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The New Webcasting Compromise

Posted by timothy on Tue Oct 08, 2002 12:51 AM
from the or-just-less-hampered dept.
News
arkham6 writes "According to a story on Yahoo, it appears that the RIAA and negotiators for webcasters have reached a tentative deal for reduced rates for 'small' webcasters. However, it appears now that the artists themselves are going to jump into the fray because the record companies now may be able to weasel out of paying the artists."
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  • Paradigm Shift (Score:5, Insightful)

    by claygate (531826) on Tuesday October 08 2002, @12:57AM (#4408318)
    Artists and music pirates have long heralded the removal of the middleman from the music business. This paradigm shift will in effect allow the record companies to make more money and the artist the same amount. Until the artists have a method of promotion that does not require a record label they will always receive the short end of the stick. Maybe instead of $2million advances, a loan of $200,000 from a bank and some hardwork promoting your band as a day job, and playing at night for the band. Turn the band into your business and it might be successful. A few ands have taken that route and succeeded.
    • Turn the band into your business and it might be successful. A few ands have taken that route and succeeded.

      Perhaps none moreso than Metallica (aka E/M Ventures and Creeping Death Music).

    • And you can put to use that business degree your parents made you get!
    • "Until the artists have a method of promotion that does not require a record label they will always receive the short end of the stick.

      It's not just that. Promotion aside, the record company also pays for the studio time, recording equipment, etc. They pay for the tour bus, road crew and accomodations. They pretty much have you by the balls from stem to stern as far as money is concerned.

      " Turn the band into your business and it might be successful.

      Some of the most successful bands around have realized just this. A big-time band isn't just about music. It becomes such a machine that you need to treat it like one. Learn about business and you're one step ahead of the game.
      The problem is, any business requires capital. Something most young bands do NOT have. They see the recording industry as a free ride to fame. Everything is paid for and setup for them. All they have to do is show up and record, right?
      Or so they think.

      "...a loan of $200,000 from a bank"

      The loan idea sounds nice in theory, but what bank in their right mind would fund a band? The recording industry strikes gold with maybe one in every 20 bands they sign. Why would a bank take that kind of risk?

    • A way to promote and share (Score:4, Informative)

      by epeus (84683) on Tuesday October 08 2002, @03:07AM (#4408589) Homepage Journal
      Over at mediAgora [mediagora.com] the details of just such a promotion and payment system are under discussion.
    • Who needs the RIAA to promote their band? The artists want more not less and don't think they need you at all. An aquantiance has made the point [adequacy.net] better than I can, and this little deal is no different from others offered before. Among the outrages:

      Retroactive Fuck:Under the regime, small webcasters will be required to pay artists and record companies a percentage of their revenue, sources said. The deal includes language that will make it retroactive until 1998, the year set by Congress as a cutoff for payment, and will allow webcasters to pay the earlier rates in installments. Wow, my friend is on the installment plan for broadcasting over the web, no RIAA music involved either!

      Money goes to RIAA for the usual "promotion deductions" Although artists rights groups appear to have no problem with a deal that helps small webcasters, a union official expressed concern about language that could allow the record companies to avoid paying artists their share of the royalty directly. The language seems to allow the recording industry to deduct the top expenses that they incur for setting up and maintaining the royalty payment regime.

      All and all the same old shit, but it won't last. As if there were only a need for five recording companies and four broadcasters in the world. Anything the RIAA can agree to is just another screw to all in order to keep their artificial monopoly on selling popular culture alive. 802.11b and similar will eliminate the RIAA racket, bring money back to artists and music to the masses. With government out of future broadcasting, your days are numbered, pig.

      • This is the heart of the issue. We are not listening to what the RIAA wants us to listen to. Pop culture will eventually die. Perhaps that will eventually produce a generally more diverse populous.
        Image the changes: fashon would be based on a different idol (instead of britney spears, n-sink, etc. not sure if that's better or not), the music industry would become much more diverse. The changes to culture would be huge. I wonder what the effect on things like MTV and VH1 would be....
    • "Until the artists have a method of promotion that does not require a record label they will always receive the short end of the stick."

