Study Says $2.3B in Net Radio Royalties by '08

An anonymous reader writes "According to a newly published report, the music industry will have a nice pile of cash to collect from net radio owners in 2008 — a staggering $2.3 billion to be exact. The report is based on current performance royalties paid by terrestrial radio vs. internet radio, and taking into account projected growth in listenership. Meanwhile, the corporate Clear Channels pay just $550 Million for broadcasting the same songs we've all heard before. Hardly a fair deal."

screw them

That's why I built my latest little project. MP3's by the boatload, napster
squared. with storage approaching $400 / TB why not copy *ALL* the music ?

MP3 is the standard, no matter what the big corps want you to believe.
this mp3 file sharing system [mxchg.com] will me

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let's just say not having a single point of failure was a design feature because I didn't
feel like becoming the focus of an attempt to shut down the 'network'. Also because it is
not technically intended to do that (just like a hammer is not technically int

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yes, but after all internet radio is just a format + a music storage device.

The media exchange does both in one single box. Why transmit music all the times when
all you really need is the format spec once you have access to all the music.

It's uncanny how c

Two things...

According to a newly published report, the music industry will have a nice pile of cash to collect from net radio owners in 2008 -- a staggering $2.3 billion to be exact. The report is based on current performance royalties paid by terrestrial radio vs. internet radio, and taking into account projected growth in listenership.

First, this assumes that everyone will pay the new fees instead of finding alternative unlicensed content (that is free or Creative Commons or other similar content).

Meanwhile, the corporate Clear Channels pay just $550 Million for broadcasting the same songs we've all heard before. Hardly a fair deal.

Second, it is fair. It is called economies of scale. Clear Channel deals is huge quantities. To put it another way, if you go to a local corner market and buy a pack of four rolls of toilet paper for $2.00, then you go to Costco and see the same brand of toilet paper in a box of 40 for $10.00, is that unfair? No, it is called purchasing in bulk. Same as the sort of thing that MS does with corporate VLKs versus regular retail prices.

Re:Two things...

Second, it is fair. It is called economies of scale. Clear Channel deals is huge quantities. To put it another way, if you go to a local corner market and buy a pack of four rolls of toilet paper for $2.00, then you go to Costco and see the same brand of toilet paper in a box of 40 for $10.00, is that unfair? No, it is called purchasing in bulk. Same as the sort of thing that MS does with corporate VLKs versus regular retail prices.

Wrong on two counts. Clear Channel and all other FM radio stations pay NO performance royalties. Yet the new rules would have inernet radio pay HUGE performance royatlies, relative to their revenues. (Both pay artist royalties. )

Also, much of the reason that the toilet paper costs more at the small store is because of local overhead. The suppliers charge somewhat higher rates to the little guys, but not many times as much, as is being proposed in the new rules from the Copyright Office.

Re:Two things...

Sorry bud, but the stations pay fees based on the estimated number of listeners (as part of the calculation, they multiply two other variable by that estimate). I would call that performance based.

-1, no link handed to you
+1, this was left out of article
+4, TRUE

Also, Neal let the phrase "just $550 million" in the summary, referencing 25% of the total internet radio revenue. Too much? Too little? "Just" is a blatant pejorative here.

Why allow overtly biased statements in such a stupid way? We expect more cunningness.

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What a silly bunt.

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Penguins?

...

Maybe I missed something...

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will pay the new fees instead of finding alternative unlicensed content

CARP created automatic royalties for ALL online music. Regardless of what you pay, you are legally required to pay RIAA's SoundExchange these automatic royalties, and it's SoundExchang

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"Second, it is fair. It is called economies of scale."

Correct in a sense, unfair laws do scale up with larger users. The 'fair' notion relates to the fundamentals principles behind the collection of royalties, the 'size' part was using an example to demon

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Economies of scale really does not apply to royalties. The internet radio community can grow 100 fold next year and will still have to pay the same amount. This is really just an example of big corporate interests and evil lobbying.

