Saturday, July 07, 2007

But the man there said the music wouldn't play

Time is running out for internet radio.

On July 15, the new rates for royalties due from Internet Radio stations will go into effect. Terrestrial radio pays 2 to 5 percent of its gross revenue as royalties; satellite radio pays 3 to 7 percent. But thanks to the rate hike, which is based on a per listener charge, Internet radio stations must pay between 50 and 1,000 percent of its gross revenue. This will drive most smaller stations off the air nearly immediately, as well as larger services such as Live365 and Pandora.

According to John Simson, the director of Sound Exchange (the branch of the RIAA created to collect internet royalties), the new unit of measure is not the CD, but the "listen":

"When you have services that are feature-rich like Pandora or Rhapsody, Yahoo or SomaFM, places where people spend a lot of time listening, that time that cuts into listening to CDs — that time's moved to listens instead of purchasing CDs."

What a self-serving argument! If this was indedd the RIAA's viewpoint, then the royalty rates for terretrial and satellite radio - which have a much higher listernship - should also be increasing. The royalty rate simply works to decrease listener choice by eliminating all competition to top 40 stations. The RIAA is blinded bya potential $1.15 billion windfall in royalty rates - which will never come through, because those stations they wanted to charge will simply cease to exist.

It is true that I do not by as many cds as I did ten years ago (I also don't go to the movies as much, buy as many books, or read any comic books, so it's not just an endemic problem for the music industry). However, nearly every choice I have made to purchase a CD or to buy a track from iTunes has been from a "listen" from internet radio. Cutting off a valuable venue for letting people expad their musical tastes and that encourages to delve deeper into label's catalogs that the surface will end up costing them revenue in the long term.

There are bills in Congress that would overturn this rate hike. The Internet Radio Equality Act would nullify the copyright royalty board decision and set royalty rates at 7.5 percent of gross revenue, which is the same at satellite radio. The house bill has 118 co-sponsors of a needed 216, so get on the phones (or the net) and let your opinion be known.

Labels: Anti-Fun, Art, Got a Permit for Breathing, Politics, Unbridled Hope for the Future, We Who Are About to Rock