SoundExchange spinoff) want to set rates so high that it would kill off this promotional channel? The answer isn’t that hard to figure out. Traditional radio, of course, is dominated by a few similarly formated stations that all play RIAA-backed music. 87% of the music you hear on the radio is from an RIAA-member record label. However, when it comes to music on webcasts, the story is quite different. Jon Healy, at the LA Times, points out that only 44% of music on webcasts are from RIAA labels. This, at least, based on the findings of Live365, one of the larger webcasting services out there. So, with more than half the songs coming from non-RIAA labels, no wonder they’re less interested in keeping webcasts alive. And, of course, the situation really is a win-win for the RIAA (in the short-term). It either kills off those webcasters who don’t contribute to the homogenization of music, or it forces them to pay large sums even if they only play non-RIAA music. Of course, this is a strategy guaranteed to backfire in the long run, as it simply pisses off even more music fans who will simply look elsewhere for music.

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Comments on “Why Does The RIAA Hate Webcasters? Webcasters Don't Play Very Much RIAA Music”

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Anonymous Coward says:

Re: The RIAA is DOOMED to Extinction

Yeah, the record execs know that too. But they’ll all retire rich, laughing all the way to the bank and nothing at this point is going to change that. The only question is how rich will they be by then? Milking the current system is a lot more expedient that building new business models when you’ve just got your eye on a golden parachute anyway.

Shane C (user link) says:

Negotiate directly with the labels.

I wrote this opinion piece back in June. Although the situation has changed somewhat, I think the basic idea still applies.

Now, the question that everyone has been asking from the start of this fiasco back in April has been “what are they doing?” They keep talking about how anything less then the outrageous fees dictated by the CRB will leave the artists “desecrated, and homeless.” Anyone with a couple hours in an econ. class will tell you that the artists won’t get anything if there is no means to advertise their goods. Furthermore, basic math will tell you that if a company has to pay 1300% of it’s revenue (that’s money coming in, not profit left over) to stay open, it won’t stay open long.

How many people would spend $20 on a CD with music that they have never heard before, from a band that they don’t know? My guess is, not many. Fact of the matter is, people buy the songs they hear repeatedly. Why else would the labels utilize “Payola” to promote their songs?
( ie: Sony / J.Lo report on Fox)

I know what some of you are thinking. “RIAA…err…Soundexchange is trying to close down the small stations that can’t afford to pay these rates. The big corporations will streamline their operations, lay off a few people, and pay the fees.” That’s not the case.

The big corporations (ie: AOL, Yahoo, MTV, Pandora, Live 365, Real Networks) have all come out declaring that if the choice is between paying 773% of what satellite radio pays, or shutting down their operations, they will choose the latter. Obviously these companies don’t want to close down, giving up all their hard work, let alone revenue streams. So what will they be forced to do when they can’t afford the “standard, everyone pays the same amount” fees that have been dictated?

Negotiate directly with the labels.
The law explicitly allows companies to negotiate directly with the “copyright holder” (ie: Universal Music Group, Sony BMG, Warner Music, EMI Group) for a reduced fee structure, less than the “common” compulsory agreement.

This does nothing but benefit the labels:
* More money. — Remember, no Soundexchange, no requirement for 50% of the collected revenue to go to the artists. (you know, those pesky people that they can’t seem to find anyway)

*Label controlled set lists. — “You agreed right here in this contract that if we let you play the music, we got to choose what music gets played.” (Independent artists? What independent artists? Go play some Britney Spears!)

*Limited numbers of *casters. — It’s easier to control a small group. If there are a limited amount of “stations” playing music, they can justifiably dictate that they play only the most “popular” music, that appeals to the masses (ie: the 12-22 age range). By the way, this market happens to be what they make most of their money.

*Limited format choices. — If you believe that maintaining Xnth different genres is easy, or desired, think again. (“Oh, we got both kinds. We got country *and* western.“)

Shane Chambers
General Manager
Big Blue Swing.com

CharlieHorse says:

head on over to the EFF ...

and read more about the SoundExchange crap.

IANAL – but, it seems that if I am an indy – not associated with any RIAA company or Soundexchange – that I *should* be able to play/webcast music that I have created (or that I have legally contracted from other indy and/or non-affiliated bands, producers, etc.) without having to pay soundexchange or any other riaa front one nickel. anything other than that would seem to be tortious interference with my right to enter into legal contract with whomever I please.

any lawyers out there who can put this in perspective ?

Mystified says:

Re: head on over to the EFF ...

I’m also not a lawyer, but if I start a webcast that only plays indy music and nothing from RIAA labels, then RIAA and SoundExchange had better not try to bill me. That would be like expecting me to pay alcohol taxes on soda.

A couple hundred years ago there was a big stink over taxation without representation. Anybody interested in a tea party over at the NAB, RIAA & MPAA buildings?

Anonymous Coward says:

Re: head on over to the EFF ...

IANAL – but, it seems that if I am an indy – not associated with any RIAA company or Soundexchange – that I *should* be able to play/webcast music that I have created (or that I have legally contracted from other indy and/or non-affiliated bands, producers, etc.) without having to pay soundexchange or any other riaa front one nickel.

It may seem that it should be that way, but if you have enough money you can apparently buy politicians and laws that say otherwise.

anything other than that would seem to be tortious interference with my right to enter into legal contract with whomever I please.

Again, not if you can buy laws that say otherwise.

Nick (profile) says:

declare independence and start a revolution

Soundexchange thinks they can tax *all* music just like the British taxed the American colonies. Time to declare independence and start a revolutionary war against RIAA and NAB!