The terrestrial radio

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First, this assumes that everyone will pay the new fees instead of finding alternative unlicensed content (that is free or Creative Commons or other similar content).

It assumes that the majors will remain the majors: free to draw on over 100 years of rec

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First, this assumes that everyone will pay the new fees instead of finding alternative unlicensed content (that is free or Creative Commons or other similar content).


This also assumes that internet radio companies will remain in business to pay those fees.

huh?

Are they trying to make money or shut down internet radio? I was under the impression that most internet radio stations were run for fun, not profit.

Good question

And the answer is that they are trying to shut down Internet radio. Consider this: currently, you can connect to the Internet almost anywhere with certain data packages from cell phone carriers. Soon, in major metro areas you'll be able to do the same via municipal WiFi or mesh networking. Some people have been streaming Internet ratio [garyturner.net] in their cars for years, so fully Internet-enabled car stereos can't be far behind. This is a situation that gives Clear Channel and other large radio companies nightmares: the ability of people to choose from thousands of commercials-free radio stations instead of being stuck with the same selection of ten traditional stations.

Re:Good question

As it happens, this also further damages traditional media business models. Right now, with their control on distribution, the large media companies can use their clout to promote artists they believe are mass marketable. Internet Radio, on the other hand, fractures their market, because smaller (or worse, independant) artists may get more airplay. It also means their current payola schemes no longer work... how can you buy off thousands of internet radio stations running out of people's basements?

In the end, the only people Internet Radio helps are the small artists and the music-listening public. Unfortunately, neither of these groups has much lobbying clout, and so we see ridiculous outcomes like this.

Yea, I don't think so...

That projected growth is on the tacit assumption that folks will pay more for the same product -- and they won't, The broadcasters will either raise fees or shut down entirely. Either way listenership goes down.

There seems to be the gross assumption that Internet radio is insanely profitable. While it certainly enables small producers an outlet for their work vs conventional broadcasting, they still tend to have small audiences with niche markets.

RIAA just needs to keep pushing until all we listen to is pirated, ripped MP3s all day, everyday.

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Didn't we already do this once? I recall in the last 90's a bunch of stations had internet streams and then the RIAA/etc started pulling rank and they all vanished. Only now are they coming back, won't this just make them disappear again?

Forgive me if I mi

Re:Yea, I don't think so...

It was actually back in 2002, all thanks to the DMCA CARP ruling. The SomaFM About Page [somafm.com] covers what they went through during that time. Now, with the latest fees, they're looking at about $1 million in royalty fees for the year of 2007, compared to $22,000 for 2006.

And all this just as I started listening to them... thanks a lot, Copyright Royalty Board. Assholes.

Fees are retroactive so...

It was actually back in 2002, all thanks to the DMCA CARP ruling. The SomaFM About Page [somafm.com] covers what they went through during that time. Now, with the latest fees, they're looking at about $1 million in royalty fees for the year of 2007, compared to $22,000 for 2006.

And all this just as I started listening to them... thanks a lot, Copyright Royalty Board. Assholes.

Actually the fees are retroactive to 2006, so they still owe $1m for 2006, they just did not know that in 2006. This is ridiculous.

-Em

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Actually the fees are retroactive to 2006

So much for the Constitutional prohibition against ex-post-facto laws. Somebody needs to fight this in court, it's blatantly unconstitutional.

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So much for the Constitutional prohibition against ex-post-facto laws. Somebody needs to fight this in court, it's blatantly unconstitutional.

I don't think this is a law and thus not unconstitutional - however it could be illegal business practice.

Personally, I think retroactive pay-per-play (payola laws do not cover Internet!!!) fees are in order. RIAA now owes us 10 cents per song per listene

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RIAA just needs to keep pushing until all we listen to is pirated, ripped MP3s all day, everyday.

Illegally...

That really is no small addition. The advice to stop pushing applies to RIAA only, who is unlikely to be reading these pages anywa.

You, on th

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You, on the other hand, seem to justify illegal behavior.

