Help Fight Against New Ruling Faced by Internet Radio Stations
Please: Go to the links below to SIGN THE PETITIONS and for the
latest news regarding the Copyright Royalty Board decision.
www.SaveTheStreams.org
www.SaveNetRadio.org
Internet radio may be driven out of business within weeks due to the
latest March ruling. Here are the basic facts from
SaveTheStreams.org.
1. Okay, what's going on?
On Friday March 2nd, the U.S. government (specifically, the Copyright
Royalty Board, or "CRB") announced its determination of the royalty
rates Internet radio webcasters must pay the owners of sound
recording copyrights to license the music they play for the years
2006-2010. The owners of these sound recording copyrights are, in the
vast majority of cases, recording companies ("labels").
While successful webcasters which have built loyal audiences can
usually cover most of their costs from their revenue (and sometimes
even make a little profit), these new rates will almost certainly
destroy the Internet radio industry, as they amount to well over 100%
of even the most-successful webcasters' online radio revenues. In
other words, these fees are grotesquely disproportionate to any other
expense a webcaster would normally face, and certain to bankrupt him
or her.
2. Are the rates really that high?
First of all, the rates webcasters pay are "per performance," meaning
any time ONE listener hears ONE song (or any portion of a song),
that's a "performance." If ONE listener hears ten songs, that's TEN
performances. If 1000 listeners hear ten songs, that's 10,000
performances. Still with me?
The rates announced for 2006 (long story, but the licensing term is
for 2006-2010, and it took this long to figure out the royalty rate,
thus webcasters will pay "retroactively" for 2006) are $0.0008 per
performance. Now, that's only 8/100ths of a cent, but let's do the
math to see what happens.
Let's imagine a webcaster with an AVERAGE audience of 10,000
listeners (obviously, listeners come and go, and no one listens 24
hours a day, but we're talking about an average number... so
sometimes there'll be lots more than 10,000 folks listening,
sometimes lots less... but for math's sake, let's deal with the
AVERAGE audience). Our webcaster plays 16 songs every hour, 24 hours
a day, 365 days a year, to an audience that averages out to be 10,000
people.
$0.0008 X 10,000 listeners X 16 songs/hr. = $128. It'll cost our
imaginary webcaster $128 to play one hour of music for 10,000 people.
At the end of the day, that's $3,072 ($128 X 24 hrs./day) -- for just
a single day! After a week goes by, it's $21,504 ($3,072 X 7
days/wk.). And for all of 2006, this webcaster with a steady average
audience of 10,000 listeners would owe $1,121,280!! (the $3,072 X 365
days/yr.) That takes care of 2006. For 2007, the rate increases 37.5%!
So, with no audience growth, the cost of streaming music for the year
would increase to $1,541,760.
And the royalty rate goes up another 28% in 2008, and another 28% in
2009, topping out at a $.0019 per performance rate in 2010 (resulting
in a royalty obligation of $2,663,040 for that same audience averaging
10,000 listeners) for that year. I wish my boss gave me raises at
those rates!
3. What about the commercials I hear? Aren't webcasters making money
from those?
Advertising rates are expressed as a "cost per thousand" ("CPM," as M
stands for thousand). Rates vary, but national radio ads (pretty
comparable to Internet radio) go at about a $2 to $3 CPM. In other
words, an advertiser would pay $2 or $3 for every 1000 people that
heard their commercial one time. For our hypothetical webcaster,
let's go with a $2.50 CPM. The webcaster would earn $25 ($2.50/1000 X
10,000 listeners) to run a commercial.
If this webcaster ran an average of 5 commercials an hour from 6 am
to midnight every day, not only would he or she win the "set of steak
knives" for selling more ads than any other webcaster ever, but would
earn $821,250 in ad revenues ($25 X 5 commercials X 18 hrs./day X 365
days/yr.). Not a bad job, but unfortunately, it'll cover just about
three-quarters of our webcaster's royalty obligation for 2006
($1,121,280). And you can be sure ad rates won't increase 37.5% in
2007, 28% in 2008, another 28% in 2009, etc. like royalty rates do.
4. Can't you make a "percentage of revenue" deal -- you know, the
more money you make, the more you pay?
Not this time... small webcasters were able to operate with just such
a deal for the previous 5-year term, but the CRB made sure all
webcasters would be subject to the "per performance" method of
royalty calculation.
5. Well... independent music is cool. Why not just play independent
music?
This is very important to understand, as lots of people see this as a
solution. The statutory webcast license covers ANY copyright music,
from the biggest labels, down to the smallest, and even
independently-released music. Again, the license covers ANY copyright
music. The copyright owner need NOT be part of SoundExchange or the
RIAA. The ONLY exceptions to this are (A) direct deals with each and
every sound recording copyright owner, (B) copyright owners that are
willing to make a blanket "waive" of fees, or (C) non-copyright,
public domain music.
6. This is crazy, and I don't wanna lose my favorite station. What
can I do?
Glad you asked! Please click the 'Sign the Petition' and 'Send a
message to your Representative' links available in the upper-right of
the SaveTheStreams.org page or on the website of your favorite
webcaster. And please, tell your family, friends, and anyone you know
that would rather not see Internet radio disappear.
Help us keep the music alive!
Thanks,
Storybox
