Webcasting Reprieved At Last Minute

In punishment terms, it’s a stay of execution, not a pardon.

Encouraging news emerged from Washington at a last-minute hearing on new royalty rates to be charged to online radio websites. The proposed increases prompted a host of webcasters, like Yahoo and Pandora, to say the higher rates would shut down their webcasting efforts.

Wired reported on the change of heart from SoundExchange during a closed door meeting in Washington:

The SoundExchange executive [Jon Simson, executive director] promised — in front of Congress — that SoundExchange will not enforce the new royalty rates. Webcasters will stay online, as new rates are hammered out.

The amazing turnaround comes shortly after the DC District Court of Appeals declined to act on a petition for delay for the July 15th deadline to enforce the higher royalty rates. SoundExchange and webcasters now have the groundwork for negotiating a more equitable rate schedule.

Until that happens, the threat to online radio has not ended. Pandora founder Tim Westergren told Wired that public efforts to bring the matter to the attention of members of Congress evidently worked, and credited the change in circumstance to web radio listeners who contacted their representatives in DC.

DC To Webcasters: Drop Dead

If the SaveNetRadio coalition had hopes a Democratic majority might help it stave off a crippling royalty increase, they can probably pack those hopes in a sack, add a couple of bricks, and drop it into the Potomac.

BusinessWeek said the result of a recent House Small Business Committee hearing resulted in only an affirmation of Congress’ inertia on the issue. Congress isn’t going to get involved.

Two Democratic Representatives from New York, Nydia Velazquez and Yvette Clarke, commented on their lack of action in the report. Velazquez doesn’t "Congress would be the best type of vehicle to resolve this type of issue.:

Clarke hasn’t heard "what the win-win is" with the issue. Gosh, Congressperson, haven’t you ever heard of a compromise?

A number of Representatives have backed a bill, referred to as the Internet Radio Equality Act, and a similar measure is making the rounds of the Senate. Negotiations may still bear fruit, too.

"We might now be at the beginning of real negotiations with SoundExchange," Ian Rogers, general manager of Yahoo Music, said in the report. He commented on the issue of webcast royalties this week, saying, "the new royalty rates are higher than the revenues anyone can hope to make from related advertising."

As far as Internet users are concerned, it’s been a crummy week. The FTC shrugged at net neutrality in counseling a wait and see attitude to legislation for it. Congress wants nothing to do with the webcasting royalties issue.

At least it was a bipartisan non-effort.

Yahoo Turns Off The Radio

If you want to hear the future of web radio with the Copyright Royalty Board’s new rates in place, chances are your regular music listening fix will be broadcasting the bitter sound of silence today.

Yahoo discussed its participation in the protest. Ian C. Rogers of Yahoo Music wrote on the official Yahoo blog how the new rates, effective July 15 and retroactive to January 1, 2006 (not a typo) would devastate what has been a boon for music fans:

The situation webcasters are in is simple: the new royalty rates are higher than the revenues anyone can hope to make from related advertising. In other words, we all lose money on Internet radio starting July 15th. Yahoo! has no intention of operating LAUNCHcast radio as a loss-leader. This senseless rate hike needs to be changed, or our business will have to.

Yahoo joins major music names like MTV and a host of other sites in protesting the proposed rate increase. Some, like Pandora, have placed a letter on their home pages explaining the protest. KCRW will loop an hour-long program where webcasters discuss the issue.

SaveNetRadio has more information about the Day of Silence. They urge interested people to contact their elected representatives in Washington DC and politely express their concerns about the potential loss of online radio.

The Day the Web Goes Silent

Next Tuesday, June 26, thousands of US webcasters will go silent, including big names like Yahoo, Rhapsody, MTVOnline, and Pandora, as well as more local offerings like BluegrassCountry.org/WAMU.org and RadioMilwaukee.

Some webcasters will cut off their streams entirely while others will play static, ocean sounds, or similar fare with periodic public service announcements of what is happening.

"The arbitrary and drastic rate increases set by the Copyright Royalty Board on March 2nd threaten the very livelihood of thousands of webcasters and their millions of listeners throughout the country," said Jake Ward, a spokesperson for the SaveNetRadio Coalition.

"The campaign to save Internet radio – a genuine grassroots movement comprised of hundreds of thousands of webcasters, artists and independent labels, and Net radio listeners – has quickly brought this issue to the national forefront and the halls of Congress, but there is still more to be done before the approaching deadline of July
15th.

"On Tuesday, thousands of webcasters will call on their millions of listeners to join the fight to save Internet radio and contact their Congressional representatives to ask for their support of the Internet Radio Equality Act."

After July 15, the CRB plans to impose its new rates, a policy that is retroactive, requiring Net radio providers pay the new rates for the previous 17 months as well.

The complete list on Internet radio stations participating in the Day of Silence are as follows:

Yahoo!
Live365 stations,
Rhapsody,
MTV Online,
AccuRadio,
KCRW (Santa Monica, CA),
Pandora,
Radioio,
DigitallyImported,
RadioParadise,
3WK,
myMVY,
Wizard Radio,
Born Again Radio,
Pearadio.com,
Ear.fm,
WGLI (Bablylon, NY),
WMUK (Kalamazoo, MI),
Head-On Radio Network,
Zecom/Gemz Radio,
monkeygrip music cafe,
KFCF (Fresno, CA),
LuckySevenRadio.com,
Blue Power/Guitar Speak,
WPNA (Oak Park, IL),
60′s Chicks Radio/Seasons &
Celebrations Radio,
STAR 107.9,
WRPS/WebRadioPugetSound,
Puregold Rock ‘N Roll,
NeverEndingWonder Radio,
RadioMilwaukee,
BAGeL Radio,
Gotradio/100hitz,
KDUN (Reedsport, OR),
GDRadio.net,
KQLZ (Los Angeles, CA),
KXPR/KXJZ (Sacramento, CA),
NiceNoise.Net,
BlackLight Radio,
Pure Pop 24/7,
Smooth Jazz and More,
Reggae Nostalgia,
WCH Radio/The Wave,
WYGS Southern Gospel Radio
Network,
BluegrassCountry.org/WAMU.
 

Under their proposal webcasters making less than $1.2 million a year would pay 10 percent of all gross revenue, up to $250,000, and 12 percent of all gross revenue above that amount.

SoundExchange’s announcement has been met with sharp criticism. "The proposal made by SoundExchange today would throw ‘large webcasters’ under the bus and end any ‘small’ webcaster’s hopes of one day becoming big," SaveNetRadio spokesperson Jake Ward said.

"Under government-set revenue caps, webcasters will invest less, innovate less and promote less. Under this proposal, Internet radio would become a lousy long-term business, unable to compete effectively against big broadcast and big satellite radio — artists, webcasters, and listeners be damned."

The rates would be in effect through 2010, said SoundExchange, which splintered off from the Recording Industry Association of America (RIAA) in 2000.

"There’s a sense in the music community and in Congress that small webcasters need more time to develop their businesses," Executive Director John Simson said. "We look at it as artists and labels doing their part to help small operators get a stronger foothold."