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SoundExchange Backs Off DRM for Webcasters

Posted by CowboyNeal on Thu Aug 23, 2007 11:37 PM
from the making-concessions dept.
Media Music The Internet
Radio Free Europe writes "The big news is not that SoundExchange has repackaged the same royalty proposal that small webcasters rejected in May, but that SoundExchange has dropped its previous insistence that DRM be a part of any agreement. 'On the bright side, it doesn't appear as if DRM is part of the terms this time around. Previously, SoundExchange stated that webcasters who agree to the deal must actively "work to stop users from engaging in 'streamripping'." This began a war of words between the Digital Media Association (DiMA) and SoundExchange, with DiMA accusing SoundExchange of using rate negotiations to push mandatory DRM. SoundExchange's letter leaves the much-maligned streamripping issue out of the discussion, clearing at least that hurdle.'"
+ -
story

Related Stories

[+] Small Webcasters Offered a Rate Break, Reject It 123 comments
Pontifex minimus writes "Music royalty collection group SoundExchange has offered an olive branch to small webcasters. They are willing to delay the exorbitant new rates set by the Copyright Royalty Board until 2010 for small webcasters in hopes that they can keep Congress from passing the Internet Radio Equality Act. Larger outfits, like Live365 and Pandora would not be affected and would have to pay the new rates. '"Although the rates revised by the CRB are fair and based on the value of music in the marketplace, there's a sense in the music community and in Congress that small webcasters need more time to develop their businesses," said John Simson, executive director of SoundExchange.' SaveNetRadio rejected SoundExchange's offer, saying that it 'throws large webcasters under the bus.'"
[+] Your Rights Online: U.S. Court Denies Webcasters' Stay Petition 264 comments
Michael Manoochehri writes "Reuters reports that a "federal appeals court has denied a petition by U.S. Internet radio stations seeking to delay a royalty rate hike due July 15 they say could kill the fledgling industry." This royalty rate hike, put forth by the US Copyright Royalty Board, will increase royalty rates for webcast music tremendously, in some cases to more per year than many webcasters bring in from revenue. Save Net Radio, a coalition of webcasters, is telling listeners that "We are appealing to the millions of Internet radio listeners out there, the webcasters they support and the artists and labels we treasure to rise up and make your voices heard again before this vibrant medium is silenced.""
[+] Webcasters Call Bunk on SoundExchange DRM Ploy 109 comments
RadioFan writes "The settlement between webcasters and SoundExchange is starting to come apart at the seams, because everyone is realizing that SoundExchange wants to force DRM on Net Radio. DiMA, one of the largest Net Radio lobbyists, has fired back at Sound Exchange, calling them out for leveraging high royalty fees to push through DRM requirements that they failed to obtain in Congress via broadcast flag and anti-recording legislation. Was this whole thing a ruse to get DRM on net radio?"
[+] Politics: Internet Radio's 'Second Chance' Bogging Down in House 105 comments
An anonymous reader writes "Wired is reporting that the Internet Radio Equality Act is failing fast in the House, with negotiations breaking down over fair pricing for internet radio broadcasters. 'A legislative setback could make it harder to dislodge the new fees, which took effect last month after a federal appeals court refused to postpone the payment deadline. With the threat of congressional backlash fading, SoundExchange could find little incentive to budge from its current position ... SoundExchange has already proposed changes that could relieve small and custom-streaming sites from charges they could not possibly afford to pay, at least in the short term. Many expect a small-webcaster deal to be done by early September, when Congress goes back into session. But the deal on the table hasn't changed since SoundExchange extended an offer in May to charge them 10 percent of gross revenue under $250,000, or 12 percent of gross revenues over $250,000, with a revenue cap at $1.25 million.'" All very cushy for SoundExchange. Wired also points out that this is the same organization illegally lobbying for terrestrial radio royalties through 'third party' shell groups.
Submission: SoundExchange backs off DRM for webcasters by Anonymous Coward
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  • How to Run a Company into the Red (Score:4, Insightful)

    by Anonymous Coward on Thursday August 23 2007, @11:47PM (#20340107)
    SoundExchange has no idea how to create a viable business model. The money is not in charging the broadcasters, rather its in free promotion coupled with aggressive web marketing.

    They should cut a deal with broadcasters that offers free music in exchange for relevant ads and links to store fronts were a listener can purchase the music. They should also offer discounts on packaged songs that they want to push on the market.

    They could be influencing lesser known genres such as indie and techno, and popularize and brand a new line of music.

    They could completely rule this new medium and reap the rewards, instead they are going to force broadcasters overseas and lose even more money to pirates.

    I am just sitting here shaking my head in disbelief at the shear stupidity of their business model.