      You mean like the Internet?

      The truth of the matter is that artists do have a method of promotion in front of them, and there are even some taking advantage of services like mp3.com [mp3.com] (which while not a good venue for royalties, still at least provides exposure) and FightCloud [fightcloud.com] (previously mentioned on Slashdot; $5 CDs with 50% of the profits going to the artists).

      But that just doesn't compete with a multi-billion dollar hype machine, for the obvious reason that money makes stuff happen. Heck, even the artists on FightCloud seem to be looking at hooking up with a label, at least based on what was said during the interview mentioned in the Slashdot article awhile back.

      However, nothing's stopping independent artists from undercutting RIAA prices over the Internet. A group of independent artists can band together and offer to allow their music to be streamed for free. Anyone with a server can give away mp3s. The opportunities are there -- more people just need to take them.

    • The artists only now (when their bottom lines were in trouble) 'jumped into the fray.' They're no better than the RIAA. Screw them both, let them die, enjoy the new sounds that don't have 'commercial appeal.'
    • Banks generally aren't going to fund something so high risk. But what about the webcasters themselves? What if they went to artists, saying "We'll pay for you to record your album if you give us rights to webcast it"?
      • It's still not clear where the webcasters are supposed to get this magical money from. After all, they can't fund new albums unless they have some sort of revenue stream, right?

        So: are they planning to charge for their 'casts? Are they planning to sell ads? Are they hoping for industry payola?

        Charging for the 'cast probably won't work. Selling ads might work, if advertisers and websurfers weren't both in "once bitten, twice shy" mode about internet advertising. And if you're doing an end-run around the industry, payola is pretty much a non-option.

  • Artists may be OK (Score:3, Informative)

    by tomasdore (222625) <tomasdore@yah o o .co.uk> on Tuesday October 08 2002, @12:59AM (#4408322) Homepage Journal
    There's a slightly more positive take on the artists' financial share over at ye olde favorite, SomaFM [somafm.com] :
    "More info as soon as we know more... we're trying to get the final wording on the bill, but we understand that the provisions (added at the last moment) that take money away from the artists were removed before the vote was approved."

  • Artists... (Score:5, Funny)

    by jmv (93421) on Tuesday October 08 2002, @01:00AM (#4408325) Homepage
    ...record companies now may be able to weasel out of paying the artists

    The artists, they think that just because they're the ones that work hard to create that music, they're entitled to some part of the profits. Shame on them! They should make their effort in order to to help the poor guys from Sony/BMG/EMI/... so they can make a living. With all these music terrorists around, it's really hard being a major label.

  • middleman mania (Score:5, Insightful)

    by Alien54 (180860) on Tuesday October 08 2002, @01:04AM (#4408335) Journal
    The deal came after an intense week of negotiations that was sparked by pressure from a key lawmaker who threatened legislation that would delay implementation of the payment.

    The RIAA agreed to something because they still want "their" money

    Although artists rights groups appear to have no problem with a deal that helps small webcasters, a union official expressed concern about language that could allow the record companies to avoid paying artists their share of the royalty directly. The language seems to allow the recording industry to deduct the top expenses that they incur for setting up and maintaining the royalty payment regime.

    "Direct payment is crucial, and if the recording industry gets deductibility language, we need direct payment," said one artists rights advocate familiar with the negotiations.

    Obviously they have gone back to their old reliable first choice of people to mess with, just to make sure they get their middle man piece of the pie.

    I want to make life size voodoo dolls of these folks.

  • It's over? (Score:3, Informative)

    by madumas (186398) on Tuesday October 08 2002, @01:04AM (#4408336)
    According to their site, SomaFM [somafm.com] will resume broadcoast soon !! yay!
    0.70$ per song per thousand listeners seems to be reasonable for small webcasters.

