Web Radio Royalties Resolved*
Our long national Web-radio nightmare is over--sort of, at least for the next five years or so.
Yesterday, representatives of the recording and Web-radio industries announced an agreement on a lower set of royalties that Webcasters would pay to musicians and record labels for the use of their recordings.
Instead of the financially destructive fees--per song and per listener--that Webcasters were set to cough up, courtesy of an ill-informed panel of copyright judges, Web radio sites could pay either lower rates or a percentage of their revenues or expenses if they opt into this new royalty structure.
For more than two years now I have been eagerly anticipating the day when I could finally write these words: the royalty crisis is over!
Webcasters, artists, and record labels have reached a resolution to the calamitous Internet radio royalty ruling of 2007. Pandora is finally on safe ground with a long-term agreement for survivable royalty rates. This ensures that Pandora will continue streaming music for many years to come!
The actual picture is a little more complex. SoundExchange, the D.C.-based organization representing musicians and record labels, and veteran Web-radio broadcaster and blogger Kurt Hanson, who helped negotiate this agreement, each needed lengthy, multiple-table blog posts to recap the new rules.
* Large Webcasters--defined as those who rake in more than $1.25 million in annual revenues--will pay either 25 percent of those revenues or a per-performance rate in the neighborhood of a tenth of a cent, whichever is greater. This deal runs through 2015.
* Small Webcasters--those raking in less than $1.25 million a year in revenues and fewer than 8 to 10 million listener-hours a month of broadcasts, depending on the year--can choose between paying a percentage of their revenues (12 percent of the first $250,000, then 14 percent of everything on top of that) or their expenses (7 percent). These options run through 2014.
Note that these rates, while cheaper than before, remain fairly expensive. Pandora's Westergren, for example, noted in that blog post that the site would have to charge listeners 99 cents if they tune in for more than 40 hours in a month.
These rates also far exceed those that satellite-radio broadcasters pay--6.5 percent of gross revenue this year, rising to 8 percent in 2012--and infinitely exceed the rates--zero percent--that American FM and AM stations cough up to musicians and labels. (In most other countries, terrestrial radio stations already pay performance royalties.) That has been the fundamental problem with the Web-radio-royalties debacle, going back not just to 2007 but to 2002: One group of businesses is getting charged more than others that provide the same basic service, apparently for the sin of taking too long to hire good lobbyists.
Bill Goldsmith, founder of the non-profit Webcast station Radio Paradise, emphasized that point in an e-mail:
I understand that Mr. Westergren has advertisers and potential advertisers who need reassurance that Pandora will still be around. But this is hardly a victory for webcasters. It perpetuates a situation where the ability for the Internet radio industry to grow and prosper is hampered--to a nearly fatal degree--by the record industry's blatant attempt to recoup some of the money lost by their mismanagement of all things digital.
Goldsmith is not saying, nor do I think, that stations shouldn't have to pay any royalties to musicians. Others disagree; Mike Masnick argues that point in a post on the Techdirt blog:
The idea that webcasters/broadcasters should need to pay artists for the right to promote them to fans just seems bizarre and borderline incomprehensible in the first place.
A paragraph later, however, Masnick seems to accept the idea that Webcasters--just like satellite broadcasters and even plain old AM and FM--should pay royalties to the composers of songs, noting that these rates amount to a more sensible 2 or 4 percent of revenue.
Well, if songwriters deserve a check for the use of their work, why not performers too? Should our copyright laws mandate some compensation to Tom Waits for his music and lyrics to "Jersey Girl,", but none to Bruce Springsteen for his performance of the song?
To that end, Congress is debating a bill called the Performance Rights Act that would levy performance royalties on regular AM and FM broadcasters. But those rates would still run far less than Webcasters' fees.
There's a simple and fair way out of this, and that's to standardize royalties--to composers and performers alike--on broadcast music outlets, whether they use a satellite, the public airwaves or an Internet connection to reach your ears. As an added benefit, this royalty structure wouldn't have to resemble the tax code.
But is that far too logical a solution for Congress? Tell me how you'd like to see this whole debate end--and how you think it will conclude--in the comments.
Posted by: lightgrw | July 8, 2009 9:34 AM | Report abuse
Posted by: rogernebel | July 8, 2009 11:42 AM | Report abuse
Posted by: 54Stratocaster | July 8, 2009 10:28 PM | Report abuse
Posted by: 54Stratocaster | July 8, 2009 10:30 PM | Report abuse
Posted by: photodon | July 10, 2009 11:23 AM | Report abuse
The comments to this entry are closed.