    • SoundExchange has no idea how to create a viable business model. The money is not in charging the broadcasters, rather its in free promotion coupled with aggressive web marketing.

      That depends what you think their business model is.

      Personally, I think the business model of getting Congress to pass a law saying that all music streamed on the internet is subject to a royalty payment to be payed to Sound Exchange - even for music being streamed by the copyright holder or with their direct authorization - is a

      • Last time I checked, sheep farmers don't skin their source of revenue.

      • Re: (Score:2, Insightful)

        by djasbestos (1035410)
        Business model is the same as any other perfect enterprise in this country: have people throwing money at you for doing nothing because it's the law. GREED.

        In the words of Lewis Black: "Piggy, piggy, piggy, fuck, piggy, piggy." or "Even the greediest people in the world said: 'Wow...that's fuckin' greedy!'"
      • even for music being streamed by the copyright holder or with their direct authorization

        Christ, this is so wrong it makes me want to cry. Broadcasters have *always* had the option to secure rights with the artists, themselves. The compulsory license is simply another route for broadcasters who don't want to jump through those hoops. The point being, if you have direct authorization from the artist, you can tell SE to go fuck themselves.

        Honestly, how is it people here get this shit so completely wrong?

        • The point being, if you have direct authorization from the artist, you can tell SE to go fuck themselves.

          That would make this situation slightly closer to being reasonable (but still pretty bad). Do you have any evidence that that is really how it works?

          • If you have authorization from the artist, SE has no standing to demand fees, as you've already negotiated a license. It's the very nature of a compulsory license that this is possible. Otherwise, the government would be removing from the artist the right to negotiate copyright on their own materials, which is *exceedingly* unlikely. Do I have any proof on hand? No. But anything else would be sheer, utter insanity.
            • And most small webcasters probably don't have the money to spend N months in court just to say "Look, the artist gave me permission."
              • Months in court? What the fuck are you talking about? You go to court, you provide the license agreement, maybe subpoena the copyright holder, and the case is dismissed. And this is assuming the case was brought to trial in the first place (assuming a criminal prosecution is being attempted). Fortunately, your average prosecutor will likely not bother trying a case when there's clear evidence of no wrongdoing.

                Honestly, how the fuck do you think the legal system works??

                • Honestly, how the fuck do you think the legal system works??

                  Badly. It should work as you describe, but then again, it doesn't. Otherwise, when the RIAA sues a grandmother who has never even used a computer, she'd just walk in on her court day and say "I've never used a computer." and that would be that. Too bad it doesn't work that way. Also, I was definitely talking (and still am) about civil courts, since copyright infringement is not usually a criminal offense (you have to break the law really hard to make it criminal). I would be very surprised if SE did n

                  • Also, I was definitely talking (and still am) about civil courts

                    Ah, then you truly are misinformed. SE has no standing regarding civil suits. They simply act as a receiving and dispensing agency for license fees. Only the copyright holder or a designated agent thereof can bring forth a civil suit.
          • Do you have any evidence that that is really how it works?

            I do now, after some basic Google searching. See this page [copyright.gov]. To quote:

            Does the Intended User Have to Use a Compulsory License?

            No. The person wishing to make and distribute phonorecords of a nondramatic musical work may negotiate directly with the copyright owner or his or her agent. But, if the copyright owner is unwilling to negotiate or if the copyright owner cannot be contacted, the person intending to record the work may use the compulsory licen

    • They know exactly what they are doing. (Score:5, Insightful)

      by twitter (104583) on Friday August 24 2007, @01:25AM (#20340567) Homepage Journal

      SoundExchange has no idea how to create a viable business model. The money is not in charging the broadcasters, rather its in free promotion coupled with aggressive web marketing. They should cut a deal with broadcasters that offers free music in exchange for relevant ads and links to store fronts were a listener can purchase the music.

      You are kidding?

      SoundExchange has been given monopoly status. Everyone has to pay fees to them, and this tiny concession is meaningless when you consider the big picture: they get to pick and chose who runs internet "radio" stations. They can block all but RIAA members and force membership. As soon as they are sure of control, all the concessions will be undone and prices will be hiked up to terrestrial broadcast levels. Kiss variety, choice and artistic freedom goodbye.

      It's a license to extend their little analog empire into the future. They are going to keep limiting who the "winners" are. A small number of acts will continue to be "pushed" as you put it, at the exclusion of all others. Bands that want to give their music away and advertise in the way you think would be best for them are not going to be able to do it. They are going to have to crawl on their knees and "prove" themselves in some "target" market, just like they do now, before internet radio stations will "risk" playing them. Without the odious fees the old industry is going to impose, the costs of running a web broadcast are very low, there are no risks and everyone is free to give their music away.