  • More Specifics at The Register/Not-For-Profit Orgs (Score:3, Informative)

    by jigokukoinu (549392) on Tuesday October 08 2002, @01:05AM (#4408338) Journal
    http://www.theregister.co.uk/content/6/27474.html

    They list some specifics that state if your revenues are less than 250k you have a specific rate' mhile 250k-500k is another tier.

    Mhere exactly would non-profit orgs sit?

  • /. blurb wrong. They're still paying the artists (Score:4, Informative)

    by utahjazz (177190) on Tuesday October 08 2002, @01:09AM (#4408347)
    Quoth Yahoo news: The language seems to allow the recording industry to deduct the top expenses that they incur for setting up and maintaining the royalty payment regime.

    They're trying to deduct their expenses for setting up the royalty payment system, not avoid paying artisis altogether.

    Yeah, OK, it's still evil.

    -These are not the sig your looking for.
    • They're trying to deduct their expenses for setting up the royalty payment system, not avoid paying artisis altogether.

      I'm sure the recording industry uses the same accountants as the MPAA member companies. The same accountants that figured out that Coming to America, Titanic, and hundreds of other movies never made a profit.

      Hey, if these guys would get together with Enron's accountants, who declared they always made a profit, perhaps the truth would finally emerge???

      The artists will never see a dime of this money.


    • Incommings $10 million. Expenses $10 million, royalties paid... zero.

      If they get to charge this overhead what is to stop this overhead becomming huge ?
      • Incommings $10 million. Expenses $10 million, royalties paid... zero.

        Actually I'd love to see them do that. Then we all storm our congress critters with proof that the fees should be abolished completely. The RIAA and artists lose nothing if the fees are zero. The law is a pure burden for zero benefit.

        -
    • The labels that the RIAA support already have all of the means and methods for collecting $$$ and distributing. That's what they do. Seems like another sneaky way to put some of their in-house expenses back onto the artists shoulders, where it least needs to be.

      No company or organization (including the mob) has ever brought such a vision of sharks circling the injured as the RIAA/MPAA.
    • The language seems to allow the recording industry to deduct the top expenses that they incur for
      setting up and maintaining the royalty payment regime.
      <sarcasm>Something that it has not had up to now, presumably.</sarcasm>

  • let me get this straight (Score:3, Interesting)

    by Anonymous Coward on Tuesday October 08 2002, @01:11AM (#4408352)
    I never really did figure out if this affected every single broadcaster. My question is if this affects people webcasting music that has nothing to do with RIAA and its multitude of labels? If I recorded myself playing and webcasted that along with some recordings of friends of mine, would I have to pay them the webcasting fees?

    • Re:let me get this straight (Score:5, Funny)

      by Glytch (4881) on Tuesday October 08 2002, @01:32AM (#4408401)
      Exactly! You'd just be depriving artists of proper advertising by not playing their music. That's just like theft, you music terrorist.
      • IANAL, but I think it was mentioned here a while ago that if you had direct consent from the artists, no webcasting fees were needed.

        Let's be clear and say you need consent from the copyright owners, not the artists. If the artist has signed away his rights to material, he cannot grant you the right to webcast.

  • This story was on The Screen Savers tonight. For those that don't know, it is the number 1 tech show. They interviewed Steve Wolf of Wolf-FM. Heres a link to the site they gave out: http://www.saveinternetradio.net/

  • The REAL Killer, the $500 Minimum fee (Score:4, Insightful)

    by Anonymous Coward on Tuesday October 08 2002, @01:28AM (#4408397)
    Do all the math you want the REAL stinger is the MINIMUM FEE!

    $500 Minimum.

    Even if you just play one song a year.

    The $500 Minimum is what will kill Most small broadcasters.

    • Nice to see that we have a lot of Burger King employees chiming in on the issue.

      If you can pay for the bandwidth necessary to stream to a number of people, you can pay a $500 minimum.