I think there is going to be a movement like a poster above mentioned. A branding campaign for Internet Radio stations: 100% RIAA free and proud!

Anonymous Coward says:

The post comes close to actually recognizing what is going on the the RIAA. It isn’t about the money. It is about control. Webcasters aren’t easy to control so the RIAA wants to wipe them out.

RIAA has to have control of the recording industry in order to perpetuate its formula. Rap and what passes for music at the RIAA are easy to mass produce; no innovation required (in fact innovation just muddies the water). Their problem is people outside their system that keep innovating and sometimes making a quality product that becomes popular. The RIAA requires control in order to make their spreadsheet-governed model work.

Anonymous Coward says:

why dont indie artists just announce they dont associate with the RIAA and are proud to offer music for the modern generation. ….or something to that effect…might that make some impact on those retards at the RIAA? if the RIAA bullies consumers, why dont the artists who dont affiliate with the RIAA start bullying the RIAA. I have to wonder…

Hulser says:

Re: Re: Re:

Because RIAA has the heart to do away with the bother of figuring who owes who what and handle all that themselves. If everyone wanted to work out individual agreements with individual artists, the industry would grind to a halt.

Well, first off, I don’t think even the RIAA would claim what they are doing is for the “heart” for any other emotional reason. It’s pure business.

What you appear to be saying is that it’s too much trouble for the RIAA to determine who is playing RIAA music and who isn’t, so it’s OK to just charge everyone. The problem with this logic is that the law is not set up to protect a given business model, but the consumer. You say that “the industry would grind to a halt” if the RIAA couldn’t indiscriminately charge their webcast fees. Yes…and? Given the current state of “the industry”, I think there’s a major portion of the world population who wouldn’t mind this “catastrophe” if it meant breaking the control the RIAA has on the marketplace of music.

Anonymous Coward (user link) says:

RIAA pressuring Canada Hair Salons?

It seems that Canada is now pressuring hair salon’s to pay up for playing music.


“The minimum fee is about $95 for salons up to 825 square feet.”

Perhaps they will lobby for royalties if a song is played at a wedding or a private party with more than 5 people present.

Maybe we will all be charged a fee on our income tax, and will need to prove our innocents to be exempt.

When will it end?

Shane C (user link) says:

First part of

OK, I skipped the background when I posted my comments earlier. I presumed that people reading techdirt would already have the background, and not need me to repeat it for them.

Perhaps I was wrong, as there appears to be some misunderstanding of what and who the SoundExchange is.

First off, the RIAA is NOT a “pawn of the NAB.” Up till recently, the NAB, and the RIAA have had a very close relationship (cousins sharing the same bed). However, there seems to be a little bit of a family feud going on recently. Presumably this was instigated when SoundExchange proclaimed that members of the NAB were “stealing from the artists,” by not paying them royalties. These decelerations have led to the proposed performance royalty changes currently in congressional hearings.

The NAB, seeing the winds of change, has recently thrown it’s full lobbing power behind the Internet Radio Equality Act. I can only presume that they figure they’ll loose their royalty free status sometime in the near future, and want to limit the damages.

SoundExchange might as well be called RIAA, in my opinion. “SoundExchange was created in 2000 as an unincorporated division of the RIAA. In September 2003, SoundExchange was spun off as an independent organization.”[wikipedia]

SoundExchange doesn’t think they can “tax all music.” The Library of Congress / Copyright Office declared they can collect royalties on all performed music. If you’re going to place blame, place it in the right people. “Beginning on January 1, 2003, SoundExchange became the only collective designated by the Copyright Office to distribute statutory royalties to copyright owners and performers entitled under 17 U.S.C. 5 114(g)(2).” [wikipedia]

Not all performances require payment of royalties to SoundExchange. Statutory licensing provides for direct contractual agreements between the copyright holder, and licensee. For example, if a station decides to only play non-RIAA music, it has two licensing options. First, the station can contact every copyright holder in their library, and cut a deal direct. In many cases, particularly with small non-represented artists, this is often limited to “publicity for performance.” Royalties for these independently contracted songs do not have to be paid to SoundExchange.

The second method is the station can purchase a “statutory license” from SoundExchange. The statutory license basically provides them with a legal CYA in case the copyright holder decides they don’t want anyone playing their music. With the statutory license in hand, the most the copyright holder can do is demand that everyone stop using the performance with out a direct contract. (note the “everyone,” as this right can not be selectively enforced) The copyright holder can only then sue if the “infringing entity” doesn’t comply with the demand. They can not sue the station up till that point, because the station has a “get-out-of-lawsuit-free” statutory license.

Shane Chambers
General Mangager
Big Blue Swing.com

mike allen says:

EFF ??? NAB RIAA also to declair war

First what is EFF ??????
The Riaa have turned on the NAB wanting them to pay high rates !!!!
The NAB have stated they support ihe internet radio equality act.
The UK record companies have set even higher rates than the RIAA.
The whole thing is a total mess. the guy who said just keep streaming and stuff em is right like the the Beatles said REVOLUTION.

uncledeercamp.com (user link) says:


The organization sound exchange are basically the Nazi’s of our time. Instead of throwing children into the ovens. Mrs.Fienstien/Senator and her lobbies’t/RIAA friends are stamping out the hopes and dreams of up and coming Acts from ever making it to the big time from grass roots beginnings. All this for the control of cell phone web-casting and its huge profits. In the Euro’s this has already came to fruition and life is allot grayer there. This is America dam it we support free choice and somewhat free listening.Call and write our friends in Washington and tell them you want this miscarriage of justice aborted along with the people that caused it.

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myra (user link) says:

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