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.

Filed Under: copyright royalty board, radio, royalties, webcasting
Companies: nab, soundexchange

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  1. icon
    PaulT (profile), 18 Feb 2009 @ 3:09am

    I don't think this is quite as dumb as people think it is - in the short terms, at least. The RIAA already have major players on board - read: ClearChannel affiliates, people who will play and almost 100% major label content - and that's all they really want.

    The smaller radio stations would almost certainly be playing independent music. Why do you think the loophole was introduced in the first place? Entirely so that radio stations couldn't avoid paying the RIAA by playing indy music. It's a travesty that this was allowed, so it's not surprising.

    So, the RIAA honestly don't care if these smaller players shut down. It means less advertising for non-RIAA music, and increases the homogenisation of music by limiting competition. The RIAA don't want to be creative with music, they just want their new production-line product to sell.

    Of course, this will backfire in the long term. People will continue to look to other channels - legal or otherwise - for new music. As the smaller players are shut down, mainstream audiences will further tire of the mainstream product and stop buying music altogether. Meanwhile, innovative musicians will continue to find new avenues by which to spread their music to those who want to listen, be it by using P2P to give music away for free or some other method.

    This will inevitably reduce the major labels' ability both to sell their own music and to acquire new up-and-coming bands. But, as they constantly show, they only care about next week's profits, not next year's. They will sabotage their future to get a windfall now, just as they have over and over again for the last decade.

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