      Minds are like parachutes, they only work when they're open.

    • Quoting the bill...
      `(I) For eligible nonsubscription transmissions made by an eligible small webcaster during the period beginning on October 28, 1998, and ending on December 31, 1998, the minimum fee for the year shall be $500.

      `(II) For eligible nonsubscription transmissions made by an eligible small webcaster in any part of calendar years 1999 through 2002, the minimum fee for each year in which such transmissions are made shall be $2,000.

      `(III) For eligible nonsubscription transmissions made by an eligible small webcaster in any part of calendar years 2003 and 2004, the minimum fee for each year in which such transmissions are made shall be $2,000 if the eligible small webcaster had gross revenues during the immediately preceding year of not more than $50,000 and expects to have gross revenues during the applicable year of not more than $50,000.

      Isn't that beautiful? To webcast a talk radio station will cost you $2,000 a year. If your station doesn't play a single RIAA-owned song, that will cost you $2,000 a year.
      Ain't life grand?
      • "it's a good way to encourage broadcasters and artists to get together and promote new music"

        Or rather, it's a good way to discourage it.

        I better be pretty darn sure your music is going to be popular before I consider broadcasting it even once. A $500 minimum is a nice, ridiculous way of making sure the small guys only broadcast mainstream (i.e. RIAA sponsored) music.

  • Librarian: did he ever admit the bad data source? (Score:5, Interesting)

    by geekotourist (80163) on Tuesday October 08 2002, @01:41AM (#4408420) Journal
    After the head librarian set the rates, it came out that the numbers he worked with [kurthanson.com] came from Yahoo, which set that rate to shut out small broadcasters. It is as if an economist setting some tax rates for, say, software, used numbers straight from Microsoft, even though Microsoft can do monopoly pricing. Or if the economist was testing the average price of toys, and measured prices only on November 26 and December 26 (both traditionally big sales days in the US). In other words, the foundation of his report- the Yahoo data- was unreliable.

    Did he ever admit that his model relied on abnormal data? I've seen nothing that shows that he re-ran any of his financial models. A good researcher admits when a data source is retroactively found to be inaccurate- the librarian is so far not acting as such. He needs to redo his calculations based on multiple data sources.

  • Who's going to think of The Artists? (Score:5, Insightful)

    by Lux (49200) on Tuesday October 08 2002, @01:47AM (#4408431)
    This makes me more than a little sick. Whenever they appear before Congress or talk to a journalist, the RIAA only talks about "The Artists" {rights, livelihood, right to compensation, insentive, ...} but the second the royalty pickings get a little too slim for the studio's tastes, the artsists are the first ones to take the pay cut.
    • That would be because the RIAA wants "the Artist" to refer to the sound technician, recording producer, studio owner.... In other words, everyone involved in making a musical recording except the musician. After all, they are the recording artists, not performing artists.

      Bah.

  • The whole concept is nonsense. (Score:4, Interesting)

    by Beautyon (214567) on Tuesday October 08 2002, @02:19AM (#4408505) Homepage
    We listen to online freeform radio from the USA every day. They have realtime updated playlists. Its simple to find information about the music being played, by a simple right click. We can then check out the t-shirts and CDs.

    There should be no charge for streaming online from non commercial entities. Period. Anyone can start a station, and see thier trafic explode if they play good sets. This new tax will dampen down or cap the potential size of audiences, which for independent labels will be a very bad thing.

    Anyway, how are they goning to police this?

    Streaming is no different to file sharing; its just copying a very long number. There cannot be one law for streaming and no law for P2P filesharing; there should be the same unrestrictive constitutional guarantees [nyfairuse.org] for both.

    Copyright is Haram. This means that you can put a server in a sharia country, securely tunnel into it and then stream from there. Unfortunately the cost of doing this wont be worth the hassle, much less the threat of having charges to a company in Iran showing up on your credit card bill!

  • RIAA:
    "We exist to collect the royalty money that pays for our existence"

    Hopefully the RIAA will implode upon itself.

