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.

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  1. icon
    Mike Masnick (profile), 11 Jul 2009 @ 12:03pm

    Re: SoundExchange Monopoly

    However, the 2009 SoundExchange rates are not as "ridiculously high" as Mr. Masnick suggests.

    How is 25% -- as a base -- not ridiculously high compared to other forms of royalties?

    In my view, the United States is long overdue to require master and video performance royalties, like the rest of the world before it.

    Right... pay us to help advertise us. I don't see how that makes sense at all.

    If performance royalties are so important, how do you explain payola?

    Music is valuable. If the webcaster business model doesn't account for that, then it needs to change. Owners and creators are entitled to their fair share of the revenue pie.

    Promotion is valuable. Hence payola. Clearly the labels have long valued the promotion over the royalty. Why should that change now? And why should it change via gov't fiat?

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