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Copyright Ruling Worries Webcasters
Excite News ^ | Mar 6, 7:38 PM (ET) | SETH SUTEL

Posted on 03/12/2007 4:55:45 AM PDT by Mad Dawgg

Copyright Ruling Worries Webcasters

Mar 6, 7:38 PM (ET)

By SETH SUTEL

NEW YORK (AP) - Internet music broadcasters worry that a new ruling could put many of them out of business by drastically increasing the royalty payments they have to make to record labels and artists.

The new rates, which are retroactive to last year, were decided on Friday by the Copyright Royalty Board, a panel of three copyright judges, and made public Tuesday on the board's Web site, .http://loc.gov/crb

The ruling could have the greatest impact on startup companies that make their living from broadcasting music online and selling advertising to pay for it. For large radio companies like Clear Channel Communications Inc. (CCU) and CBS Corp. (CBS), online broadcasting still makes up a relatively small portion of their overall business.

Kurt Hanson, who founded an online radio company five years ago called AccuRadio, said his six-employee company managed to "eke out" a profit last year under the former rate structure that called for paying royalties of 12 percent of revenues to music publishers.

Under the new rates, which charge per song and per channel regardless of how much advertising money is being generated, would put Hanson's company out of business, he said, increasing his 2006 royalty bill from $48,000 to $600,000. Hanson testified at hearings of the copyright board on behalf of smaller webcasting companies.

Hanson said he was aware of about 50 companies that paid royalties for streaming music online under provisions for small webcasters, including Digitally Imported, Radioio.com and a husband-and-wife company called 3WK.

Larger companies like Yahoo Inc. (YHOO) and Time Warner Inc. (TWX)'s AOL unit also have significant Internet radio operations that would also be affected by the new copyright rates.

Jonathan Potter, the executive director of the Digital Media Association, a trade group that represents webcasters and digital music and movie companies including Yahoo Inc. and Time Warner Inc.'s AOL, said his group was disappointed in the copyright board's decision, which he said would raise the royalties by 30 percent per year for four years.

Potter said in a statement that the group's member companies were "re-evaluating the viability of the Internet radio business."

On the other side, SoundExchange, a nonprofit organization that collects royalty payments from digital music broadcasters and distributes them to rights holders, called the ruling fair and said the fears of putting webcasters out of business were overblown.

"They've been saying this since 2002, that they were going to go out of business," said Willem Dicke, a spokesman for SoundExchange. "Instead what's happened is the industry has growth tremendously."

Dicke said the advertising revenues from online music broadcasting have grown rapidly over the past few years, from about $50 million in 2003 to $500 million last year, giving webcasters enough resources to cover the new royalty rates.

The royalties in question only apply to digital broadcasts of music, such as through Web sites or satellite radio, and are separate from the royalties that terrestrial broadcasters pay to rights owners.

Under the new ruling, commercial webcasters will have to pay .08 cents per song for each song played last year, increasing to .11 cents per song in 2007, and rising to .19 cents in 2010.

The rates can still be appealed, either to another hearing of the copyright board or to federal court. It's also possible that Congress could become involved, Hanson said.

Both Clear Channel and CBS' radio unit, the No. 1 and No. 2 radio broadcasting companies in the country, declined to comment on the ruling.


TOPICS: Business/Economy; Crime/Corruption; Front Page News; Government
KEYWORDS: copyright; internetradio; riaa
Unbelieveable.

The Recording industry got a retroactive ruling for money.

Wow, an agreement was in place yet the Recording industry manage to redo that agreement after the fact.

hahah nice work if you can get it :P

1 posted on 03/12/2007 4:55:49 AM PDT by Mad Dawgg
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To: Mad Dawgg

19 cents per song?? Holy Shizit!! Thats Billions of dollars. How much does the old fashion over the air broadcast pay per song? Why is streaming over copper wire so drastically different?


2 posted on 03/12/2007 5:07:10 AM PDT by bird4four4 (Behead those who suggest Islam is violent!)
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To: bird4four4
"19 cents per song??"

Yeah but that is in the future. When runnign a business you setup your plan on projected costs. So now the internet radio guys have had that thrown out the window. See they setup their advertiseing rates on a percentage basis agreement but the recording industry got that thrown out and instituted a new retroactive rate.

In other words the recording industry is saying we don't care what your costs were last year or what you planned on this year, we are TAKING this much money period.

Unbelievable...

3 posted on 03/12/2007 5:12:11 AM PDT by Mad Dawgg ("`Eddies,' said Ford, `in the space-time continuum.' `Ah,' nodded Arthur, `is he? Is he?'")
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To: bird4four4

Is it 19 cents or .19 cents?


4 posted on 03/12/2007 5:14:36 AM PDT by Buck W. (If you push something hard enough, it will fall over.)
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To: Buck W.
"Is it 19 cents or .19 cents?"

Good Question.

But even at that, hell of a pay raise in three years.

