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Originally Posted by Alexander Turcic
Wasn't there already a similar discussion a few years back? I remember reading about the rise of royalty costs and the imminent end of Internet radio. Obviously it didn't happen - on the contrary, it seems like the number of radio stations online has multiplied by several orders of magnitude.
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The rate hike was announced months ago and was immediately challenged. The decision was reached on the challenge to uphold the original rate terms, which is why you are hearing about it again now. For example soma.fm, a big internet radio station that plays lots of indie artists, paid $22,000 in royalties last year. Under the new regulation they would have to pay $600,000 this year. What kind of business can survive a 2,700% increase in operating cost?
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Originally Posted by Moonraker
This is crazy thinking if it's all about retaining control.
Existing Internet radio stations could play Indie music only.
Listeners tend to purchase something they've heard and liked.
If people don't hear any 'AA' music they won't buy any.
These media moguls seem intent on screwing themselves.
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Nope, that is not correct. The way the ruling is internet radio stations would have to pay royalties to the SoundExchange, the royalty collection company, for ALL music they play, at the same rate. Then the indie artists have to petition/register with SoundExchange for their money. Same way it works today just the rates will be much higher. The only way around it is if the indie releases public domain music, which really limits their revenue potential and control in all media aspects, or if the internet radio station reaches another agreement with that specific indie artist. In other words internet radio stations can't just saw "screw the RIAA I'll only play indie music!". Too bad, you still have to pay the same.
This doesn't even go into the fact that today many indie artists are being denied royalties by SoundExchange even though the internet radio companies are paying royalties to the SoundExchange per the current regulation for playing these artists' music.
The other thing with the new rate regulations you don't hear much about is the new accounting is much more onerous. In the past the internet radio station would just pay a portion of their revenues as royalty/licensing fees. Now they have to pay specific rates per listener per time listened. So they essentially have to track exactly how many people are listening to exactly what every second and pay a rate based on that. This is why NPR has come out strong against the regulation because even though they don't play much music, like 1 minute clips, they'd have to track all this stuff and it wouldn't be worth it any more to do internet broadcasts.
It's basically regulations designed to kill internet radio. RIAA spokesmen have even said they want to clean up the wild west of internet radio and consolidate to a handful of big stable companies (read: ClearChannel), supposedly so they can get more leverage and control the content like they do on regular radio. If regular radio or TV had these kind of regulations placed on them when they started out, we'd still be heading to movie theaters to watch the month old news.
