The RIAA Does the right thing?

Say it ain't so…

Sides chosen in royalty tussle

Interesting story on the upcoming Copyright Royalty Board hearing regarding the amount of money paid to songwriters and publisher for music streamed on to the internet…

Here's one interesting bit from the RIAA

"The labels contend that the music publishers have gotten fat as their business has starved and want the payment method rewritten. According to papers filed by the RIAA at the Copyright Royalty Board, the labels want the board to reduce the rate to 8% of wholesale revenue. The current rate is about 9 cents per song, but it often is lowered in negotiations with the record companies. That money usually is split 50-50 between the publisher and the songwriter.

The RIAA contends in its documents that the rate is out of whack with the rest of the world and historical context."

Of course New Media companies, represented by the Digital Media Assn (DiMA), want it even lower and contend

"Internet streams should not trigger any copyright royalty, the association contends, saying that they are performances and not covered under the mechanical license.

"Digital music services believe that digital performances are like radio and should require a performance license only," the association said in asking for CRB action on the issue."

Those representing the songwriters and publishers want the rate for songs increased for CDs and Internet streams.

It's of course the existence of SoundExchange that threatens to drive up the cost of any person broadcasting on to the internet. A fee which traditional broadcasters don't have to pay, only the songwriting royalties.

Originally posted by kosmo:
It's of course the existence of SoundExchange that threatens to drive up the cost of any person broadcasting on to the internet. A fee which traditional broadcasters don't have to pay, only the songwriting royalties.

How do you propose artists are paid for their music being played via digital streams or satellite radio?

That would be handled by fees paid to ASCAP, BMI, etc, which is only what over-air radio stations have to pay… SoundExchange was created strictly to collect fees from Internet Broadcasters on behalf of the record companies to be passed along to artists (yeah right).

Originally posted by kosmo:
That would be handled by fees paid to ASCAP, BMI, etc, which is only what over-air radio stations have to pay… SoundExchange was created strictly to collect fees from Internet Broadcasters on behalf of the record companies to be passed along to artists (yeah right).

False. SoundExchange collects and distributes royalties for digital performance. They handle all the royalty distribution for XM and Sirius as well. And they absolutely are passed along to artists - I get a check from SoundExchange quarterly.

It is also a different royalty than what ASCAP or BMI pays. SoundExchange pays performers, as opposed to the royalty set up that BMI and ASCAP have - which deals with copyright holders and the like.

ok.. i was being factious in my yeah right statement…

however, prior to the formation of SoundExchange an hobbyist, such as myself, interested in setting up a legal internet radio station could do so without breaking the bank with licenses paid to ASCAP, etc. For instance the minimum fee paid to ASCAP for a year is $288 assuming i'm not making any revenue from the site and have low listenership.

the minimum soundexchange fee for a commerical station is $500 plus a monthly fee… Note it appears that it would be hard for even a hobbyist broadcaster to claim a non-commercial station.

it's the soundexchange fees that threaten to silence all but the largest of site wanting to stream music on to the music… WOXY.COM almost went down twice because of those fees… additional fees they didn't have to pay when they were broadcasting over the airwaves.

there are very limited options for a hobbyist internet broadcaster to keep a station legal… and obviously the threat of getting sued doesn't stop many people as evidenced by all the stations over at shoutcast… i personally would rather not get caught..

Originally posted by kosmo:
ok.. i was being factious in my yeah right statement…

however, prior to the formation of SoundExchange an hobbyist, such as myself, interested in setting up a legal internet radio station could do so without breaking the bank with licenses paid to ASCAP, etc. For instance the minimum fee paid to ASCAP for a year is $288 assuming i'm not making any revenue from the site and have low listenership.

the minimum soundexchange fee for a commerical station is $500 plus a monthly fee… Note it appears that it would be hard for even a hobbyist broadcaster to claim a non-commercial station.

it's the soundexchange fees that threaten to silence all but the largest of site wanting to stream music on to the music… WOXY.COM almost went down twice because of those fees… additional fees they didn't have to pay when they were broadcasting over the airwaves.

there are very limited options for a hobbyist internet broadcaster to keep a station legal… and obviously the threat of getting sued doesn't stop many people as evidenced by all the stations over at shoutcast… i personally would rather not get caught..

I certainly understand the argument that it should remain possible for hobbyists and broadcasters to operate internet or streaming radio stations.

However, I would also argue that it is important to set a precedent that artists are paid for the use of their music in digital mediums. Personally, I think a station like WOXY.COM should absolutely have to pay royalties - they are at a level where they are reaching a somewhat substantial (Yes, I realize this is relative) national audience. I don't know enough about WOXY to know whether they do, but I would expect that they also generate income to the site.