      There is absolutely no justification for this. There is no scarce public resource involved and therefore no reason to regulate the internet. Your rights have been sold and the RIAA is going to keep raking in the cash at everyone else's expense.

      • Your rights have been sold and the RIAA is going to keep raking in the cash at everyone else's expense.

        I wish they were sold. I might have collected a healthy profit. No, what happened is that they were given away... by us.

      • Re: (Score:3, Insightful)

        by jmccay (70985)
        IANAL, but isn't maintaining and creating a monopoly illegal in the US? The RIAA, and all their bastard children, just use mob enforcement tactics to raise money. Isn't this just more shakedowns from these guys? While I doubt we'll get anywhere with them. Their existence needs to be challenged. They are attempting to stifle there only real competition--internet radio.

        The only sure way to stop them is to stop feeding them. Stop buying CDs. Stop going to concerts. Stop buying t-s

      • Re: (Score:3, Informative)

        by Abcd1234 (188840)
        SoundExchange has been given monopoly status.

        Jesus Christ, every time this damn conversation comes up, it's clear no one here has any idea how this actually works...

        SoundExchange was selected by the Copyright Royalty Board as the default arbiter for royalties paid under the compulsory licensing scheme. There is *nothing* stopping an artist from selecting a different arbiter, and registering it with the CRB, at which point any compulsory licensing fees will be handled by that group. There is no "monopoly"
          • That would be wonderful, but I'm afraid that it's not true. Everything I've read tells me that SoundExchange is the only game in town ... forever.

            Yeah, I did some digging, and it appears I was wrong, in that the CRB selects the designated agent. However, that doesn't change the fact that the compulsory license is still optional.

            What if you don't want fees to be collected?

            Then apply a blanket license to your material. As I've said elsewhere, the compulsory license is *optional* for broadcasters. You only
              • That does not negate SoundExchange fees, and that's the beef artists have. According to them, SE collects fees anyway.

                Really? Where are these statements? What artists have made these claims? Have you heard them yourself, or were they just passed on by someone equally ignorant on the subject?

                If that's true,

                It's *not*. Christ, read the regulations. You either pay SE, or you pay the artists. That's it, that's all. SE only collects an administrative fee if they're being charged with collecting royalties

    • Re: (Score:3, Informative)

      by Abcd1234 (188840)
      SoundExchange has no idea how to create a viable business model.

      That's because they aren't a fucking for-profit business.

      SoundExchange is a non-profit organization charged with dispensing licensing fees to artists, fees charged based on a compulsory licensing scheme set up by the government. A scheme that is *optional* (the broadcasters can always deal with the artists directly, if they're willing to shoulder that cost burden). Further, they are simply the *default* collecting agency. An artists is free
      • I should point out, I can't find any method of register a receiving agent with the CRB, so that part of my comment could very well be incorrect. The rest still stands, however.
      • The concept is sound enough. The problem is that there is no other central body available to register artists who don't want to go thru SE.

        Last time this topic went around, I suggested that outfits like CDBaby, as existing proven-reliable shared-profit music distribution entities, should institute a program where their artists can use them for these compulsory royalties -- and trust CDBaby (et al.) to set a rate as reasonable as they have for their other services.

        At least it would be another option, that wo
  • SoundExchange http://en.wikipedia.org/wiki/SoundExchange [wikipedia.org] is a subsidiary of the RIAA. Why do webcasters, radio stations and everyone else continue to play their game? There is a lot of good music out there; Always has been, but now it's a listener's market. The web means we no longer need the RIAA to choose which acts we should listen to. So why don't these guys, instead of waltzing with the RIAA, tell them to get bent and promote other artists instead?

    Can you imagine the looks on the faces of the RIAA Shil
    • I love Pandora, and I listen to it for five or six hours every day. However, they won't stream anything you can't buy on CD, which means some music is hard to come by. The soundtrack to MechWarrior 2, for example. Or the Doom series and Quake series soundtracks. Or the vast quantities of module-format music out there that I've grown to love. (Granted, the quality of that last can be dreadful...)

      It's unfortunate. There's lots of great music out there (even music you can legally download for free), but Pan

    • Re: (Score:3, Insightful)

      by BootNinja (743040)
      The problem with your suggestions is that SoundExchange, while being a subsidiary of the RIAA is still authorized to collect all compulsory royalties due whether or not they are due to RIAA members. So your suggestion holds no water.

      • No Choice. (Score:2, Informative)

        by twitter (104583)

        SoundExchange, while being a subsidiary of the RIAA is still authorized to collect all compulsory royalties due whether or not they are due to RIAA members.