  • And all this under the guise of "protecting the artists"!

    And with the recent TV commercials with Spritney Bears and a bunch of pathetic "rap stars" informing the public that downloading music is stealing from them... Of course, there were no respectable artists appearing in those commercials.

    disclaimer: don't get me wrong, I don't support music piracy at all, but I also don't believe the RIAA's silly notions that they're "protecting the artists".

  • Why is web-radio so different? (Score:3, Insightful)

    by gorjusborg (603799) on Tuesday October 08 2002, @07:41AM (#4409108) Journal
    I have a friend that works for a radio station near where I live. She is a DJ. She has explained to me on several different occasions that the record companies have liasons which pay the station to put certain songs on the air (this was called payola in back when there was no liason). The idea is that the record companies get advertising for their albums, with the assumption that people will buy them.

    Why is on-air broacasting payed to play songs when wired broadcasters are forced to pay to play?

    It seems to me that the same advertisement idea works for both.
  • But maybe we don't need music collection agencies for radio anymore. I vaguely remember reading somewhere that BMI, ASCAP, and the like are among the richest companies in the world. And what do they produce?

    We have the technology today to pay the artists directly. And the cost of a system like that would probably be less than the extra charges that the collection companies add on for profit

    As I said, it isn't very realistic. It is hard for little changes to come about in the music industry, forget about big ones like this. Just a little wishful thinking I guess...

  • RIAA, make up your mind. (Score:3, Interesting)

    by tsg (262138) on Tuesday October 08 2002, @08:33AM (#4409303)
    When the artists question you about their low royalty payments, you complain about having to pay independent promoters (aka "payola workaround") to get the songs on the radio thus getting exposure.

    Now, here comes a bunch of people who want to play your songs, giving them as much if not more exposure, and you're trying to charge them for it?

    Well, which is it?

  • How much will this really cost small webcasters? (Score:3, Interesting)

    by Reziac (43301) on Tuesday October 08 2002, @10:06AM (#4409821) Homepage Journal
    The article noted that the rate works out to 70 cents per song per 1000 listeners. Now, I have no idea how many people can actually connect to a given webcaster at the same time, but just to keep the math simple, I'll postulate 1000 listeners (and do a little rounding).

    At an average of about 4 minutes per song, that's about 15 songs per hour, so that means (assuming I didn't drop a decimal somewhere):

    1000 listeners costs the webcaster around $10/hour in royalties, or about $7500 per month.

    100 listeners costs the webcaster around $1/hour in royalties, or about $750 per month.

    10 listeners costs the webcaster around $0.10/hour in royalties, or about $75 per month.

    That strikes me as being WAAAAY over what that many listeners can bring in revenue, considering that advertisers want to know that their ads are being seen/heard by a certain minimum number of listeners.

    So I don't see how this is any great improvement over the previously-stipulated rate. It's kinda like telling someone who earns minimum wage that you'll reduce their fee to $1 million, because the previous $2 million fee wasn't affordable.

    • I believe that the $0.07/listener/song (70 cents per thousand listners per song) was the original flat rate; the new rate is a percentage of revenues:

      "By a voice vote, the House approved a deal that would allow smaller "Webcasters" to pay a percentage of revenues or expenses to the musicians and record labels whose songs they use, rather than a flat per-song rate set by the Library of Congress (news - web sites) in June."

  • The Aritsts Do Get Paid. (Score:4, Informative)

    by thumbtack (445103) <thumbtack@ j u n o .com> on Tuesday October 08 2002, @11:47AM (#4410560)
    The Future of Music Coalition, The Recording Artists Coalition, AFTRA, NARAS, The American Federation of Musicians, and the International Managers all jumped into the fray on Monday and the text got put back in that pays the artists directly.

    The Bill Passed the House on Monday Evening.

    Full Text [boycott-riaa.com] of the Bill as Passed in the House (pdf)

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