Sunday, March 04, 2007

Having helped to destory their own industry, the RIAA moves on

Internet radio. You'd imagine the idea of people streaming music on a small scale, to likeminded fans, would be popular with the RIAA. After all, it's a great way of promoting music; the streams without downloads would supply a lot of people with a music fix without soaking up their desire to purchase, and a properly-licensed service would also put some cash into the label's pockets. Virtue all round, right?

Nope. The US Copyright Royalty Board has just announced its rate card for the coming four years - oh, and retroactively for 2006, too. It's delivered what the RIAA asked for. At first, it sounds rather generous - a non-commercial organisation can get a licence for $500.

That's not overly generous - after all, $500 is quite a lot to find for someone who isn't commercial, but still, it's not impossible. However, if you're popular, and listeners clock up more than 159,140 "aggregate tuning hours a month", you're immediately classified as a commercial broadcaster - and will have to find the full commercial rate. Since, of course, a sudden surge in audience could suddenly turn a public service into one seen as a commercial network, you could suddenly find yourself having to pay a hefty sum - despite not having been able to make any money off the broadcasts as you were trying to stay non-commercial.

Even other organisations are going to have trouble - RAIN calculates, for example, that once you're popular enough to be able to sell advertising, you'll have to be paying for licences at a rate higher than you can sell commercials.

In effect, then, the RIAA has set up a system that is unworkable - and net radio companies will be faced with a choice of closing down, or shipping out of the US. Either way, by setting its demands insanely high, the US music industry has managed to throttle yet another potential revenue stream before it even starts.


Anonymous said...

This latest news is bad news of course, for everyone. I recently read that MTV doesn't even pay royalties on the videos they play. If the royalty rates were reasonable that would be one thing...if they can find a formula that doesn't overwhelm webcasters that's fine, but something tells me they want a ridiculous amount. One guy just posted on Digg that he worked at a terrestrial radio station that had to pay $400/song played, simply outrageous! No wonder there's so damn many commercials...and no wonder I no longer listen to radio anymore!!! Anyways, the RIAA should focus on eliminating middlemen and lowering CD prices...and they better enjoy their lawsuits while they can, because lots of file-sharers are making the switch to encrypted file-sharing solutions like GigaTribe, which keep people out of the radar ( ).

Anonymous said...

Hello all. As a former signed musician, i.e. a current computer geek, I have been watching this horrid situation unfold for years. The only solution that I see is to get to the artists before the labels do. There are several sites in the world that allow artists to make money off their songs without signing away all of their rights. Take a stroll over to AmieStreet and look at the wonderment they bring to the world. I see AmieStreet as the begining of the new music distribution system. Next we will see online radio stations being able to air whatever the hell they want and all the music fans will know where to go and get it. Young bands of the world out there no this...never sign a record deal. Learn how to record your own stuff and more importantly know how to play it live, know how to play it live, know how to play it live. I can not stress this point enough. Most bands out there suck. Why do you think we are still hearing sweet home alabama on the radio. Its cause most new music is canon fodder. Make good t shirts as well your main income streams will be from playing live and selling t shirts. You know what U2 does for a living? They tour. They spend so much money on making albums that the need to sell millions just to break even, but when there tour nets 35 million who the hell cares how many albums sell. Bono is a t shirt salesman. Dont sign record deals sell your self.

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