Recording industry cripples webcasting

Robert Hallock 8 Jul, 2009 at 10:18am ET Article published in Tech

In response to a new webcasting royalty agreement reached yesterday, the streaming music site Pandora will now offer users just 40 hours of free music per month.

The new agreement is the result of more than two years of negotiations, lobbying and pleading with lawmakers to save webcasting. However the fight is not yet over as websites must still pay hefty royalty charges while traditional broadcasters fulfill no such obligation.

The agreement calls for the largest sites to share 25 percent of their gross revenue or a per-stream rate of $00.08 retroactive to 2006, whichever is greater. The $00.08 royalty rate will increase to $00.14 by 2012.

Sites generating less than $1.25 million in gross revenue must immediately pony up to the table with a 12-14% revenue share.

Cartel executive VP Steven Marks of the RIAA was pleased by their newest brand of one-sided extortion.

“Supporting new business models through innovative licensing agreements is critical to the future of our industry,” Marks said. “We are pleased to have found an alternative in the hope of avoiding costly litigation in favor of building partnerships.”

Tim Westergren, founder of the famous Pandora streaming music site, has been a key component of the opposition. He argued last September that a lower rate than the RIAA’s initial offer of a $00.19 royalty was critical to the lasting survival of webcasting. While he has received his wish for a lower rate, the buck will be passed to Pandora users which must now pony up $00.99 to receive more than 40 hours of streaming a month.

While radio so far remains immune to the pocketbook-dredging fingers of the RIAA, there are clouds on their horizon as well. RIAA lobbyists are hard at work in congress to pass the Performance Rights Act which would levy royalties charges on radio.

Must be nice to be judge, jury and executioner of your own agenda with enough money to ensure success.

Comments

8 Jul 2009 ~ 10:34am _k All the laws and Acts that are being passed are making me sick. I am slowly becoming ashamed of being American. Freedom and Liberty for all those who can afford it.
8 Jul 2009 ~ 11:10am Cliff_Forster What makes me sick is they do this all under the false pretense that they are doing this solely to protect the artists interest. Its bullshit, its all to protect the executives and lawyers that have been fleecing their artists intellectual property for years.

Maybe there should be an internet movement to only buy music from 100% non label supported independent artists? I could live without major label music for a while.

Perhaps we could start something like that here at Icrontic? We can still have great music, obey the law of the land, and give the RIAA the middle finger at the same time if we share resources, talk about independent music, who is out there making compelling interdependent music without the interference of the RIAA? Who is marketing their product on their own terms? How do we rally to their cause? If enough people support it, perhaps a number of big artists will see the value in walking away from the corporate machine to support it. Honestly, with recording equipment being less expensive, with the amazing advertising and distribution tool of the internet, is it not time for musicians to be in business for themselves?
8 Jul 2009 ~ 11:29am mirage In many other countries people don't say they are ashamed of their nationality. Simply because they can't. I am not criticizing you, that would be against freedom of speech. Just pointing out that, altough there is room for improvement regarding freedom and liberty, America is the best place to be.
8 Jul 2009 ~ 12:24pm shwaip I'll pay my $1 for a month of pandora, gladly.
8 Jul 2009 ~ 12:37pm Butters This bites. I listen to Pandora all day. I wouldn't know half of the artists I listen to now if it wasn't for Pandora. Some I've actually purchased some tunes from.

However, $11.88 a year is affordable.
8 Jul 2009 ~ 1:46pm Garg I worry about what this might do to my favorite Shoutcast stations, and my public radio stations if the RIAA are successful on the radio front.

Cliff_Forster wrote:

Maybe there should be an internet movement to only buy music from 100% non label supported independent artists? I could live without major label music for a while.

I think there are some people already doing that. RIAA Radar exists so people can find out if an artist or label is on the dark side.

I think it's a matter of time before records labels fade away, or like this guy says, exist only to license their back catalogs. NPR recently asked "Do Record Labels Matter?" I think a lot of new artists will ask themselves the same question.
8 Jul 2009 ~ 10:57pm krharrison Here's another point of view from techdirt that asks the question, "Why Should Webcasters Pay 25% Of Revenue To Promote Musicians?"

http://www.techdirt.com/articles/20090707/1657295475.shtml

The one great point from this article is that "most musicians will now get less exposure." Granted, webcasters like Pandora may stick around with it's low and relatively marketable price, but the audience is being intentionally limited (by making it difficult for webcasters to stay in business).

