I just sent the following email out to the Radio Dismuke mailing list. You can subscribe to that list for updates on Radio Dismuke and the Internet radio royalty situation by going to the Radio Dismuke website.
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July 15 has passed and, thanks to the emails, letters and phone calls listeners placed to Congress, Internet radio is still streaming - at least for now. Under pressure from Congress, SoundExchange agreed at the last minute to not immediately enforce the devastating rate increases that were scheduled to take effect today and to enter into negotiations with webcasters.
To those of you who have contacted your representatives in Congress, you have my profound gratitude. Please know that your your doing so DID have an impact. I can guarantee you that the ONLY reason that thousands of stations did not go silent yesterday was because of the pressure Congress felt after hearing from hundreds of thousands of concerned constituents over the past several months.
Unfortunately, at this point, there is still much that needs to be resolved and the future of Internet radio still faces many potential dangers in the days and weeks ahead. The good news is we are still alive to fight and, now that Congress has stepped into the picture, SoundExchange is under pressure to negotiate honestly and in good faith - something that it has not done to date.
Right now, the situation is very fluid and lot of what is going on is taking place behind the scenes and is simply unknown to most webcasters and the general public. Based on what I have read from various online sources, here is where things currently stand:
SoundExchange has agreed to cap the $500 per channel "administration fee" which threatened to immediately bankrupt webcasters such as Live365, Pandora and Yahoo who each offer thousands of channels. The cap would be at 100 channels or $50,000. My understanding is that this only applies to stations that fall under the "large commercial webcaster" category which is determined by the size of a company's annual revenues. Live365 falls under this category. LoudCity, however, is classified as a "small commercial webcaster" and will likely end up under some different sort of arrangement.
A new bill, H.R.3015, has been introduced in the House which would officially postpone implementation of the new rates for 60 days in order to allow time for negotiations between SoundExchange and webcasters or for passage of the Internet Radio Equality Act which would set Internet radio royalties at a rate equal to what satellite radio pays to perform the same recordings. Such a bill would give webcasters a postponement of execution that is more binding than SoundExchange's mere promise to not enforce the new rates. Some websites are suggesting that the bill will pass quickly while others say it stands little chance of passing. The general consensus, however, is that just the mere fact that such a bill is out there is probably enough to pressure SoundExchange into keeping its promises.
One area of particular concern to me is reports that, in the negotiations with the large commercial webcasters, SoundExchange has supposedly said that the per-song per-listener rates are "non negotiable." This ought to be troubling to the Radio Dismuke audience and fans of niche genres because Live365 falls into that category by virtue of its annual revenues. Despite being a "large webcaster" Live365 is, in fact, the home to the vast majority of the Internet's SMALLEST radio stations. Live365 makes it affordable for hobbyists and music enthusiasts to provide highly specialized programing to very limited audiences that are simply not profitable for more commercially oriented webcasters to serve. For example, on Live365, Radio Dismuke is only one of several stations that feature vintage music. Weimar Rundfunk specializes in European recordings from the 1920s though 1940s. Elite Syncopations specializes in ragtime music. And there are others.
Beyond the danger to Live365, my concern about the negotiations with the large webcasters is that SoundExchange might be taking a hard line approach with the per-song per-listener rates in order to pressure webcasters such as Yahoo, AOL and Pandora into cutting direct license deals with the major RIAA labels at lower rates. Such an approach would be a DISASTER for independent artists. If the only way for the largest and most successful webcasters to survive is by dealing directly with the labels, it would mean that it would cost such stations far more money to play music by unknown artists and obscure genres than it would to play mass market hits - which is the exact opposite of what would occur under normal marketplace conditions. It would also give the RIAA labels considerable leverage over such webcasters because they would always be under the potential threat of their direct license not be renewed at the end of its term. This would have the effect of giving the RIAA labels considerable leverage over stations in terms of getting airplay for the particular recordings that the labels are especially interested in promoting at any given time.
Congress and its constituents have already made it clear that they will not allow RIAA/SoundExchange to get away with killing off Internet radio completely. My guess is that SoundExchange has already conceded that it has lost the battle as far as killing off the smaller webcasters is concerned and that its focus is now on trying to at least make it so that the most successful webcasters who have the deepest pockets in terms of being able to promote themselves are under extreme financial pressure to play only RIAA approved formats and artists.
Another concern I have is that SoundExchange will attempt to harass smaller stations out of existence by unreasonable reporting requirements. Under the old rates, educational institutions such as colleges paid very low licensing fees. Many colleges, however, have been forced to take their streams down not because of the royalties but because they simply could not afford the expense and hassle of keeping up with all of the reports that SoundExchange was demanding. I have read that SoundExchange is already complaining in the current negotiations about the need for increased reporting and tracking requirements.
