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Save Net Radio

Jeff Duke wrote:
> I just noticed this http://www.savenetradio.org/ .... scary stuff 
Oh my goodness. Where have you been? I linked to that website long ago. 
Here's a post I saw recently that might be of interest to some of our LD 



> From: http://www.savenetradio.org/about/myths_and_facts.html
> A recent decision by the Copyright Royalty Board (CRB) that increases
> the royalties owed by Internet webcasters pay to play music by between
> 300 and 1200% has jeopardized the future of Internet Radio.  This
> decision will affect millions of Americans who enjoy the unparalleled
> radio diversity that is only available on the Internet; and hundreds
> of thousands of artists who depend on Net radio to reach new fans, and
> thousands of webcasters whose livelihood depends on their ability to
> play music for their listeners.
> MYTH:  Broadcast radio, satellite radio and Internet Radio pay the
> same amount of royalties to creators of music, or pay proportionate
> relative to the size of their businesses.
> FACT:  The smallest medium  Internet radio  pays the most royalties;
> and under the new CRB royalty scheme the smallest webcasters will pay
> the highest relative royalties in amounts shockingly disproportionate
> to their revenue. 
>     * Broadcast radio, an industry with $20 billion in annual revenue,
> is exempt and pays no performance royalties to record companies or
> recording artists.
>     * Satellite radio, which has approximately $2 billion in annual
> revenue pays between 3 and 7% of revenue in sound recording
> performance royalties. 
>     * The six largest Internet-only radio services anticipate combined
> revenue of only $37.5 million in 2006, but will pay a whopping 47% (or
> $17.6 million) in sound recording performance royalties under the new
> CRB ruling.  In 2008 combined revenues will total only $73.6 million,
> but royalties will be 58% or $42.4 million.
>     * Small Internet radio services are essentially bankrupted by the
> CRB ruling, with most anticipating royalty obligations equaling or
> exceeding total revenue. 
> MYTH:  Internet Radio isn't really that big anyway.  Most people still
> listen to traditional FM radio.
> FACT:  At some point every day more than 7 million Americans are
> listening to Internet radio.  Studies by Arbitron and Bridge Ratings
> conclude that between 50 and 70 million Americans listen to Internet
> radio every month, and about 20 percent of 18-34 year olds listen to
> Internet radio every week. 
> MYTH:  If Internet Radio is so big the higher royalty rates should be
> affordable. 
> FACT:  Internet radio is a relatively new industry with advertising
> models still developing.  Some services rely on banner ads; others are
> selling traditional audio ads; and still others rely on sponsorships.
>  The vast majority of Webcasters will not be able to generate enough
> advertising revenue to pay their new, higher royalty fees.
> MYTH:  The webcasters' previous royalty rate was too low and needed to
> be increased to ensure that artists and record companies are paid fairly.
> FACT:  Bankrupting the Internet radio industry will not benefit
> artists or record companies, as total industry royalties will
> diminish.  Moreover, the demise of Internet radio will be particularly
> harmful to independent artists and record labels whose music is rarely
> played on broadcast radio.  The American Association of Independent
> Music reports that less than 10% of terrestrial radio performances are
> independent music but more than 37% of non-terrestrial radio is
> independent music.  This benefits artists, labels and music fans.
> When Congress provided webcasters a guaranteed "statutory license" to
> perform sound recordings, Congress intended that Internet radio would
> flourish as a competitive medium offering diverse programming and
> paying a royalty.  Tripling webcasters royalties undermines all these
> goals. 
> MYTH:  Big webcasters can afford these royalties and they will each
> offer hundreds or thousands of channels, so what's the big deal?
> FACT: The CRB royalty is so high that even the biggest Internet-only
> radio services  including Yahoo, AOL, MTV and RealNetworks  will pay
> a combined 50+ percent of their revenue for only this single royalty.
> The only way to make a profitable, scalable business will be to
> attract the largest audience and advertisers while reducing overhead
> and innovation. The result will be "mass appeal" Internet radio
> programming that will look much more like today's broadcast radio,
> rather than the diverse programming that exemplifies today's Internet
> radio.
> MYTH:  The rate is only increasing from 7/100 of a penny per song
> streamed to 19/100 of a penny per song streamed over a 5-year period. 
> FACT:  Nearly tripling the per-song royalty rate is only the first
> insult. 
>     * No Revenue-based Royalty Option.  Prior to this decision all
> small webcasters and some large webcasters had the choice of paying
> royalties based on a percentage of their revenue that typically
> equaled 10-12%.  But the CRB decision did not offer a revenue-based
> royalty option for any webcasters. 
>     * Retroactive Impact.  The CRB decision is effective as of January
> 2006, so if it actually becomes effective for only one day its impact
> will be immediate as the past due royalties alone will be enough to
> bankrupt virtually all small and mid-sized webcasters.
>     * Per Station Minimum.  The CRB piled on even more, by imposing a
> $500 per channel minimum royalty that for many services will far
> exceed the annual royalties that would otherwise be due even after the
> CRB decision.  One advantage of Internet radio is that it is not
> limited by spectrum capacity or bandwidth capacity, which enables
> several services literally to offer 10,000 or 100,000 stations and
> more.  By penalizing this innovation and creativity the CRB further
> ensures that Internet radio will become less creative, less dynamic,
> less of an opportunity for non-mainstream artists and genres, and will
> look more like broadcast radio in the future.