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Internet radio is a broadcast, like any other broadcast. It bears no resemblence to Napster, AudioGalaxy or Morpheus. This ruling is about broadcasting music. The big record companies are using this as a way to keep total control over who broadcasts music over the internet. It's a power play of huge proportions.
Here is a great letter by fellow broadcaster Tobasco (Toby). It illustrates several great, and disturbing points.
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Dear Mr. Sessions:
On Wednesday, February 20, the Copyright Arbitration Royalty Panel (CARP) proposed new rates and royalties to be paid by "Webcasters" for the performance of copywritten material. As an American and a Webcaster I feel it is my duty to promptly contact you to voice my opinion about the extreme outrage the proposed rates are having on the Webcasting community and the need for serious reconsideration of the rate structures proposed.
Webcasting is merely a new form of broadcasting using the Internet as a transmitter rather than a tower as in radio, or satellite dishes as in television. Aside from the delivery mechanism, Webcasting is identical in every way. Yet the new fees and rates being proposed by the CARP along with the Recording Industry Association of America (RIAA) are forcing Webcasters to pay much more to broadcast, and to deliver more detailed logs for their transmissions than traditional broadcasters. This legislation will in effect suppress the very foundations this country is built upon - the freedom to pioneer new technologies and develop entrepreneurial ideas to their maximum potential.
Thanks to Webcasting technology, for the first time in decades the power to broadcast has again been placed in the hands of those who cannot afford to purchase a 100,000 watt transmitter and spend millions of dollars to compete with the major radio stations. Broadcasting has reached a new era akin to the days when radio began, when anyone could start their own radio station with a few parts and some electricity. Those days fueled an entire industry that has now become a multi billion dollar machine.
Through Webcasting there is a whole new machine on the verge of being created, yet the new rules and fee structures are quickly quashing any hopes of anyone being able to afford to pioneer this technology.
I know your time is valuable but let us take a quick look at some numbers:
The proposed fee structure is $0.0014 per song played, per listener tuned in to the station. For our math purposes, we will assume our station has 1 listener tuned in for 24 hours a day all year long. Let us also assume we play 15 songs per hour.
$ 0.0014 X 15 songs = $.021 X 24 hours = $0.504 X 365 days = $183.96 per year
So that's roughly $180 per year for one listener. Now let's look at one of the top independent stations on the Internet right now, Digitally Imported (DI), which is also mostly commercial free. DI has at any given time of day at least 2000 listeners. Over a year at the above rate this means they are paying 2000 X $183.96 = $367,920.00 in fees alone.
Does traditional radio pay that much in licensing fees for broadcasting their music to a much larger audience? No. Add to that fee the 9% fee for making "Ephemeral Reproductions" (or a digital copy on your hard drive) and you've added an additional $33,000 in fees. Do traditional radio stations have to pay for Ephemeral Reproductions? No. But they DO place their music onto a hard drive for station automation. Why aren't they charged?
The new proposed rules also require that the Webcaster keep extremely detailed logs of their transmissions - much more detailed than the logs required of traditional radio stations. It is assumed that the only reason the RIAA and the record labels wants to enforce such detailed logging is to enhance their own ability to market their own product.
While some logging is understandable, webcasters are being asked for much more than is possible to deliver:
a.. UPC codes of the music we play. What if the disc was given to us as a promotional copy from the record label? The UPC codes are destroyed on those copies so they can't be sold. What if we play music from vinyl recordings?
b.. The exact time a listener tunes in, tunes out, and the listener's time zone. Traditional radio has never been technically able to report this information and never will. It seems as if the industry has done just fine with rough estimation for the last 40 years. Again, it appears the RIAA and the major labels just want to use this information for marketing purposes.
c.. The unique user ID. For what purpose? The only way to accurately get this information is to turn a station into a subscription-based service where the listener has to have a login and password. Coincidentally the major record labels are all starting up their own such subscription-based services.
d.. ISRC Coding embedded into the disc itself. Preposterous. This automatically rules out playing any music from cassette or vinyl. It is also next to impossible to retrieve the ISRC coding from a disc without highly advanced CD players or other systems. Again the major record labels seem to have all of the ISRC codes from the discs they manufacture. Perhaps yet another ploy to monopolize the Webcasting industry with their own stations.
As a Webcaster I am not opposed to regulation and legislation. I understand the need for artists to get paid. However I feel this new legislation is helping the Big 5 record labels, along with RIAA, to monopolize an emerging industry. If this were allowed to happen when radio was first introduced to the World it would not have emerged as the industry it is today.
I also feel the money recouped from these outrageous fees would not benefit the artists at all, rather it would benefit the RIAA and the record labels. If one reads the fine print the RIAA can use recouped funds for operations without limit, and if they cannot distribute a royalty within 3 years they keep the money. Nothing in the legislation says they have to locate and pay an artist or prove that they even embarked in a search process.
It is difficult for me as a Webcaster to agree to pay such fees and keep such detailed logs when I have no reciprocal methods of accountability from the RIAA. I have no proof the artist is getting paid. If this new legislation is indeed designed to protect the artist I want to see exactly where the fees I am paying are going.
I urge you to speak out against this legislation on behalf of the Webcasting community. This is a crucial time for those of us attempting to create a new business based on new technologies.
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