Digital media streams are still a relatively new medium for music. They're only going to become more prominent - and artists will need income from those outlets. Yes, I recognize that this may make it difficult for hobbyists - but as a musician, I want to be compensated for my work.

I guess this is ultimately a discussion over at what point you draw the line - which is what SoundExchange has been tasked to do. Perhaps the debate that you'd rather have is whether or not this type of royalty should even exist - the reason for the creation of SoundExchange was to collect a new kind of royalty that ASCAP and BMI do not. Not only does SoundExchange handle digital media exclusively, but the type of royalty that they collect is a different classification. From the SoundExchange website:

"Prior to 1995, Sound Recording Copyright Owners (SRCOs) in the United States did not have a performance right. This meant that, unlike their counterparts in most of Europe and other nations around the world, recording companies and artists were not entitled to receive payment for the public performance of their works. Users of music, the digital music service providers, freely performed these works at will, without a dime being paid to the rightful owners of those recordings or the featured artists who performed the songs - the recordings which created the backbone of their business.

The Digital Performance in Sound Recordings Act of 1995 and the Digital Millennium Copyright Act of 1998 changed that by granting a performance right in sound recordings. As a result, copyright law now requires that users of music pay the copyright owner of the sound recording for the public performance of that music via certain digital transmissions. The U.S. Copyright Office recognized the benefits of SoundExchange's administration of these royalties, and so has designated SoundExchange as the administrative entity for subscription services' statutory license fees. You may find SoundExchange's Notice of Designation as Collective Under Statutory License here. The Copyright Royalty Board (CRB) was established by Congress in 2004 to set fair market rates to be paid to recording artists and record labels under the statutory license. The CRB reaffirmed SoundExchangeâ??s sole collective status in 2007."


A "performance right" is a fundamentally different type of royalty. Take this as an example - Harry Belafonte made the "Banana Boat Song" (Day-O) famous. However, he was simply the performer - and under previous royalty laws, he was not entitled to royalties from the performance of the song. ASCAP and BMI cover songwriters and publishers - but NOT performers or copyright holders [NOTE: I recognize I said ASCAP & BMI covered copyright holders before - that was an error due to writing a quick post and I can't go back and change it now]. So, since Belafonte was only the performer of the song, didn't write the song, and didn't hold the publishing rights to the song, he was never paid royalties. Think of that - DECADES of performances of a song that your performance made famous, but you're not paid a penny for those performances?

SoundExchange pays the performer, along with the copyright owner. Currently, performers and copyright owners ARE NOT paid royalties for public performances on more traditional mediums - radio, TV, etc.

So I think the larger debate here is whether or not you think this royalty structure should even exist. Personally, I feel as though it should - I also think it should extend to traditional media as well as digital media. But I don't think we're there yet.

saying that internet radio streams will go out of business because of these fees is a non-starter, in my books, because those streams didn't really have a right to exist in the first place. when you open a store, do you tell off your suppliers because paying them will ruin your business? no, you factor that cost into your business plan. can't afford to pay? don't go into business.

there is an unfounded air of entitlement at work here - "music is free, we have a RIGHT to music". you've been napsterized. unfortunately there is an equally ugly flipside: greedy industry dinosaurs that refuse to adapt.

to answer sweetcell's comment…

the fees internet radio broadcasters are in addition to what over the air radio stations have to pay. prior to DMCA of 1995 those stations broadcasting copyrighted material were paying ASCAP, BMI, etc fees, which was no different than TV, Cable, Radio, Clubs, Cafes, etc.

with DMCA an additional set of fees was applied only to those using the Internet and Sat Radio. how come it wasn't also applied to the other places music was used in. probably because of stronger lobbying , etc


IMHO, Soundexchange was created so that the record industry could get their pound of flesh from new media providers, to recover loses from their inability to quickly adapt or change business plans to use the internet.

Did you know there was a bill being floated in Congress that would result in 1.5 Million dollar fine for the copying of single CD? I'm all for the protection of Intellectual property but thats a bit excessive. Sure it's aimed at those who pirate CDs for a living, but it could just as easily be used against private citizens.

Originally posted by kosmo:
to answer sweetcell's comment…

the fees internet radio broadcasters are in addition to what over the air radio stations have to pay. prior to DMCA of 1995 those stations broadcasting copyrighted material were paying ASCAP, BMI, etc fees, which was no different than TV, Cable, Radio, Clubs, Cafes, etc.

with DMCA an additional set of fees was applied only to those using the Internet and Sat Radio. how come it wasn't also applied to the other places music was used in. probably because of stronger lobbying , etc


IMHO, Soundexchange was created so that the record industry could get their pound of flesh from new media providers, to recover loses from their inability to quickly adapt or change business plans to use the internet.

