May 24, 2007
Deal Offered to Webcasters over Royalty Rates
SoundExchange is throwing a bone to small radio webcasters. The Copyright Royalty Board basically approved higher rates that small operators would pay for Internet broadcast streams. SoundExchange would collect those charges on behalf of the record labels. Small operators complained and Congress got into the act by introducing various bills that rolled back rates to something akin to what terrestrial broadcasters pay. A law has the affect of locking in rates until Congress gets around to passing another law. It would be easier to get a post office branch named after the late Jack Valenti than to get Congress to revisit rates a second time if a bill passes. So, at the quiet urging of Congress, SoundExchange has offered a deal for broadcasters whose revenue is less than 1.25 million a year. They want 10% of revenues up to $250,000 and 12% for revenues over that. That, of course, leaves out ClearChannel and other large broadcasters who stream. Watch them lobby Congress to pass a bill. They have the lobbying dollars to make a credible effort.
In a somewhat related move, the RIAA is lobbying to get a law passed that would require radio stations to play performance royalties. That's money that would go to the artist for their recording in addition to any royalties that currently go to song writers. This move comes from the RIAA belief that radio performances do not promote sales, which is contrary to the basis for the lack of radio performance royalties. The logic is simple. Radio stations keep playing music but sales keep dropping. That does not take into account, though, what is in rotation at mainstream radio stations or the lack of musical diversity in those play lists. Moreover, it doesn't account for the fact that once music is turned into a commodity, consumers will buy less than more. The labels are very good at promoting music as a sale than as an art. That doesn't give anyone a reason to buy more music of a particular genre when it all starts to sound alike. But that's a different debate. The point here is that the RIAA is doing the same thing that politicians do all the time. If one says something over and over again, whether it's true or not, the statement could get some traction. Thus the attack on the basis for no performance royalties for radio plays. It will be interesting to see how they prove that radio doesn't sell music, if the association tries to prove it at all.
May 24, 2007 | Permalink
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