Never forget that the RIAA's motive in this entire mess has ALWAYS been nothing more than to kill off what it sees as an emerging threat to the influence it has traditionally had over which recordings receive all-important FM radio airplay. Internet radio is poised to replace FM radio's role as the primary musical trendsetter in our culture. If the RIAA labels are not able to exert similar influence over airplay on the Internet, their days are very numbered. The very moment it becomes apparent to artists that they can get much needed airplay and become successful on their own, there will no longer be any reason for them to sign the terribly one-sided record contracts with the RIAA labels. By bypassing the major labels, artists will be able to retain much more control over their artistic product and would be entitled to receive 100 percent of all revenues that might be derived from it. The way things are rapidly evolving, there will soon no longer be a need for the role that the major record labels traditionally served prior to the advent of recent technological advances. What we have been witnessing over the past few years is an obsolete and dying industry desperately trying to use the law of the land in order to carve out a relevance and role for itself that would otherwise not exist in a free market.
In my opinion and in the opinion of most webcasters, the only viable LONG TERM solution to this mess, regardless of the outcome of any negotiation with SoundExchange, is the passage of the Interent Radio Equality Act. If the act were passed, Internet broadcasters would still be paying the highest royalties of any category of broadcaster in the United States and it would be among the highest royalties paid by broadcasters anywhere in the world. The advantage of the Act, is that it would provide PERMANENT relief to the various attempts by the RIAA to kill off webcasting as an independent industry.
Whatever may come out of the negotiations with SoundExchange is only going to be good through the year 2010. After that, the whole process starts over again. The RIAA attempted to shut down Internet radio when the first rates came out in 2002 and was stopped only because of a pubic outcry to Congress. At this point, it appears that the same might happen in 2007. The fact of the matter is, however, that webcasters simply cannot afford to have to endure this every four years. No serious investor is going to make a substantial financial commitment to an industry that is under constant threat of a possible forced shutdown in the future. Very few webcasters currently make much, if any, profits. And yet they have been forced to fight a battle that has been very costly in terms of legal and lobbying expenses, staff hours as well as lost opportunities that might have been pursued had the webcasters been able to focus more on their businesses than on fighting the RIAA. I have been fortunate in that my agreements with Live365 and LoudCity have sheltered me from such expenses. However, even on my level, this battle has been costly in terms of lost opportunities. For over a year and a half now I have been more or less forced to put all of the various plans I have entertained for substantially expanding Radio Dismuke's audience and programing abilities on indefinite hold until the royalty issue has been resolved one way or another. It makes no sense for me to sink time and money in significant expansion when I have no way of knowing whether my existing service providers will still be around and whether or not I will be forced to struggle to find a way to keep the station going at a fraction of its present size at a significantly increased price. The Internet Radio Equality Act would provide a long term legal stability that the Internet radio industry has yet to enjoy. Had such an approach been taken since the get-go, I can assure you that Internet radio would be far more advanced and evolved that it presently is.
Because the long term outcome is still uncertain, it is very possible that webcasters will once again be forced to ask their listeners to contact Congress on their behalf before this is finally over. I will let you know when and if any such action becomes urgent.
In other news, despite the gloomy mess of the past few months, I have been constantly updating the Radio Dismuke playlist. Over the past weekend, I added 60 new selections - all from vintage 78 rpms. I would guess that over 80 percent of those new selections have never been reissued in CD format. I have many hundreds of additional 78 rpm recordings lined up for eventual inclusion. The difficulty with 78 rpms is that transferring them and digitally restoring the audio so that it will be acceptable to modern audiences is very time consuming so using them has to be an ongoing and very long-term project. As of today, Radio Dismuke currently has 1,947 tracks in its playlist. The playlists of most terrestrial stations are but a fraction of that size. At its present size, it takes over 4 days for Radio Dismuke to cycle through its playlist (I do have it set up so that recently added recordings are played somewhat more frequently). The current playlist features 665 unique artists - far more than one would hear in a given week on a typical FM station. According to one of the Live365's employees, during the month of May, over 250,000 artists received airplay across the thousands of Internet stations in the Live365 network. That's about 249,000 artists who would have most likely received NO airplay at all had it not been for Internet radio and about 249,500 more artists whose existence and work the major RIAA labels would rather you not be made aware of. Internet radio is special and, in my opinion, it is the most wonderful thing that has come along for music and the artists who perform it since the invention of recorded sound. It is definitely something worth fighting for.
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Please feel free to foward this email to anyone you think might be interested in reading it.