Finally, some good news for webcasters and internet radio.
October 21, 2002 1:49 PM   Subscribe

Finally, some good news for webcasters and internet radio. In lieu of the per-song, per-listener rates that were certain to sink internet radio, flat rates and annual caps look like an acceptable compromise that will let the new music venue survive, and perhaps thrive.
posted by mathowie (20 comments total)
I've never understood why webcasters need the government to fix the price of broadcasting music from RIAA represented labels. If the price is too high, then why not search for other sources of music that are more affordable and agreeable.

I'd like to lease a Ferrari for $10 a month, but lobbying congress to force old 'Enzo to give me one for that price seems a little unreasonable.
posted by jsonic at 2:02 PM on October 21, 2002

jsonic, the old proposed rates were higher than broadcast radio royalties were. Internet broadcasters aren't asking to get something for free here, they're simply asking for a fair price.

"The CARP determined that the only example of a "willing buyer/willing seller" was a deal cut between Yahoo! (which had recently paid $5 billion for and the RIAA in July 2000 (while the dotcom craze had not yet crashed) and based their ruling largely on the terms of that deal."
posted by mathowie at 2:10 PM on October 21, 2002

Thanks for the clarification.

they're simply asking for a fair price

Techinically speaking, the fair price is whatever the RIAA represented groups want to charge. They own the music.

Webcasters and music listeners can pressure the RIAA to lower their prices by seeking alternative sources for music. If the RIAA sees enough people flocking elsewhere, then they will lower their prices to compete.
posted by jsonic at 2:22 PM on October 21, 2002

It's not a free market, jsonic.
As I understand it, the CARP *fixes* a rate to be paid, regardless of who the publisher is. So there's no 'market forces' involved. Since the rate was chosen based on a single deal made during the dotcom heyday, there's no way for smalltime broadcasters to participate. Further, the model itself is very different from how radio broadcast works - more costly, and the publisher gets the money instead of the composer.

So technically, no, that's *not* a fair price.
posted by freebird at 2:33 PM on October 21, 2002

Webcasters gain a new ally (-via /.) Things are looking a little brighter.
posted by jbelshaw at 2:34 PM on October 21, 2002

Funny that it was Jesse Helms who blocked the compromise bill set to go into effect this week. Thanks should go to the folks at Raleigh's independent classical music station WCPE, along with the "two prominent religious broadcasters" who petitioned Helms. But Deborah Proctor and the rest of the CPE staff have been working hard for a while on this one.

jsonic, we're not just talking about fair market pricing here. This was a clear case of the RIAA using its government clout to force through an obscene increase in deliberately burdensome requirements and fees. I agree that it would have been nice to see radio shift further away from the major labels, but if you keep your eye on the details of what was actually being required here, you'll see what a ridiculous mess the RIAA was trying to foist on the public.
posted by mediareport at 2:38 PM on October 21, 2002

freebird: If CARP actually fixes the price, then that sucks. Government intervention in determining prices just causes problems.

Thanks for clarifying everything.
posted by jsonic at 2:45 PM on October 21, 2002

Things are really tricky with this issue. It sounds like the deal that I thought was going through isn't - and that's a good thing, since it was hijacked in the eleventh hour by large webcasters. The register covered this fairly well. So now I should thank Jesse Helms for saving us from the plan to save small webcasters. I just don't know what to think...
posted by freebird at 2:45 PM on October 21, 2002

jsonic: the RIAA doesn't own the music, as you say. A wide variety of folks own the music - ranging from the artists themselves to the record companies or some combination of both. Sometimes, third parties own the music.

Therefore, why should the RIAA get to decide what it costs to broadcast?

As for forcing the RIAA to reconsider by flocking elsewhere - flock where? It's too expensive to start a radio station (initial investment for a weak one is on the order of $500,000 from what I've read) - so what else is there?

Play only independent bands not on labels the RIAA cares about? But - on tiny labels, there's not as much money to distribute and promote the music, not to mention mix and produce (produce as in using electronics to make it sound right, not as in create) it nearly as well as a multimillion dollar label can.

So what other options are there? Driving around town with your car stereo turned up won't exactly sway the RIAA.

I don't understand the blind / mindless following of "it's capitalism, deal with it" that I see these days. Capitalism is not just "survival of the fittest, fuck the rest" - it was founded on the principle that people would have opportunities to compete and coexist.

The RIAA is trying to stamp out all alternative sources for music. They tried to stamp out casette tapes back in the day, they tried to stamp out CDRs, actually, but with little success (ever seen "audio CDRs"? They're the same damn thing with a different branding that cost more money because the RIAA gets royalties, no joke). They're trying to stamp out p2p services even though they CAN have legitimate uses. Clear Channel has stamped out independent radio as we know it.. so what alternatives are there?

The alternative was internet streaming, and it's a small alternative at that, since relatively few people actually have broadband connections - but the RIAA wanted to crush that too with totally unfair fees that went way beyond the cost of regular radio broadcast. Think about it - regular radio broadcast can, in theory, reach an infinite number of users - whereas bandwidth is finite. The cost per listener for internet broadcast is much higher, even if you look at actual numbers that some local radio station gets.

Lastly, many artists whose labels are members of the RIAA do not support its actions in the least (and yes, many of them ARE the rightful owners of their own music).

Anyhow, enough babble - basically, you don't know what you're talking about, and you're just so pro-capitalism that you're forgetting what it was founded upon.