Did you know there was a bill being floated in Congress that would result in 1.5 Million dollar fine for the copying of single CD? I'm all for the protection of Intellectual property but thats a bit excessive. Sure it's aimed at those who pirate CDs for a living, but it could just as easily be used against private citizens.

Well, my point is that radio, TV, clubs, cafes, etc. should have to pay both royalties as well.

You're probably right that they don't because they have a stronger lobby - but that doesn't make it okay. Yes, you can make the contention that this is "just supporting labels," but ultimately, it is also supporting the artist. You can't really divorce the two.

I'll agree that the artist/label and not just the songwriter should benefit from when someone uses material in commercial manner, however it needs to reasonable which the current SoundExchange fees aren't and applied evenly if possible.

I would also think that for certain artists trying to gain wider exposure that they would want New Media outlets to flourish instead of being stifled. I mentioned WOXY because it's a highly regarded internet radio station that gave Cartel/Cedars at some wide spread exposure at one point. Wouldn't you agree that getting a source like WOXY to start playing Soft Complex on regular basis is a lot easier than hoping for airplay on DC101?

Looking back at callat703 post… isn't the argument that Harry Belafonte didn't make any money from performance of the Banana Boat Song a bit flawed? Surely he was paid when he sang the song in concert, on television, etc? People who go to see him in concert are paying money with expectation he'll perform it for them. He may have even made some money from the sales of records that feature that song… That song could have also helped launch his career to bigger and better things.

Originally posted by kosmo:
Looking back at callat703 post… isn't the argument that Harry Belafonte didn't make any money from performance of the Banana Boat Song a bit flawed? Surely he was paid when he sang the song in concert, on television, etc? People who go to see him in concert are paying money with expectation he'll perform it for them. He may have even made some money from the sales of records that feature that song…

First - absolutely, it is easier to hope for airplay on WOXY than on DC101. I'm certainly not meaning to argue against the importance and relevance of internet or streaming media. However, I think it comes with responsibility to pay for what you're doing. I'm not ready to sacrifice a means of financial support for all artists simply because it benefits some looking for wider exposure. What happens when you reach that wider audience then, and could be capitalizing upon income from those sources? The "wider exposure" argument is a slippery slope, because unless there is some kind of financial promise in reaching that wider audience, why bother? Ultimately, many musicians' goals are to be financially secure in what they do - that's the best most can hope for. To make enough money to be a musician full time. Royalties from digital performances can assist in that goal - and I think it would be folly to not recognize or support that.

Second - yes, he's paid for appearances and receives money from concert tickets and so forth. I'm purely making a royalty argument - he isn't paid for that song being played on radio, TV, cafes, clubs, and so forth. The argument that you're making could be extended to say, "well, artists make plenty of money from touring and record sales, so why should they make money when their song is played on any medium?"

Now, I don't know for a fact that this is true - but I would expect the same could be said about Jimi Hendrix with "All Along the Watchtower," the Byrds with "Mr. Tambourine Man," or any other artist that has had a massive hit with a cover. Unless you're the owner of the publishing rights or the songwriter, you're not getting royalties for your performance. Now, for all I know, Hendrix or the Byrds may have publishing rights for those songs - but I doubt it.

first of this might be of interest to some of you :)

Last.fm is paying royalties to indie artists

Ok, so here's a good overview of the effect the most recent royalty rates will have on internet radio broadcaster. The bottom line being that a broadcaster could essentially be paying 100%
of total revenues just to pay the SoundExchange royalites, also due would be composer fees. This assumes that the broadcaster is seeing any real revenue from banner ads, etc.

http://www.kurthanson.com/archive/news/030207/index.shtml

How many hours a week does a full time musician work?

Originally posted by callat703:

Originally posted by kosmo:
Looking back at callat703 post… isn't the argument that Harry Belafonte didn't make any money from performance of the Banana Boat Song a bit flawed? Surely he was paid when he sang the song in concert, on television, etc? People who go to see him in concert are paying money with expectation he'll perform it for them. He may have even made some money from the sales of records that feature that song…

First - absolutely, it is easier to hope for airplay on WOXY than on DC101. I'm certainly not meaning to argue against the importance and relevance of internet or streaming media. However, I think it comes with responsibility to pay for what you're doing. I'm not ready to sacrifice a means of financial support for all artists simply because it benefits some looking for wider exposure. What happens when you reach that wider audience then, and could be capitalizing upon income from those sources? The "wider exposure" argument is a slippery slope, because unless there is some kind of financial promise in reaching that wider audience, why bother? Ultimately, many musicians' goals are to be financially secure in what they do - that's the best most can hope for. To make enough money to be a musician full time. Royalties from digital performances can assist in that goal - and I think it would be folly to not recognize or support that.

