Future Uncertain for Internet Radio

Bill Goldsmith, 04.03.2007 20:07

These concerns about internet radio are on the minds of a number of folks who work with KSKQ our lpfm radio station in Ashland which currently is streaming over the internet.  http://www.kskq.org A special thanks to Hal Anthony from Hugo who posted this message below (and thnx, Hal for using Rogue Indymedia!)--rogue imc volunteer

 http://www.radioparadise.com/index.php

The US Copyright Office has released their new set of rates for the
payment of royalties by Internet Radio, and they ignored all of the facts
presented by webcasters (including RP) and gave the record industry
exactly what they asked for: royalty rates so high that they will put RP
and every other independent webcaster out of business. See Kurt Hanson's
newsletter for 3/2/07 for the details on how the rates work and what they
will mean to stations like RP.
 http://www.kurthanson.com/archive/news/030207/index.shtml

You can participate in the discussion about this issue in our Listener
Forum.
 http://www.radioparadise.com/content.php?name=Forums&file=showtopic&topic_
id=9567

March 4, 2007 The View from Paradise
Internet radio, RIAA |

Posted by
Bill Goldsmith

I’m Bill Goldsmith, and my wife Rebecca and I have spent the last seven years of our lives pouring our hearts, minds, and financial resources into Radio Paradise. We are now faced with the very real possibility that all of our efforts will have been in vain, and that the thousands of people who are devoted listeners to our station will have it snatched out of their lives.

I have been in love with radio all of my life, and spent 30-odd years dealing with the conflict between my vision of radio as an art form and my FM-station employers’ vision of radio as a conduit for advertising. I have watched the medium that I love turn from an essential part of the process of connecting those who love making music with those whose lives are touched by it into a mindless background hum of advertising and disposable musical sludge.

With the advent of the Internet, we were finally able to bring to life the radio station I had always wanted to work for (and listen to): commercial-free, passionate, and embracing a wide universe of musical treasures, from the classic rock artists I grew up with to the latest indie discoveries, with a liberal sprinkling of world music, electronica, jazz, even classical. We have slowly built up a loyal audience and have been able to support ourselves while living our dream.

An Exciting - But Fragile - New Era for Radio

The Internet has changed radio in a profound way. Instead of a business that required investments so huge (millions of dollars for even a small-market FM station) that a programming focus on the lowest common denominator and an extreme aversion to risk or experimentation was an unavoidable consequence, a radio station with a global reach was now within the grasp of anyone with the talent and determination to make it happen.

Every day we hear from listeners who are profoundly touched by our efforts - by the music we play, by the way we assemble the songs into meaningful sequences that are more than the sum of their parts, by our passion for what we are doing, and our commitment to never contaminating the music with advertising. And our station is but one of many who have attracted that kind of passionate following, and provided that kind of outlet for radio artists like myself.

The Internet’s paradigm-shifting gift to radio programmers and music lovers - at least those in the US - is now in danger of being taken away by the misguided actions of the US Copyright Board. The performance royalty rates released by the Copyright Board on March 1, 2007 are not just extreme, not just burdensome. They are a death sentence for all US-based independent webcasters like Radio Paradise, SOMA-FM, Digitally Imported, and many others.

The facts and figures of the new rates are detailed in Kurt Hanson’s newsletter for 3/2/07. Kurt’s analysis of the financial impact of the new rates is entirely accurate, and chilling.

The Artificial Analog vs. Digital Divide

There has been much discussion about how unfair these rates are, but our listeners find one fact particularly apalling: while Internet stations like ours are being told they must pay royalty fees that exceed their income, sometimes by several times over, FM stations - including those owned by media conglomerates like Clear Channel - pay nothing at all!

Yes, both FM stations and Internet stations pay royalties to songwriters and/or music publishers. But the royalties in question are owed to the owners of performance copyrights, which means, in most cases, record companies - and to them, FM stations pay nothing at all.

How is it possible for such a massive disparity to exist? For the answer to that we need to go back to the 1990s, when music industry lobbyists persuaded Congress to include wording in two pieces of legislation (the Digital Performance Right in Sound Recordings Act of 1995 and the Digital Millenium Copyright Act of 1998) that drew a sharp division between analog and digital broadcasts. Their reasoning was that a digital radio transmission was not a radio broadcast at all, but a sequence of perfect digital copies of music performances provided to the user, who could then copy them rather than paying to own a CD.

This is a profoundly flawed piece of reasoning, but members of Congress (who at that time had no idea how this whole digital thing worked) accepted it at face value, and agreed that it was only fair that digital broadcasts be subject to additional copyright fees, to be determined by an impartial (in theory…) ruling by the Copyright Office.

