Really? The Soundexchange is the strongarm for the RIAA. Let me show you what they do:

http://www.oregonlive.com/news/oregonian/index.ssf?/base/news/1182914724179260.xml&coll=7

Does no one think it odd that the FCC had to make rules to prevent the RIAA's members from paying for airplay on the radio (payola), yet now they claim the labels and artists receive no benefit from the exposure they get from internet, broadcast and satellite? If that's the case, why were they falling all over themselves to bribe dj's to play their products?

It is well to remember that in a considerable number of other countries broadcast entites pay 3-4% of their revenues for the broadcasting of recorded music. In addition, they pay approximately the same percentage for the use of the lyrics and compositions associated with the recorded music they broadcast.

Such an arrangement is sustainable. However, the Copyright Royalty Board's decision of March 2nd removed the terms of the Small Webcasters' Settlement Act of 2002.

This act allowed Internet radio stations whose revenue did not exceed 1.2 million dollars the option of remunerating royalty fees on the basis of the percentage of revenue model. Thus, in royalty fees those stations that did not earn revenue in excess of 250,000 dollars were required to pay 10% of their revenue. Those stations that earned revenue in excess of 250,000 dollars had to remit fees constituting 12% of their revenue.

While this was a system more expensive than which exists in other countries, still, it was manageable. Then, earlier this year, the CRB eliminated this provision, and it required that all stations pay according to the per performance schedule. More than that, it imposed progressively higher prices per performance each year from 2006 through 2010.

Thus, for example, in 2007 alone, Internet stations will have to pay .0011 per performance (one performance is when one listener hears one song). Assuming 100 concurrent listeners and assuming 15 songs per hour and multiplying these numbers by 24 hours by 30 days by 365 days, well....
Doing the arithmetic certainly shows why such fees are not sustainable for all but the wealthiest Internet broadcast services.

In addition,these fees are to be applied retroactively to January 2006, causing many stations to discontinue broadcasting and many others to declare bankruptcy. Effectively, the application of these royalty rate increases and special fees will consume between 50-350% of revenue. I do wonder how many businesses would be able to continue in such an arduous environment.

But let us assume for the moment that these fees someday are applied to terrestrial radio as well, does Mr. Ades assume that many of these stations will continue broadcasting music hitherto as they have? While a number of such stations will continue to broadcast music, they will truncate the amount of time to which they devote such programming. And, it is likely that the playlists they use in future will be even more limited than they are today, given this scenario.

Perhaps one would find interesting one of Kurt Hanson's articles on this subject. For example, he estimates that many terrestrial radio stations make a profit limited to approximately 6-10%. However, as he estimated that paying these type of fees would increase expenses by almost the same factor, it is patently obvious that many of these stations would limit or eliminate music programming from their formats.

Given the reality of such a scenario, how would the artists benefit then? Even now, when terrestrial stations broadcast the music they broadcast, more likely than not it is the well known artist and, often enough, the already wealthy artist who benefits. Scarcely does the struggling artist benefit from the present situation where over the air radio is concerned. Should the CRB's decision be applied to terrestrial radio, for example, by an act of Congress, that situation favoring the wealthiest musicians will be exacerbated, indeed.

The Digital Millennium Copyright Act replaced the older and fairer standard, the 801(b)(1) criterion, in favor of the "willing buyer, willing seller" standard. The effect of this substitution, ultimately, was that such a change gave leave to the CRB to rule as it did. In effect, the CRB was simply following the law, however poorly that law was crafted in 1998.

The problem with the willing seller and willing buyer standard is that it incorrectly assumes that the parties negotiating such fees are on a level playing field, which is assuredly not the case. Internet radio trying to negotiate fair prices in the face of the power of the RIAA is, to state the matter subtly, rather daunting, if not impossible.

When setting royalty rate increases, the older standard took into account various factors. For example, it required that rate increases, etc. be fairly set, and it required that rate increases be set in the context of the effect on existing broadcast services.

The 801(b)(1) standard required that the interests of the copyright holders, the copyright users and the general public be weighed when adjudicating such matters. Stated differently, it prescribed that, while society should reward the copyright holder for his or her works and creative efforts, it prescribed that other stakeholders are involved in this process as well and that their interests also should be taken into account.

And, it would be well to consider that, in general, satellite radio pays 7.5% of its revenue for the broadcasting of such fees.
Why Internet radio should suffer and labor under such obviously discriminatory practices is a mystery to me. Perhaps Mr. Ades posting could explain that to me.