Second - yes, he's paid for appearances and receives money from concert tickets and so forth. I'm purely making a royalty argument - he isn't paid for that song being played on radio, TV, cafes, clubs, and so forth. The argument that you're making could be extended to say, "well, artists make plenty of money from touring and record sales, so why should they make money when their song is played on any medium?"

Now, I don't know for a fact that this is true - but I would expect the same could be said about Jimi Hendrix with "All Along the Watchtower," the Byrds with "Mr. Tambourine Man," or any other artist that has had a massive hit with a cover. Unless you're the owner of the publishing rights or the songwriter, you're not getting royalties for your performance. Now, for all I know, Hendrix or the Byrds may have publishing rights for those songs - but I doubt it.

Originally posted by Charlie Nakatestes,Japanese Golfer:
How many hours a week does a full time musician work?

because "musician" has a one-size-fits all definition…

also, didn't you answer your own question? (re: full-time musician). work less than 40 hours, you're a part-time musician. work more, and you're an over-time musician.

EDIT - see fuller post below.

Originally posted by kosmo:
first of this might be of interest to some of you :)

Last.fm is paying royalties to indie artists

Ok, so here's a good overview of the effect the most recent royalty rates will have on internet radio broadcaster. The bottom line being that a broadcaster could essentially be paying 100%
of total revenues just to pay the SoundExchange royalites, also due would be composer fees. This assumes that the broadcaster is seeing any real revenue from banner ads, etc.

http://www.kurthanson.com/archive/news/030207/index.shtml

Hopefully this doesn't double post, as it looks like my post got lost somewhere in cyberspace…

My understanding of your argument is that these new royalty rates are going to put hobbyists out of business. First - I pay for my hobbies. Why should hobbyists be entitled to use other people's art free of charge?

Second - the article you linked to says:

"In 2006, a well-run Internet radio station might have been able to sell two radio spots an hour at a $3 net CPM (cost-per-thousand), which would add up to .6 cents per listener-hour."

It goes on to say that with added revenue from gateway ads and so forth, this essentially can cover the royalty fees using 100% of the income from the website. If you're a hobbyist, I think that's more than fair - you're making enough money off of your hobby so that it is free and you can sustain it.

The biggest internet radio providers - WOXY, KEXP, etc - likely charge more than a $3.00 net CPM. That is absurdly low. From looking at WOXY's media kit, for example (http://woxy.lala.com/media/files/aboutwoxy.pdf) - it is clear that they have enough visitors to charge easily three times that CPM, if not more.

actually hobbyist are stil expected to cough up… SoundExchange fees are collected regardless if you have revenue or not, unless you can truly meet the definition of a non-commercial radio station which still requires a certain fees to be paid.

and i need to hire a better fact checker, because in this case the RIAA isn't actually doing the right thing if you are a songwriter… as this battle isn't over internet performance royalties which is still being disputed but over the mechanical royalties paid to songwriters. i.e. ASCAP.

RIAA and DiMA have formed sort of an unholy alliance in attempt to lower the mechanical rights.

So on one hand up with artists/labels but down with songwriters.


"We are seeking to have royalties be in line with what the record industry historically has paid," said Jon Potter, executive director of the Digital Media Association, or DiMA. "Royalties today are disproportionately high for publishers in the context of overall sound recording pricing…. They've gone from 7 cents, to 8 cents, to 9 cents (per song), while record prices have dropped dramatically."

While songwriters want an increase from 9.1 cents to 12.5 cents per song sold – saying distribution costs are dropping during the transition to digital – the Recording Industry Association of America, or RIAA, wants songwriting royalties to be set at 8 percent of the wholesale price. DiMA proposes 4.1 percent of the retail price, and has asked the Copyright Royalty Board to decide whether webcasters need to pay mechanical royalties at all, since streaming isn't designed to leave the consumer with a copy of the song.

http://www.wired.com/entertainment/music/commentary/listeningpost/2008/02/listeningpost_0204

also

http://blog.wired.com/music/2008/01/here-we-go-agai.html#more

Ultimately, I think we just disagree. I think the royalty rates should go up - artists aren't generating as much income from record sales anymore.

I don't know much about the mechanical royalty debate - but that does seem as though the RIAA isn't acting in the best interests of the musician.