Reactions To New Royalty Scheme
The Copyright Royalty Board, which determines royalties on sound recordings, quietly released a decision on Friday setting the per-performance rates for Internet radio stations through 2010. There's a full story on this in Technology Daily's PM edition.
Small and independent online music providers are not pleased. They wanted royalty rates based on a percentage of revenue but the three-judge panel decided they should pay what larger webcasters and broadcasters pay.
Initial reactions in the blogosphere were pretty nasty. TechDirt called the CRB decision "utterly backwards and damaging to the industry" since webcasting is "a great means of promotion for artists." Corante's CopyFight blog argued those "outside the big media mainstream" are "screwed." Radio Paradise owner Bill Goldsmith wrote on his Save Our Internet Radio blog that the new rate structure is a "death sentence" for his music site.
But SoundExchange, the nonprofit that will administer the royalties, said the CRB weighed evidence presented by over 60 witnesses and examined tens of thousands of pages of testimony to arrive at a fair deal.
Those who "want to frame this as a desire by big, greedy record companies to fatten their bank accounts," are wrong, SoundExchange spokesman Willem Dicke said. Fifty percent of the royalties will go to performing artists and 15-20 percent will be funneled to independent labels. As much as 35 percent of revenue (depending upon the service) will go to major labels, he said.
He complained that the old rate had not increased at all prior to this proceeding and had remained flat for seven years. At the same time, webcasting audiences have increased exponentially and webcasting revenues have soared, Dicke said.
Webcasters paid less than $20 million in royalties to sound recording copyright owners and performers in 2006, based on the old royalty rate, Dicke said. He added that webcasters' warnings that they are going to go out of business "has been heard over and over again and has never materialized."
Update: The Digital Media Association, which represents America Online, Yahoo and other digital music services, also weighed in late Monday. The group's members are "disappointed" in the CRB decision and are "re-evaluating the viability of the Internet radio business,” DiMA Executive Director Jonathan Potter said.
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