Webcasters to SoundExchange: No, It's Not an All-Day Listening Party for John Cage’s '4?33?'
If things continue as they are, the Buggles may have to re-record their 1979 New Wave masterpiece with a new lyric: “Imbeciles Killed the Radio Star.” Thousands of Internet radio stations went quiet today in observance of a “Day of Silence” organized to protest a catastrophic increase in royalty rates that threatens to cripple Internet radio. From the Radio and Internet Newsletter:
Although a royalty rate like this is typically 4% to 5% of revenues in other media (e.g., satellite radio), for other rights (e.g., the musical compositions), and in other countries–the rates set by the Copyright Royalty Board judges equate to roughly 50% of revenues for large webcasters like Yahoo LAUNCHcast (and probably many terrestrial station streamers), 150% to 300% of revenues for small webcasters like AccuRadio, radioio and Digitally Imported, and, for Webcasters with large numbers of channels like Rhapsody and Pandora, well more than 1,000% of revenues.”
SoundExchange–an organization spun off from the Recording Industry Association of America to collect royalties on the behalf of sound-recording copyright owners–argues that the royalty increase, slated to go into effect July 15, is fair payment for the right to stream digital music. But 50% to 300% of revenues does seem a bit steep, doesn’t it?
Steeper still, when you consider the fact that SoundExchange doesn’t always manage to disburse all the royalties it collects. That’s right. In the first quarter of 2006, the organization collected some $14.2 million in royalties, but distributed just $8.5 million. Where’s the remaining $5.7 million? SoundExchange says it’s being “held in reserve for artists and sound-recording copyright owners that have not been identified or located.” And it is. Until June 30, when those missing artists–all 8,353 of them–forfeit it to SoundExchange.
The irony is enough to make your head explode.