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The Music Wars: Damning the Streams in the New Frontier

In Blogs we like, Civil Liberties, Consumerism, Freedom of Information, Freedom of Speech, Media Criticism, Misc., Music, Technology on April 20, 2007 at 12:34 pm

The accomplished Talking Heads frontman and activist, David Byrne, recently posted a blog about the insidious new licensing rates and policies being propogated by the Copyright Royalty Control Board, a government panel of appointees tasked with regulating ever more influential copyright issues. At the root of the new policies is a substantial increase in royalty rates – fees a broadcaster pays to the copyright owner for each time their composition is played – that will greatly impact the way business is done for thousands of independent webcasters. Not only are the rates retroactive, but they also happen to be in line with a proposal submitted by SoundExchange, basically the “non-profit” face of RIAA advocacy. You can read their press release here.

Considering that the RIAA’s lawyers have litigated the pants off those downloading free Mp3s and the services making them available, it seems only natural that they now turn their attention to purveyors of webstreams and podcasts. Instead of going head to head in court, though, they’re trying to circumvent the system and pre-emptivelty install legislation that works in their favor by increasing their revenue. Byrne breaks it down for us:

With the proposed changes the royalties [for Webcasting] can no longer be based on a percentage of revenue, but on a fee for each listening hour — how many folks are listening and for how long — and there will be a minimum fee per radio “channel”. Also, above a certain aggregate listening hour amount, non-profits have to pay the same per-listening hour rates as commercial broadcasters. So now there will be no distinction between a large-scale non-profit station (like KCRW or WXPN) and Z100.

These changes are estimated to increase average costs about 20% accross the board, taking money directly out of the pockets of webcasters and into the hands of the 4 remaining major labels. And as I said before, since the law is retroactive starting from 2006, there will be a ton of money “owed” to these multinationals in addition to their increased projections:

For NPR stations it is a different story as they have wider listenership than I and would pay the same royalty rates as commercial broadcasters. KCRW estimates roughly that as this ruling is retroactive they would owe $130,000 in additional fees for 2006 and $237,000 for 2007. WXPN in Philly estimates $1,000,000. In some worlds this is not a big deal but as one can imagine many of these stations barely eek by as it is, so this could very likely shut down the webcasting side of many of them. That would be a shame, as these stations are the only source of, well, good music, alternative sounds and innovative and informative programming in the U.S. It would be a loss for, well, democracy, as democracy depends on availability of many points of view untainted by commercial concerns and pressures. A truly informed populace, in other words. It points to another victory for the oligarchs — the big 5 record companies and the media companies that own them. Count one more for the big guys. The reasoning that it’s for the benefit of the artists rings a little hollow as most artists heard this argument re: cracking down on file sharing, and most never see money from their record companies anyway — so the line about “we’re doing it for you” is pretty suspect.

They don’t charge these kinds of rates to terrestrial broadcast radio, either. They can’t. Despite the homogeonzing effect Clear Channel has had on playlists through it’s absorption of radio stations, it is still nearly impossible for anyone to determine if an audience is listening. ASCAP and other performing rights organizations determine royalty payments via Billboard rankings, applying some assinine, archaic formula to determine who gets paid what in a given week. Internet radio is different in the fact that servers and ISPs keep exceptional records of everything associated with any web-based service, allowing for more accurate tracking of audiences, effectively allowing these companies to see exactly how much money they’re “losing” to internet radio.

This argument is – for lack of a better word – bullshit. Every major label record deal removes about 10%-15% of an artist’s sales revenue for what are called “Free” or “Promotional” materials; this includes T-shirts, posters and, of course, CDs given away to press, radio and other media outlets to promote the act. A considerable amount of money also goes to “marketing consultants” who basically bribe stations with fabulous cash and prizes to gaurantee radio play – termed “Payola”. So, I ask, what the hell’s the problem with factoring internet radio into this equation? Anyone with any kind of business acumen can see this makes a shit ton of sense. Not only are you reaching more consumers in new and fashionable ways, but you don’t have to produce any additional product or incur any further cost to do so. You can email MP3s to scores of stations for free, track the feedback far easier and more accurately than broadcast radio, and hone in that much more effectively on your key demographics, thereby streamlining your promotional schemes for similar artists in the future. The shit actually SAVES you money in the long run.

This is not about money, though, and don’t let the RIAA tell you different. Every case of piracy and royalty infringement in the past, and the future, is about access and control. The real power in the current music business structure does not come from producing content, but rather by regulating how that content is distributed and consumed. Radio, concerts and CDs are the conveyance of their property, and Labels charge tolls – be they concert tickets or retail prices – to access them. The internet represents a new frontier that is no longer controlled by the establishment, it is controlled by the people. There are no more dams or gates restricting the flow on content, and the only true regulation is quality – talented bands who work and tour to develop their own following are able reap the benefits of their work with the help of organic, grassroots support structures. True, this creates a far more decentralized business model that is harder to predict and difficult to conquer. But it also encourages smaller, more agile businesses – like local radio – who understand their niche audience and are genuinely engaged in satisfying their specific tastes, putting these lumbering multinational corporations at a marked disadvantage against their independent counterparts. Litigation for copyright infringement and the tripling of licensing rates represent the last ditch efforts by these majors to exert their only real advantage: money. Increase costs of starting and running an independent outlet, and more and more will go outta business forcing fans back into the mediocre mainstream. With access denied to their audiences, bands will have to fight even harder for increasingly rare and exploitative record contracts. The possibilities we should be given by this new age will be denied to us, but at least Universal’s stock can move up a couple of percentage points. For everyone out there who loves music, variety and choice, please get involved with the links below.

Future of Music Coalition

Save Net Radio

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