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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 community. Cheers, Bill > 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.