Thank you. Radio Orenovscotia (station at Live365.com)

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How is charging me $11,000 for performance royalties from January 1, 2006 through March 11, 2007 on $1,200 in income fair? If I had my stations open right now, through Christmas season 2007, I estimate I would have had an income of approximately $3,000 for 2007, but my performance royalty bill for 2007 would be over $20,000. So instead of the artists divvying up their share of a percentage of my revenue for the foreseeable future, the artists will divvy up a share of nothing. I don't really think that helps the artists, do you?

Last year, I started a free podcast where I interviewed various independent artists whose music I was playing. I peaked as the #7 most popular podcast in iTunes' Music category in December. Some of the interviews were downloaded thousands of times. That was all to promote the artists.

My station is a great example of niche programming. Nowhere on over-the-air radio or satellite radio does Christmas music year round. And I generally have 10 to 20 listeners at a time during work hours in the USA.

The Internet allows for inexpensive broadcasting. A person can start up a legal method to share their love of music. Live365 pays the writers of the music, and always has. And we webcasters don't mind paying the artists. But a fair rate. HR 2060/S 1353 sets the rate as 7.5% of revenue (which is higher than satellite pays(~5%), and much higher than over the air radio pays (nothing)).

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That's a little deliberate misinformation from Mr. Ades I think. I would like to ask him what proportion of the fees paid to Soundexchange finds it's way into artists pockets.

Soundexchange are actually shooting themselves in the foot big time with this - the big players in Internet are simply going to create relationships with artists and labels directly - no fee for Soundex there - and smaller outfits will simply go out of business - no fee for Soundex there either.

So bye-bye internet radio really will be bye-bye Soundex also - hmmmm a great business brain behind this I DON'T think...

What SoundExchange fails to say is that internet radio stations constantly voice their support for independent artists. How? By playing their music. Whether it is out of our pocket or paid for by companies like Live365 and LoudCity, these artists get royalties that they would otherwise not get because terrestrial radio refuses to play them.

SoundExchange is no friend of the artist. They have a list of artists that they have somehow not been able to find - many of them well-known artists. A number of people not associated with SoundExchange have been able to "find" (i.e., look up their website and contact them) these artists and inform them that they have money waiting for them. The money itself will go into their general fund if they somehow cannot find these people.

Oh... did I mention SoundExchange charges artists a fee for artists to get their money, as well as skimming a percentage off the top? And that a number of independent artists who are also copyright holders have seen not one check from SoundExchange, although they know their music gets played on internet radio stations?

SoundExchange is only out to line their pockets with the money that rightfully belongs to the artists they claim to support. And, with their affiliation with the RIAA, it is no surprise that they want to put internet radio out of reach of the regular broadcaster. That way they can make sure they get rid of independent artists' access to the airwaves once and for all.

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I don't represent Live365 nor its 10,000 stations, however, when you see a cowpile, such as this piece of editorial yellow blather above (shame on you Andrew) you have to say SOMEthing.

SoundExchange has been putting out press releases (really propaganda filled with lies and half-truths- making themselves look like they love artists, when in fact they only love their money.) indicating that webcasters don't want to pay artists. Well, they HAVE been paying them, huge amounts over the last few years- go to the Live365 choice page http://www.live365.com/choice and read the truth.

Facts:
*SoundExchange was a former entity of the Recording Institute of America (the infamous RIAA)
*SoundExchange was loaned $7 million by the RIAA and still owes them
*The RIAA (major labels' organization) mismanaged their businesses over the years, refusing to catch up with the times, and then the Independent Artist revolution happened, so they're trying to shut down those new artist's avenue for promotion: Internet Radio.
*The RIAA (and sometimes their lobbyists don't declare who they're with) has donated hundreds of thousands of dollars to politicians in several states, all the way to presidential candidates, in an effort to buy their votes and support.
*AM/FM radio does not pay performance royalties at all. Did you know that?
*Satellite radio pays less than Internet broadcasters have.
*SoundExchange spokespersons have been caught in lies more than once, always trying to make Internet Radio look like they don't want to pay artists. (I honestly don't think I can believe anything they say, from here on out.)

I've done my research, folks, and you need to call your senators and congressional representatives as soon as possible, because there are some shady deals going on now, designed to take away our freedom- take away Internet Radio and have government control of the internet, and completely stop the Indie artist revolution.

Time to turn the TV off and get on the phone. I hear another chunk of freedom breaking off. Go to http://www.live365.com/choice if you really want the truth (and they're a lot nicer than me about this.)

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If there are no webstations there will be no music being played and no royalties at all being collected - so, since we agree that we're all in this together and interdependent on each other then the solution seems to simply be a rate by which everyone comes out a winner ---