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. identicon
    Observer, 11 Jul 2009 @ 3:05pm

    Re: Re: Downright creepy.

    "Stations will really only be able to afford to play music from artists that the industry promotes by giving the stations kickbacks (i.e. payola) for playing."

    Payola is completely legal for web stations, it seems. Maybe this is the reason Pandora sees this as a good deal: Because their business plan is to become an RIAA whore and jump on the payola gravy train. Their jubilation makes sense now.

    I expect to see a lot of webcasters jump into the record industry's pockets now. Of course, they will deny it and nobody will be able to prove otherwise because the payola will be hidden from public view, but the record industry, not listener demand, will be calling the programming shots for any stations that want to stay in business.

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