Me personally, I use Pandora to listen to music I like, but I can count numerous times where I hear music from groups I'm not used to. That's the great thing about the service.

It's too bad the RIAA believes the only way they can "win" is to continue to shrink and control the market. I don't see anyone "winning" from my point of view.
8 Jul 2009 ~ 11:03pm Thrax I think my super editorial slant makes my opinion clear, but it's a deliberate plot to excise more money from the very companies and people that make the RIAA cartel even possible.

Even at 99 cents, I guarantee people are going to feel bait'n'switched on principle. There are several services that are still free, and they're about to get a lot more traffic. The exodus has begun.
10 Jul 2009 ~ 3:12pm AlexDeGruven The RIAA never ceases to amaze me with their abject refusal to accommodate the people who carry their own existence in their hands: The music consumer.

Unfortunately, there is a large enough population of consumers that still don't mind being bent over the bed rail (it seems they're beginning to enjoy it, really) by the media companies. And this is why we continue to get little dribbles of what we want, but crippled in capabilities (DRM). Until these consumers start to get a little chafed, it's going to continue.

The *AAs have continually fought innovation on every front. Any attempt to wrest even the slightest control over the product by the consumer has been met with the firm and heavy hand in the name of piracy. This goes back to, and even beyond the days of cassette recorders and VCRs.

I dream of the day when I can go to one website (Amazon is getting there, but they're still very laden with DRM on the video front, and I believe they don't have HD available yet) and purchase an item of media, whether it be a movie, TV show, audio recording, or whatever is available at the time, and then be able to place that item on any and/or all devices in my possession. No HDCP to make sure my TV authenticates as a TV, no WMDRM to make sure my audio/video handheld player is PlaysForSure compliant, etc. Purchase, download, sync, walk.

I think that's enough ranting from me for now.
11 Jul 2009 ~ 4:50am ardichoke Oh great, I had this big long post typed out then accidentally hit ctrl+r instead of ctrl+t and lost it all >_<

Oh well... attempting to reproduce it in 3... 2... 1...

I agree with you Alex. As for record labels not mattering though, I couldn't disagree more. I have a couple of friends from college who are in an indie folk group together (This is Deer Country, they make really good music and I encourage you to check them out if you like that sort of thing). Recently they released an EP on their own, not on a record label (not even an independent one). Just yesterday they found a British website, being hosted in Russia that is selling their EP, in digital format, without their consent and without paying them. If they were on a label, the label would take care of the legalities involved in either getting the content taken down and/or suing. They don't have a label though so they must now take times out of their life, time that could be spent performing, writing, practicing, recording or working for that matter to educate themselves about copyright and to file takedown notices with the site and their host. This is why I say that record labels are still relevant and useful. That said, the RIAA is a wholly corrupt and archaic organization and I strongly recommend that everyone boycott the RIAA. I also recommend that people support their local indie artists, and independent record labels. I truly believe they will be the ones that make it possible to relegate the RIAA to the annals of history.
11 Jul 2009 ~ 5:39pm chrisWhite I really, really want to go off on this thread and do some serious cursing at the RIAA but I'll restrain myself.

I will very happily pay Pandora for my tunes and that price is no problem at all but this is absurd, it hurts Pandora (and similar music services) and it hurts all but the biggest artists that don't need exposure.

Change. This. Now.
15 Jul 2009 ~ 9:23pm Bandrik This news really made my heart sink. About 80% of my current music listening experience comes from streaming internet radio. I'm not big on Pandora just yet, but I'm about to - mostly I've been living in the wonderful ShoutCast world.

What the RIAA is doing doesn't surprise me in the least. I'm thankful that Pandora has resisted them as long as they did.

Regarding Cliff's call for a Icrontic-based RIAA-boycott, I have mixed feelings for how effective it would be. But sometimes ripples make waves. I'll join any anti-RIAA movement Icrontic comes up with.