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Are the Days of “Free” Internet Music Over?

August 18, 2008

first of a series on the public and music copyright abuse by E. Manning

Faced with the inability to generate money and faced with higher internet music fees, many large internet music broadcasters like Yahoo Launchcast and Pandora are making overtures toward giving up, which will further restrict your ability to listen to music on the internet, at least without paying fees for the privilege beyond the cost of internet service and maintaining a computer.

Internet radio broadcasters faced an unprecedented hike in fees because of a Court of Appeals decision back in July of 2007. Many small internet broadcasters saw the writing on the wall and closed up shop quickly. Other more stalwart or more hopeful broadcasters kept the faith, believing that the politics of the music industry round table would save them. Those of us in the music industry know better. The music industry is little more than a collection of legal false walls that are moved around in an effort to generate revenue for music recording labels, music rights companies and anyone else closely tied enough to make a few cents. Everyone else, including all but the most famous recording artists are left out in the cold.

internet broadcasting

internet broadcasting

The internet radio community breathed a sigh of relief when the July 15 deadline for web music broadcasters to start paying new royalty rates and per-station fees was temporarily put on hold in lieu of Digital Rights Management promoted by “SoundExchange.” Apparently, this transition isn’t working well since broadcasters have learned that working with Digital Rights Management demands “enforceable technology mandates that are unreasonable, unworkable, and way off-topic.” Whether that reasoning is right or not, SoundExchange has sought to leverage absurd fees against imposing control mandates that they have promoted.

In an attempt to derail the possibility of congressional action, music licensing authority SoundExchange has made a couple of overtures to webcasters. Initially, they offered to delay the onset of higher royalties for “smaller” webcasters until 2010, although larger, commercial webcasters would still be on the hook for the higher fees. SoundExchange offered a temporary cap on minimum royalty fees. Whether this action is generosity or outright manipulation is up to the reader.

Back in 2006, the PERFORM Act or “Platform Equality and Remedies for Rights Holders in Music Act of 2006” sponsored by Feinstein, Graham and Frist proposed changes to the Copyright Act would force the use of protected formats for all streaming media services for online services, cable, satellite radio and TV. The idea promoted was to ensure that songwriters and performers continue to be fairly compensated for their works. The idea died on the vine in the name of personal recording rights. The idea of fair compensation hasn’t truly happened. With lawsuits and other stalling by big money in the industry, most songwriters and performing artists are still waiting to see a single penny for their efforts in the last few years. In the meantime, attorneys, music rights organizations and music labels hold in limbo any money that is in play as they decide what legal false wall to move next to keep that money.

SoundExchange offered a potential reprieve from proposed royalty hikes in lieu of Digital Rights Management. Like the conniving business politicians that they are, SoundExchange was able to initiate a retroactive and massive rate hike through our lawmakers for a royalty hike on Internet radio stations, imposing per-user fees for each song. Adding insult to injury, the royalties on Internet radio will double for big stations by 2010. Without getting into a slew of mumbo-jumbo, rates on Internet radio are now double what satellite radio pays. SoundExchange is working on fixing that problem.

SoundExchange has had DRM and radio broadcast efforts on its agenda for quite a while. Representatives of the company have justified its stance on higher royalties from revenue and profit standpoints in order to justify their existence. SoundExchange wants to arm wrestle internet broadcasters into oblivion or force profitability based on their standards.

California Representative Howard Berman is attempting another last-minute deal between web broadcasters and SoundExchange in an effort to head off a huge rate increase that will put many large web broadcasters out of business entirely. Clearly, there is an attempt to go berserk on both consumer rights as well as the rights of songwriters and performers in the name of rights, lobby and protection for the industry.

the better music deal

the rebuilt music deal

So what is SoundExchange anyway? SoundExchange is a spin-off of the RIAA, a “non-profit” performance rights organization that collects royalties on the behalf of sound recording copyright owners and featured artists for non-interactive digital transmissions, including satellite and internet radio. The board is comprised of some of the largest record labels, a few artist management firms, independent labels and the Recording Industry Management Association of America.

In short, this is more of the music industry that you have come to hate and love as they work for their own good over the good of those they claim to represent. The Government Copyright Office has handed our rights over to them to administer in most recent legislation. Songwriters and performers are grossly underinformed and have lost many rights until they claim them anew. It isn’t enough to be a member of ASCAP or BMI. You have to be a member of the system to claim rights to your own music. The right to be paid royalties is no longer retroactive. SoundExchange takes an administrative cut from all your royalties as well to compensate themselves.

The music industry a/k/a, the corporate oligarchy has what it wants: the money of everyone involved on all sides. SoundExchange IS the music industry, combined and regurgitated in a new non-profit form to promote self-interest while you weren’t watching. Welcome to the brave “new world” of music broadcasting that seeks world domination with a legal flourish. ~ E. Manning

One Comment leave one →
  1. webjock1 permalink
    August 20, 2008 11:05 am

    The purpose of Sound Exchange’s design has not been to ‘kill’ the internet radio industry, yet to slowly ‘bleed it to death.’

    Good point. That is the chief purpose of the music industry at large. It is much more profitable to drain the victim slowly than all at once. That is what leeches do. The only difference is that in this case the leeches claim to give something back. ~E.M.

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