There's nothing wrong in that. The present configuration of laws that we have is by no means perfect. Some things that are legal should be illegal; some things that are illegal should be legal. While

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Certainly not. And here is why. Even the vilest pirates claim, they only steal from the RIAA/MPAA -- not the original authors: musicians, artists, whoever.

What do their claims have to do with the underlying morality of it? Besides, the vilest of pirates do

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You lost me right there at the denying to creators the power over their creations -- and the property rights.

Hm?

First, what I'm advocating is a reformed, lesser copyright. I do think that copyright is a good idea, I just don't think we've implemented it we

Correct, the numbers will never get there.

You nailed this sentiment.

It seems as though some of the individuals involved here (typical of government bureaucrats BTW) don't have the first idea of basic economic theory:

If you raise the price of something, the demand goes down. How simple can you get

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The projected growth will still happen, just not in the US. If I start up streamtuner, I can listen to any of over 2000 streams for free. (None of the ones I listen to happen to be in the US anyway.)

Good business idea

If you have a crowd of credible amateurs giving your product exposure in a new medium with excellent youth market penetration, the best thing to do is shut it down. After all, they should be re-imbursing the labels for...um...the free product advertising?

Oh, wait, that's actually a terrible idea. And from those peerless innovators in the recording industry - who knew?

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If you have a crowd of credible amateurs giving your product exposure in a new medium with excellent youth market penetration, the best thing to do is shut it down. After all, they should be re-imbursing the labels for...um...the free product advertising?

Hardly a fair deal?

Huh? What did you expect? You've never been involved with the mafiaa, or you'd know that you can't get a fair deal with 'em. Monopolies don't tend to make fair deals.

"terrestrial" radio?

That's the worst possible word to describe what is simply IP radio. What does it even mean? That the radio travels over lines that are on the ground? And what happens when it goes through the millions of wireless broadcast points and everyone can access it like it was...radio?

Radio is radio. The idea that they should be taxed differently is absurd. Even more absurd is the idea that IP radio be taxed more than normal radio because normal radio can be freely recorded and digitized by anyone within the broadcast radius, whereas to get IP radio you have to be paying for internet access (most of the time).

TLF

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OK, so I read that completely wrong.

Let the pain begin. :)

Sometimes I really wonder why /. doesn't have an edit function. Why why why?

TLF

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Radio is radio. The idea that they should be taxed differently is absurd. Even more absurd is the idea that IP radio be taxed more than normal radio because normal radio can be freely recorded and digitized by anyone within the broadcast radius, whereas to

Great returns!

$2.3B per year on a $23m investment in bribing congress (http://opensecrets.org/industries/indus.asp?Ind=B 02) is:
($2,300,000,000 / $22,699,424) *100%= 10,132% return. = Damn near priceless.

Now RIAA members *could* invest in modernizing their legacy business model, but their current one is clearly much more lucrative.

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Someone who truly understands the business model. Mod up.

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the first time I read about the RIAA was when I was building a record player pre-amplifier.

If I had known at the time what I was getting involved with I would have left it at a
flat curve :)

But I think that another 10 years or so should see the end of them

"Taking into account projected growth..."

OK say what you want to about the RIAA, but that's a funny line.

Wanna bet?

I think that the addition of the 'levies' will reduce the number of ( legit ) stations broadcasting on the net. So the net ( no pun intended ) income will be less.

Save Our Internet Radio

Check out www.saveourinternetradio.com [saveourinternetradio.com]. Sign the online petition. Write your Congressman. For anybody out there who listens to stations like Radio Paradise and Pandora (my personal favorite), let your voice be heard before these staggering fees kill these

Push Money

Meanwhile, the corporate Clear Channels pay just $550 Million for broadcasting the same songs

Ordinary radio stations are expected to play [only] the songs they've received incentive pay or broadcasting discounts to promote. For example, if a performer is giving a concert soon nearby, airplay will be purchased of that performer's songs to drive

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Ordinary radio stations are expected to play [only] the songs they've received incentive pay or broadcasting discounts to promote.

