July 17th, 2007
I Call Bullshit On DiMA
I’ve stayed out of the whole argument over webcasters paying royalties issue because I believe the little blogger should be able to put up some streaming music that they like without having to jump through a million bureaucratic hoops or pay a fortune to do so. Although I feel somewhat betrayed by Last.fm’s sale to CBS, I still remain a fan of their model and recently re-upped with them as a paid listener.
While this argument has been raging between SoundExchange (the online and satellite royalty collection agency) and DiMA (Digital Media Association,) organizations like the A2IM (where I’m a member) are trying to sort out a fair solution to the matter.
Here’s the problem for me as a label owner: everyone loves to talk about the PROMO value of net radio. According to conventional wisdom, labels sell music because of internet radio. I would say artists may become more popular (and sell more tickets or t-shirts) by internet exposure, but they simply aren’t selling more music. In fact, recent NPD research shows that a significant reason that fewer people are buying music is because you can listen to it everywhere without buying it. As a label owner, I don’t mind sites like Something I Learned Today posting a few Sheer Terror tracks. I don’t mind the free streaming on music community sites because I think that sampling type of playlist does sell records as it’s not a substitute for a music collection. It’s not like someone is coming back again, day after day to listen to a perpetual stream of unpaid, on-demand music.
DiMA is made up of big venture capitalists and companies like Yahoo! hiding behind the little guys. They wave the flag of freedom, and paint the picture that they’re all kids who “just want to do it for the love ” but what they really want is the free access to pillage our life’s work to build value for their own shareholders. They come up with great tag lines like “Save Internet Radio” when they really mean “Give some fat old white douchebag more money.” Screw these swiftboating bastards where they live and curses upon those who believe their bullshit.
How do I know this? When offered a settlement that would eliminate per-channel-fees and CAP the minimum fee at $2500 through June 2008… DiMA rejected it. Furthermore, they want to take all but the smallest webcasters (who’d pay about 20k based on the number of channels they currently have) and charge them a flat fee of $50k for unlimited channels. This effectively prices out everyone but the biggest (i.e. venture funded) players from the webcasting area. Through smoke and mirrors, they are eliminating competition and colluding against free trade, and building the same empire of a handful of media companies that control web radio just like they control terrestrial.
Written by Bill Wilson
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On July 17th, 2007 at 9:46 pm
John said:
On March 4th, only 24 hours after the CRB decision, I purchased the domain savenetradio.org for the princely sum of $8.00
Why? Because my own small radio station, and hundreds of others - many operated by people I consider my friends - were suddenly faced with royalty increases of 4000 percent retroactive to January of 2006. That’s not a typo. 4000 percent!
A coalition of small (and I mean, really small) webcasters from Live365, SWCast and LoudCity began the campaign to save internet radio. These are the same folks that play a lot of independent music.
In early April, I was approached by DiMA who had the cash and skills to orchestrate a true campaign and get a bill before Congress. I have no regrets about turning the domain over to them, and fully support their efforts.
My station is funded by listener donations. It’s far too small to attract advertisers. On a good month, I cover hosting and royalties. Most months, I lose money. It’s not my job - it’s just a labor of love.
Besides the big corporate webcasters, DiMA also represents Live365 and LoudCity, who combined provide streams from over 10,500 small, mostly home-based, internet radio stations. My station is part of LoudCity and without them, I wouldn’t be broadcasting. LoudCIty is owned by two guys, it’s only 2 years old, and the owners gave up everything to start their business. The operators of LoudCity were facing *retroactive* payments over half a million dollars under the March decision. They were, essentially, bankrupt. And it’s foolish to think that any business could anticipate a retroactive increase of that magnitude.
With an offer from SoundExchange to delay bankruptcy for a mere 12 months, is it any wonder that DiMA said no? What if a recording studio your artists used suddenly increased their fees from $150 an hour to $5000 an hour, and billed retroactively for the past 15 months? Then said, okay - we’ll hold off on charging you until next year…
This is the reality facing thousands of small webcasters. We’re not interested in a one year stay of execution. We want reform. We’re the people who have paid royalties in the past, not the thousands of unlicensed and illegal stations available on sites like Shoutcast.com
We believe artists should be compensated for their work. It’s our love of the music that drives many of us to run these tiny stations that offer a mix of music not available via satellite or terrestrial radio. We hope listeners will discover new music, and buy it.
The fundamental flaw in the CRB decision was due to the instructions those judges were given by Congress. The RIAA had successfully lobbied for special language (Willing Buyer, Willing Seller) in those instructions instead of the more widely used language of the US Copyright laws. Even a deal lasting until 2010 won’t help. Thousands of dollars have been spent on both sides. It’s time for everyone to come to the table and agree on long term rates that will provide artists with rewards and allow webcasters to plan more than one, or five, years into the future.
I appreciate this opportunity to offer an opposing viewpoint, and I respect your position. But from where I sit, the “fat old white douchebags” after more money are people like Jon Simson and his friends at the big four labels. What’s truly an outrage is that SoundExchange pays artists and labels what’s left *after* they have paid their legal bills, and paid themselves 6 figure salaries. They collect money from webcasters, and then spend a significant portion of it on nice houses and lawyers.
Yes, there’s plenty of blame to go around. But ultimately, it was Congress that was duped by the RIAA into passing the DMCA and the absurd, vague standards for rate-setting on internet radio. Congress should clean up their own mess.
On July 18th, 2007 at 7:08 am
bill said:
I’m on the side of the small webcaster, the same way I’m on the side of the small record label. For years I made a modest living doing what I loved with the label, so my heart is with any garage-level entrepreneur. Both of us want the barriers to be low, and the costs to be reasonable. In the case of the labels, with CD sales in the crapper, we need to start plugging some of the revenue holes that could have been written off as “promotional value.”
If an online station generates minimal revenue from any source and uses all of their resources to pay for bandwidth, I’m not looking for a royalty. The token ultimately means nothing to anyone’s bottom line. If an online station has 500 listeners, I’m not looking for a royalty. If an online station sells advertising, offers unlimited on-demand (or custom station play that skirts the on-demand issue) I need a cut. Someone is building a brand (that they may turn around and sell for hundreds of millions) on MY back and the backs of my fellow labels and their artists. Where is the fairness in that?
I tell you what. Use all my music for free, all the time. You sell your company for 280 milliion, I want my pro-rated share as an investor who has contributed to the value chain. Until that happens, we need to find a compromise.