Screw the RIAA. They can eat my shorts.
posted by twiggy at 3:14 PM on October 21, 2002

jsonic, since the government is providing a service to the music publishers by protecting their works through copyright, isn't it reasonable to expect some return on that; specifically by ensuring that that copyright isn't abused?
posted by BrandonAbell at 3:20 PM on October 21, 2002

ever seen "audio CDRs"? They're the same damn thing with a different branding that cost more money because the RIAA gets royalties, no joke

This is a result of the 1992 Audio Home Recording Act which requires all manufacturers of digital audio recorders and blank digital media, like CDRs and DAT, to make royalty payments (2% of manufacturers' revenue, at this moment) to the U.S. Copyright Office, which are then supposedly distributed to artists as compensation for cash they'd lose to home taping.

Every time I buy a blank CDR to burn some songs that I myself wrote, that I myself distribute, the RIAA is getting a bit of cash.

Isn't that delightful?

Lastly, many artists whose labels are members of the RIAA do not support its actions in the least (and yes, many of them ARE the rightful owners of their own music).

Too bad none of them have the guts to say much about it publicly.
posted by scottandrew at 3:32 PM on October 21, 2002


What part of thinking that someone who produces something should be paid for their work is incongruent with your view of the world?

I don't support what the RIAA and its member organizations do, and I don't think they should be trying to control music that is not the property of its member organizations. But that doesn't mean they do not have the right to set prices on products that they own.
posted by jsonic at 5:40 PM on October 21, 2002

The so-called compromise is not all it's cracked up to be, by any means. The bill that (thank goodness) was not passed had a whole bunch of horrible language in it that (depsite so-called "no precedence" language to the contrary) would have set a HORRIBLE precedent for the rest of the industry for future CARPs. There are a lot of bad things in the bill, including a definition of revenue that would include tons of non-music-related revenue. Why the HECK do recording artists deserve a cut of revenue that wasn't generated due to their music?? They don't. The very small group of webcasters that were involved in the negotiations of the bill would have benefitted in the short run, but it would have screwed the industry at-large in the long run.

I am glad that SoundExchange announced it will accept the minimum from those that would have qualified under the bill in any event until they can work out a compromise with those folks, for those people's sakes (and I have met many of the people involved in the negotiations in person), but really it helps hardly anyone at all. It only helps those that would have qualified under the bill, and that is a very small percentage of the webcasting industry as a whole. And any compromise that is worked out should NOT be codified into the Statute -- there is no need to muck up the Copyright Act further with 24-or-so pages of ill-drafted crap.

And by the way, the real problem is not that the arbitration panel/government is setting the price. The reason the system is set up to be a blanket license is to help the industries on BOTH sides avoid the enormous transactional costs associated with negotiating licenses with hundreds of record labels and hundreds of webcasters. The problem is that the arbitration panel failed to recognize that RIAA acted as a monopoly (even with an antitrust exemption for this purpose, they still had monopoly power over 90 percent of the sound recordings out there) and discount the rates that RIAA had managed to negotiate with a few foolish folks (and one very savvy company who payed a higher-than-reasonable rate to avoid millions in litigation fees) accordingly. Think of a Bell Curve. RIAA picked off a handful of folks at the tail end of the bell curve and said "see!! These are reasonable rates!" The CARP rate is bad, and it is way higher than anyone pays for musical works, but it is also waaaay lower than RIAA asked the CARP panel to set (and, RIAA is still in the process of appealing and requesting a higher rate).

Disclosure: I was on the litigation team that litigated the CARP on behalf of the webcaster/broadcaster industry. There are pending appeals asking that the rate be lowered as well.
posted by IPLawyer at 5:57 PM on October 21, 2002

What IPLawyer said.
posted by jeremias at 7:03 PM on October 21, 2002

Guess what? The RIAA is now claiming credit for having "stepped in to assist affected small Webcasters."

No, really. I blogged it, so it must be true.
posted by mediareport at 8:44 PM on October 21, 2002

I'm confused now - is this good or bad news? Is anything going to save our radio stations?
posted by dg at 6:13 AM on October 22, 2002

What jeremias said.
posted by Dirjy at 3:20 PM on October 22, 2002

Paul Maloney at RAIN has a sharp analysis that pokes at Helms for waiting so long to act:

RAIN sources seem convinced that the National Religious Broadcasters and Salem Broadcasting have enlisted Helms to fight any sort of small webcaster bill containing language for noncommercial broadcasters and webcasters. RAIN was unable to reach press contacts from either of these companies for official position statements.

...Sens. Sam Brownback (R-KS) and Dianne Feinstein (D-CA) both brought their objections to the bill to the attention of the Judiciary Committee while the Senate was still in session, allowing enough time to take care of their concerns before a vote. On the other hand, Helms put a "hold" on the bill, and never voiced his objections. Only after it was too late to save the bill did Helms express any problem with it...The impact of a compromise solution crafted and introduced by a legislator of Helms's stature would be immense. Until that introduction, the wait is on.

posted by mediareport at 3:35 PM on October 22, 2002

I like Paul, but he's just wrong on this one. There was no time to change the bill before the Senate voted and still have it enacted-- the House would not have had time to consider the re-formed bill -- and "voicing concerns" to the Senate Judiciary could not have changed that. The bill, which started out as a simple, one paragraph, six month stay, was turned into a 24 page monstrosity at the very last minute and placed on the consent calendar in the House. There were co-sponsors of the bill that didn't know it had been so radically changed before the House voted. They tried to pull a similar trick in the Senate -- pushing it through without a true vote -- and Helms said no. They still could have had a normal vote, but they knew they didn't have the votes for that. That kind of fast track may be appropriate for one paragraph stays, but it is not appropriate for major overhauls to the Copyright Act or any other law.
posted by IPLawyer at 7:16 PM on October 23, 2002

Thanks, IPLawyer. That was my impression, too - that Maloney was being a little unfair - but since he acknowledged there might be good reasons for the delay I let it go. But your post above clarifies it nicely.
posted by mediareport at 7:32 PM on October 23, 2002

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