This is a lot worse than expected. What this means is that my costs related to performance royalties from last year to 2010 will increase almost 4x. And that's if I don't add a single new listener between now and then. Last year, my listenership tripled. Now, I don't know if I can afford to have it triple again this year.WEBCAST ROYALTY RATE DECISION ANNOUNCED
The Copyright Royalty Board (CRB) has announced its decision on Internet radio royalty rates, rejecting all of the arguments made by Webcasters and instead adopting the "per play" rate proposal put forth by SoundExchange(a digital music fee collection body created by the RIAA).
RAIN has learned the rates that the Board has decided on, effective retroactively through the beginning of 2006. They are as follows:
2006 $.0008 per play
2007 $.0011 per play
2008 $.0014 per play
2009 $.0018 per play
2010 $.0019 per play
RAIN Analysis:
Because a typical Internet radio station plays about 16 songs an hour, that's a royalty obligation in 2006 of about 1.28 cents per listener-hour.
In 2006, a well-run Internet radio station might have been able to sell two radio spots an hour at a $3 net CPM (cost-per-thousand), which would add up to .6 cents per listener-hour.
Even adding in ancillary revenues from occasional video gateway ads, banner ads on the website, and so forth, total revenues per listener-hour would only be in the 1.0 to 1.2 cents per listener-hour range.
That math suggests that the royalty rate decision — for the performance alone, not even including composers' royalties! — is in the in the ballpark of 100% or more of
total revenues.
I'm not sure what all of this means quite yet but it's not good. Musical Justice has never been a money making project. I love the music that I play and want to share it with the broadest audience possible. Most people probably wouldn't put the money into it that I do, but my "real" job pays me well enough that I could afford to subsidize it at the original 2006 level. But this royalty schedule changes everything. I may have to cap listeners until the dust settles and the full impact is known.
Performance royalties are only part of my overall costs. For example, I don't get many freebies from the record labels, so I buy most of the music that I play. By the time you add in the cost of maintaining the website, radio station and song library, along with this new fee structure, my costs are somewhere in the 5 to 8 cents per listener hour range. At that point, I still haven't paid myself yet for any of the time I spend...
I'm not complaining. This has always been a labor of love. But like I said, it's not pretty.
So, I'll be taking a closer look to see how this is going to impact Musical Justice. In the meantime, if you're a MJ listener and you want to know what you can do to help, here are a couple ideas...
The number 1 thing you can do is sign up for VIP listener status on Live365. I get a "reward" from Live365 for every VIP listener hour on Musical Justice of 0.9 cents. You can click the button below if you want to sign up now.
Another way you can support MJ is something I've been working on for the past month. I'm putting together an online Musical Justice store in association with Amazon. I wasn't going to announce it for a couple more weeks, but why wait? You can go to www.justicemarket.com and buy everything from CDs and DVDs to computers and iPods. For every dollar you spend there, Musical Justice will get 6%. Prices are comparable to Amazon and Best Buy, so if you're going to buy something anyway, please consider throwing a little love our way...
As always, thanks for listening. I think I need to lie down.
UPDATE: A new website is going online at SaveNetRadio.org to provide people with background information and contact information for your members of Congress. If you've read this far, you'll probably want to go and take some action.
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Listen to Musical Justice at Live365 or iTunes Radio (under Alt/Modern Rock).
1 comment:
Inhibiting the growth of webcasting was the goal from the outset, with passage of the anti-webcasting provisions of the DMCA. The impossibly burdensome music use reporting requirements and now these grossly unreasonable compulsory license fees are part and parcel of the over all effort to put an end to webcasting.
The problems lies with the music industry's addiction to its traditional sales-based revenue model and the negative policy implications of that has for consumers, technology firms, consumer electronics makers, and digital audio service providers of all types (not just webcasters). There can be no doubt but that public policy should support the opportunity of music industry rights holders to derive substantial revenue from their contributions to culture and to commerce. By the same token, however, the industry has no right to demand that public policy support its desire to do business in a particular way.
What's really needed is an alternative to the music industry's sales based revenue model.
I recently published a White Paper (available at bennettlincoff.com/fixing_what_is_badly_brokwn.pdf)in which I propose such an alternative. Mine is a comprehensive approach to rights licensing and rights management that does not depend on the efficacy of digital rights management (DRM) technology for its success. Specifically, I suggest that the rights of songwriters, music publishers, recording artists and record labels in their respective musical works and sound recordings should be aggregated so as to create a single right for digital transmissions of recorded music. The digital transmission right would be a new right, not an additional right. It would replace the parties’ existing reproduction, public performance and distribution rights (and, in those territories where it applies, the communication right).
Ownership of the digital transmission right in individual recordings would be held jointly by the songwriters, music publishers, recording artists and record labels who contribute to the recording. Each rights holder would have authority to grant non-exclusive licenses for digital transmissions of those recordings on any terms they and their licensees find to be mutually acceptable. The only limitation on this authority would be the obligation to account to co-owners pursuant to whatever arrangements they make among themselves for the division of royalties earned from this newly-established right.
The digital transmission right would be enforceable only against those directly involved in providing digital transmissions of recorded music. Accordingly, consumers would not incur any liability merely for surfing the web, accessing streaming media, or downloading music files. Neither would copying for personal use require authorization. Similarly, software developers, technology firms, consumer electronics makers, and telecommunications and Internet access providers, as such, would have no liability under the digital transmission right. On the other hand, service providers would need licenses if they operate web sites, social networking services, P2P file-sharing networks or the like that provide digital transmissions of recorded music.
Consumers would only need licenses if they act as service providers in their own right; that is, whenever they are responsible for the digital transmissions at issue. By way of example, consumers would need authorization if they operate music-enabled personal or hobby web sites; or if they upload music files to a web site or service that does not have its own licence under the digital transmission right authorizing this activity by users of its service (known as a “through-to-the-user licence”); or, if they offer recordings to others through participation in a P2P file-sharing network, or similar service, that does not have such a through-to-the-user licence.
The right would be implemented through a combination of free market transactions between individual right holders and service providers and voluntary collective rights administration. The best results for all would flow from a marketplace in which collective licensing is the norm and direct licensing the exception. The division of ownership of rights that I suggest will tend to encourage rights owners to work together through collective licensing organizations. I also suggest solutions to the complementary issues of how to license transborder transmissions and on what basis to distribute royalties each from those transmissions. In my view, overall success for the music industry will depend on the presence in each territory of at least one collective organization whose catalogue encompasses all or nearly all recordings and which is authorized to grant worldwide rights at its local rates for all digital transmissions of recorded music that originate from its territory.
Through the digital transmission right implemented as I suggest in the White Paper, digital transmissions of recorded music could be made available from the largest number and widest array of licensed sources, anytime, anywhere, to anyone with network access. Consumers would be free to enjoy music when, where and how they themselves decide. Technology firms and consumer electronics makers would be free to offer greater interoperability between the many recording, playback and communications devices that are available, and to meet consumer demand for new products with next generation capabilities. And, in the aggregate, music industry rights holders would do at least as well financially under my proposal as they do now under the system that my proposal would replace.
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