OPINION: Why small webcasters will suffer from new royalty rates

Music-Online
OPINION: Why small webcasters will suffer from new royalty rates
By David Marsh
Jun 28, 2002, 11:22

LABELS SHOT IN THE FOOT AGAIN?
They got what they wanted;
will they now lose what they had

Last week, the record-company cartel for the first time gained a fee from U.S.-based radio stations.

That, not the specific rate, marks the real breakthrough of last week's ruling by the Librarian of Congress (LoC) that established fees for webcasting recorded music. Recording Industry Association of America (RIAA) mouthpiece Cary Sherman shrieked that "artists and record companies will subsidize the webcasting businesses of multibillion-dollar companies like Yahoo!, RealNetwroks and Viacom."

The LoC actually played into the hands of both the RIAA's five-member label cartel and the big webcast powers. It did this by using as its royalty model the agreement struck between Yahoo! and the RIAA. This meant rejecting a rate based on percentage of webcaster, like that which songwriters and music publishers get from both broadcasters and webcasters.

The per-song standard ensured an amount of money owed far beyond what any small webcaster can pay. Since the rates are retroactive to 1998, some web stations owe several hundred thousand dollars each, payable in October. Smaller webcasters like SomaFM, French ambient station BlueMars, and Tag's Trance Trip folded before the ink dried on the decision.

Some say the RIAA has committed suicide, since little webcasters expose so many kinds of records and targeted core audiences. But this misses the real point which, as Andrew Orlowski of www.theregister.co.uk points out, is that the RIAA "want complete control." The only way that the RIAA cartel can achieve such control is through alliances with large webcasters-the kind who _can_ afford the new rates. None of the big webcasting entities screamed loud.

The typical comment, from Alex Alben, of RealNetworks, was "It's a step in the right direction." Live365, the largest Internet broadcaster with 8.4 million Arbitron-certified broadcast hours a month, has had a plan, based on the projected rate, since February to pay $1.5 million in fees plus a monthly charge of $200,000. The new plan, which cuts the rate per song from an earlier-proposed $0.0014 cents a song to $0.0007 cents, cuts those sums in half.

In contrast, Live365 points out that many of the 40,000 webasters who use its service, some paying as little as $6.95 a month to do their shows, would now face at least a $500 license fee and will have to subsidize Live365's record royalties.

Just as broadcast "deregulation" virtually wiped out small radio stations, the LoC's new rates ensure that webcast survivors will belong to very wealthy companies who can afford them. Clearly, that's now government policy, summed up by the LOC's rationalization: ". . . many Webcasters are currently generating very little revenue, [so] a percentage-of-revenue rate would require copyright owners to allow extensive use of their property with little or no compensation."

As I've pointed out many times, protecting "copyright owners" means protecting big business, not artists. That the Librarian of Congress views songs solely as property, discarding their status as culture, is even more appalling.

As the stranglehold of big broadcasters became too much to endure in the '80s and '90s, one result was the rise of a pirate (so-called micropower) radio movement. Pirate radio became so pervasive that the FCC tried to create micropower licenses; big broadcasting stopped that in its tracks by corralling a batch of its pet legislators to object.

Some pirates became Webcasters. They (and many others) will likely become "pirates" again rather than pay rates set to destroy them. If the FCC couldn't police such stations when they needed relatively large transmitters, how is the government going to catch Web "pirates"?

All Web pirates will be aware that it was the cartel labels who drove them out of legitimacy. This means an opportunity to expose more of the RIAA's music will be truned into one more salad of snarling hatred. You don't even have to hope the RIAA chokes on it. Plummeting sales figures show it already is.

Veteran music journalist and author Dave Marsh writes this column for Starpolish.com, dmusic.com and counterpunch.com. He edits Rock & Rap Confidential (rockrap.com). Posted by permission of the author; Copyright, 2002, David Marsh.

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LABELS SHOT IN THE FOOT AGAIN? They got what they wanted; will they now lose what they had

LABELS SHOT IN THE FOOT AGAIN?
They got what they wanted;
will they now lose what they had