5 posted on 03/12/2007 5:18:05 AM PDT by Mad Dawgg ("`Eddies,' said Ford, `in the space-time continuum.' `Ah,' nodded Arthur, `is he? Is he?'")
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To: Mad Dawgg
The Recording industry got a retroactive ruling for money.

Kind of like the Clinton tax increase.

6 posted on 03/12/2007 5:24:28 AM PDT by Mr. Brightside
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To: Buck W.
"Is it 19 cents or .19 cents?"

It goes up to .19 "per viewing" which is per person listening to that song. And since Internet radio stations can very accurately track who is logged onto their servers at any given time, they can't fudge the numbers the way a traditional radio station could.

The rise in fees is obscene and it will have the effect of killing a lot of good Internet stations who will not be able to afford the royalties.

I suspect that Congress will step in at the last minute and negotiate/force that rate downward by quite a bit and many of those Internet stations will be able to stay on the air a while longer.
7 posted on 03/12/2007 5:34:58 AM PDT by The Louiswu (Never Forget!)
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To: Mad Dawgg
Internet broadcasters should contract with some unpublished young bands and have them compose music for use on the Internet. The broadcasters could pay them exactly the same revenue as they formerly planned to pay the RIAA. The new bands would get exposure and get paid, and Internet radio would have its music at a reasonable cost.

And Internet broadcasters would be free from the RIAA.

8 posted on 03/12/2007 5:36:58 AM PDT by Nomorjer Kinov (If the opposite of "pro" is "con" , what is the opposite of progress?)
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To: Mr. Brightside
"Kind of like the Clinton tax increase."

Hear hear!

That one I will never forget.

9 posted on 03/12/2007 5:38:08 AM PDT by Mad Dawgg ("`Eddies,' said Ford, `in the space-time continuum.' `Ah,' nodded Arthur, `is he? Is he?'")
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To: Nomorjer Kinov
"And Internet broadcasters would be free from the RIAA."

Not a bad idea, of course I am sure if later on the RIAA would lure one of those bands away, they would demand all revenues that the internet radio station made be paid to them.

Yeah sounds far fetched but I bet it would happen in a friggin heartbeat.

10 posted on 03/12/2007 5:41:35 AM PDT by Mad Dawgg ("`Eddies,' said Ford, `in the space-time continuum.' `Ah,' nodded Arthur, `is he? Is he?'")
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To: Mad Dawgg
Hmmm - What am I missing here? It says $0.08 cents for each song played. Using this year's 11 cents per song, say 16 songs per hour (48 minutes songs, 12 min ads) 20 hours per day and 365 days a year. That's 116,800 songs per year at $0.11 each or just under $13,000 total. I don't get anywhere near his $48,000 royalty bill, much less $600,000. Unless the guys running 50 stations over the 'net. Is this a case of bad reporting?
11 posted on 03/12/2007 5:54:50 AM PDT by green iguana
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To: green iguana
It's $0.0011 per song per listener. At 116,800 songs per year thats $128 per full time listener. There is no way most people would pay that much as a listener, which then makes internet radio unviable, which is what I believe RIAA's plan was in the first place.
12 posted on 03/12/2007 7:08:20 AM PDT by KarlInOhio (Parker v. DC: the best court decision of the year.)
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To: Mad Dawgg

The record industry delayed the explosion of popular music on Radio for several years in '40s with this same tactic.


13 posted on 03/12/2007 7:10:57 AM PDT by AU72
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To: green iguana
From the Accuradio site:

AccuRadio is a multichannel Internet radio station specifically designed to showcase the potential of the exciting new medium of Internet radio!

AccuRadio is also the first multichannel Internet radio station desgined specifically for adults with sophisticated musical tastes.

We currently reach over 1,000,000 unique listeners per month (as many as a large New York City radio station), with an audience of as many 20,000 simultaneous listeners on weekdays during business hours (Internet radio's "prime time").

Based on Arbitron data and other sources, we believe we are one of the five largest multichannel webcasters in the world.

14 posted on 03/12/2007 7:12:50 AM PDT by Drammach ("If you make yourselves sheep, the wolves will eat you." -- Benjamin Franklin)
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To: KarlInOhio; Drammach

Ahh - per song per listener. That changes the equation somewhat, even tho' I was off by a factor of 100 on the per song cost. Couple o' thousand listeners and it could get quite expensive. Thanks.


15 posted on 03/12/2007 7:27:22 AM PDT by green iguana
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To: Mad Dawgg

Are these royalties for the music (i.e. the sequence of notes) or the master (the particular audio transcription of a piece of music)? I would think the RIAA would only be involved with royalties on the master, but copyright law only recognizes the concept of performance rights for composers and not for recording artists.

A rate of $0.0019/song would be about 1/40 of the royalty to make and distribute a permanent phonorecord of the music therein. Make of that what you will.


16 posted on 03/12/2007 6:46:46 PM PDT by supercat (Sony delenda est.)
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To: Mad Dawgg

btt


17 posted on 03/12/2007 9:16:52 PM PDT by Cacique (quos Deus vult perdere, prius dementat ( Islamia Delenda Est ))
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