Let’s Get Real About This

Let’s reassess that reasoning in the light of 21st-century reality. Is there, in truth, a fundamental difference in the experience of an online listener to Radio Paradise and someone who was listening to identical programming on an FM station? Every one of our listeners - indeed, anyone who has ever clicked on a webcast as background music while working - knows the answer to that question. No! There is no difference whatsoever. Radio is radio, whether it comes in digital or analog form.

As for the recording angle, I would challenge any random group of RIAA lawyers, copyright judges, or members of Congress to listen to a digital recording of our radio station and a high-quality cassette recording of an analog FM station and tell which was which. I guarantee that they could not. The differences in quality are too subtle for all but the most discerning listener to notice.

The quality jump between AM and FM broadcasts was an order of magnitude more significant, yet the music industry managed to thrive their way through that transition. The advent of decent-quality cassette recorders in the 70s, coupled with stereo FM broadcasting, made it possible for anyone who wanted to to make copies of their favorite songs from the radio, with a quality not too different from the analog LPs sold at the time. Did that spell a death-knell for the music industry? Not hardly. The 70s and 80s saw a phenominal growth in the sales of LPs and, later, CDs.

Ah, but the music industry thought that home music recording would destroy their sales, and lobbied unsuccessfully in the 1970s to cripple that technology. The same fear-based and misguided reasoning popped up again in the 90s, with the advent of digital recording and broadcasting, and this time the industry - flush with dollars earned after their earlier fears were proved groundless - succeeded in this attempt to preserve their bottom line at the expense of, well, pretty much every one else.

A Grave Disservice to The Public

Crippling an exciting, groundbreaking industry like Internet radio is certainly not in the best interests of the public, nor that of musical artists, and not even - if history is any judge - of the music industry itself. Just as they were unable to see how the advent of home music taping actually spurred the sale of LPs and CDs, they are unable to tell exactly what impact Internet radio and other forms of digital media will have on the future of their industry - and to behave as if they do know, and for Congress to go along with them, is a grave error, and public disservice, that needs to be recognized and corrected.

So, if we are building a business - even a non-commercial business like Radio Paradise - by the use of copyrighted material, isn’t it fair that we pay for its use? Perhaps it is. But the fact remains that what we are doing does not differ in any substantive way from what a company like Clear Channel is doing, and to move forward under the fiction that such a distinction exists is neither fair nor rational.

Perhaps the most equitable solution is for all broadcasters - analog or digital, terrestrial, satellite, or Internet - to pay such royalties equally, just as they all pay more or less equally for the use of music compositions. This is the situation in many other places in the world, including most of Europe. The fact that the US broadcasting lobby has successfully out-spent and out-manuevered the music industry on this issue should not be “balanced” by Internet radio royalty rates so high that they cripple that entire industry.

That kind of reform will take some time - time that people like my wife and myself just don’t have. We are hoping that we can, along with a small group of other independent webcasters, negotiate a separate settlement with the RIAA, similar to the one we negotiated in 2002. That agreement allowed us to operate by paying a royalty equal to 10% - 12% of our gross income in performance royalties. That has been enough of a burden for a struggling “mom & pop” operation like ours, but it has allowed us to survive since that point. However, that agreement has expired, and we are now liable for royalties, retroactive to the beginning of 2006, that are equal to aproximately 125% of our income.

Trust me, it has been difficult to write those checks knowing that the foundation that the entire royalty structure is based on is a lie. Perhaps we will succeed in negotiating a new deal with them. If we do, it will probably be at a significantly higher rate - creating even more of a burden on small businesses like ours.

My question is this: why should we continue to be penalized for the mistakes made by Congress back in the 1990s?

What’s The Solution

The truly fair solution is a moratorium on the collection of any fees and the imposition of any penalties until Congress has had the opportunity to revisit the decisions they made a decade ago, and see if there is not in truth a profound wrong that deserves to be righted.

We are at a fork in the road. Down one path is a radio universe populated entirely by large corporations, who can either afford the legal firepower necessary to negotiate a reasonable settlement with the music industry (such as the satellite radio companies have done) or can afford to offer Internet radio as a “loss leader” (as Yahoo and AOL do).

Down the other fork we are presented with a universe of choices, freely available to all, produced by people who truly love and value what they are doing - including user-programmed channels such as those offered by lala.com, “discovery” channels such as those available at Pandora, and who knows what else in the coming years. None of those choices are viable under the new rate structure, and that would be a tremendous loss for all involved.

e-mail:: threepines@jeffnet.org

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Sign Petition Against Fees 06.03.2007 - 14:10 Dear KSKQ Members, Please sign the following petition to be delivered to congress regarding the recent royalty fee spike/exploitation of the RIAA:  http://www.petitiononline.com/SIR2007r/petition.html  http://www.somafm.com is a major online radio station from the bay area that will be practically shut down by these new fees. We should refuse to pay royalty fees altogether. We are promoting the musicians work for free, as volunteers, and should not be penalized for it. Someone needs to stand up to these thugs and I believe we could lead the way. Zac Krebs>