Thy shouldn't be. See Payola [wikipedia.org]

To quote the first paragraph:
In the American music industry, the practice of record companies

Outsourcing

It just shows that its time once again for Americas FAVORITE game show!!!!!!

OUTSOURCE

Simply outsource the radio broadcasting service/equipment to someplace where location != United States.

The irony is they are writing their death sentence

The *royalty* payments are only for RIAA/BMI/ASCAP/Harry Fox related artists and labels. All the labels in the indie scene and the labels are actually labels that are much bigger than you might think (though this excludes the fake indies or 'boutique labels') will give you - if you ask nicely - a blanket license not only to stream their music but to podcast it as well. Podcasting has serious licensing issues well beyond streaming internet radio but all of this is obviated if you are allowed to negotiate with the label or the copyright owner directly. Remember the RIAA/BMI/Harry Fox are acting on behalf of *their* labels, not music in general. They can not dictate what a label or an artist themselves say if the artist and the labels are not part of that agency.

To be clear, my show gets about 1500 listeners a week and industrial / new wave electro and here is a list of labels that have given permission:

http://www.bloosqr.com/the%20essence/the%20labels. html [bloosqr.com]

*the irony* of these laws it is giving these labels much more exposure because by definition the indie/hipster/creative kids making their shows are now even more likely to only play music from the indie labels and more over anyone looking for internet music is more than likely to be exposed to music from these labels which given the distate for the "big 4" could easily turn some of these artists/labels into the next big thing

Re:The irony is they are writing their death sente

The problem is that it can be a significant legal hassle to get the necessary agreements in place, a hassle which is costly in both time and money. The result is that many internet radio stations will likely just disappear.

What the indie scene desperately

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Its not as hard as you think to be honest.. I'm not saying its a piece of cake but there are two sides of this.. the legalesque is only needed to cover you in case the label is going to sue you. If as is mostly the case the non-ascap/bmi labels aren't goin

Re:The irony is they are writing their death sente

Of the radio stations I listen to, most are very niche internet radio stations run by DJs and the associated community. Out of maybe 100 djs, a good 20-30% of them actually produce their own tracks and use it as a form of marketing for themselfs.

We're talk

Article seems confused about facts

A recent article from BetaNews has analyed facts and figures on royalties currently paid by terrestrial radio stations to the three major performance royalty organizations (PROs) -- ASCAP, BMI, and SESAC -- and has determined that, under the new rates prop

Oh, they can kiss my ass.

As the operator of an internet radio station [mirrorshades.org] myself, my response is "kiss my ass". Like most other stations, I broadcast things that aren't ever going to be heard on conventional radio, giving (relatively) niche or obscure artists that much more free exposure. I know this works for two reasons:

1. I myself have bought albums after hearing certain artists' songs on other net radio stations -- music I would never, ever, ever have heard otherwise except perhaps in the drunken haze of a goth club.

2. Several independent artists have sent me singles and even entire albums, encouraging me to put them in rotation. To quote the latest, after he sent me a few samples and I liked 'em:

Thanks I appreciate the exposure, it's hard to get the music out as an
independent artist which is why I'm trying to get radioplay. The CD is
the mail.

This has happened several times. It's good for the artists who are trying to get noticed; it's good for the audience who gets to discover new music; it's good for the broadcaster cause it's just fun. I get permission from many of the labels or artists to play their stuff, and when I don't, well, it's a freaking 96k broadcast that can't be copied without some technical know-how (certainly much more difficult than jamming a tape into your radio and hitting "record"). Exactly who is being harmed here?

The RIAA's outmoded and antiquated business models, and their continued attempts to strangle the life out of emergent technologies, is absolutely appalling. I'll continue to broadcast from my host in Germany and here's a big screw you to the suits. I don't make a single cent off my broadcast, and I don't play the kind of music that would come close to competing with the mass-appeal fare on the normal airwaves. You'll never get a dime from me.

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Yeah, I've listened to them before, and they seem to have kind of the same deal. no radio station in the US that I know of is going to play trance, certainly not the generally unknown stuff from afterhoursdjs -- as far as I can tell artists on that statio