        That seems to be the size of it [slashdot.org]. Locking out competition, rather than finding and promoting excellence is what the RIAA member companies are all about.

      • that's correct...soundexchange is still legally allowed to take royalties on any music that is taken at any time, in case that the artist later signs with the riaa, to possibly take some of their ill-collected royalties back.
  • Good grief, why would Sox get involved with DRM? Maybe to add some echo?
  • This doesn't surprise me. DRM is dead. How could SoundExchange possibly require it when most of the RIAA members now favor retail sales of DRM free music? Even WalMart is getting into the act. Why? because they found that they can charge MORE for DRM free music and the consumer will pay it. It only took the music industry TEN YEARS to figure out what most of US knew all along!
    • As much as I would like to agree with you, there isn't anything that says they won't re-introduce DRM later in the negotiations. DRM was ALWAYS a bargaining chip and it was always in play. What they did at first was to say "well here are these exorbitantly high rates -- accept them or else." Then they pretended to throw a bone by saying "well, we'll delay the rate but you need to include DRM" but now they are just going right back to where they started, just this time it's the other way around. They ar
  • So, I've heard of Soundexchange but I don't know who they are and why we have to listen to them. What do they have to do with internet radio stations who play non-RIAA music. I ask that because I heard that they put the "squeeze" on everyone, no matter what they play. NPR has even been talking about them.
    • http://en.wikipedia.org/wiki/SoundExchange [wikipedia.org]

      basically, they were created as an arm of the RIAA and then spun off to a independent (and I use the characterization lightly here) non-profit and the government designated them to collect royalties for all artists. I think it boils down to the fact that this allows for small artists to know where they need to go to find out if anyone has been playing their music and to get paid for it. how well this part works i have no idea -- but that is the justification
      • [...]that this allows for small artists to know where they need to go to find out if anyone has been playing their music and to get paid for it. how well this part works i have no idea[...]

        Not very well to be honest. From what we have previously seen, I believe this is used as more of an excuse to charge for someone else's music whom they have no rights to, and then force those small artists to come begging to them for money that (A.) they (the small artist) had never intended to charge (with regards t

      • SoundExchange should be before the RICO judge (Score:4, Insightful)

        by crovira (10242) on Friday August 24 2007, @09:02AM (#20343297) Homepage
        because its just an extortion racket.

        Let me get this straight...

        SoundExchange are going to collect $50k from each and every WebCaster radio station.

        Then the artists have to find out wether they played their songs, or not, from every single WebCaster. (If you believe people are consistently that diligent, I have a bridge to sell you in Brooklyn.)

        Then the artists have to figure out how much of those $50ks SoundExchange might owe the artist. (Some of these guys and gals can play great. Math, they're not so hot at.)

        Then the artists have to try to collect, less the euphemistically called administration fees of course (can you say 110%.)

        Get the "Piperazine"! I'm looking at a nastytape worm here.

        • Re: (Score:3, Informative)

          by Abcd1234 (188840)
          because its just an extortion racket.

          You might want to educate yourself before spouting off and making yourself look like an idiot.

          Broadcasters have *always* had the option of negotiating broadcast licensing deals with artists directly. The compulsory licensing scheme exists for one reason, to make it easy for radio stations to broadcast music without having to deal with each and every artist.
        • When I was DJing at a station that was NOT obligated to pay royalties, we still kept meticulous playlists. With digital stations, you don't need this handwritten log, you just need an automated server log.

          BTW, piperazine has no significant effect on tapeworms; it's for ascarids (roundworms, pinworms). For tapeworms you want fenbendazole or droncit or Yomesan. Too bad the LD50 for these drugs is so high. ;)

  • Agreement reached says SaveNetRadio.org (Score:5, Informative)

    by beakerMeep (716990) on Friday August 24 2007, @03:26AM (#20341101)
    I was digging around and just noticed that SaveNetRadio.org is claiming an agreement has been reached.

    Here is the press release [savenetradio.org] (pdf)

    And more on their homepage [savenetradio.org]

    Note: it looks like this is just one detail that has been agreed upon but negotiations are ongoing.
  • Sweeten the deal, get it signed. We can change it to include DRM later.
  • For all its bluster, SoundExchange is an organization with about 30 employees. They are set up to collect and administer royalty payments, not engage in large-scale litigation. Even if the broadcasters completely stonewalled, I doubt SoundExchange is in a practical position to do much.

    As I've said before, the music industry and the broadcast industry are engaged in a standard contract negotiation, albeit one that is receiving a good deal more press than would be usual. Strictly from an economic perspecti
    • Eventually they'll meet at somewhere in the middle where they both figure they can make a buck. It will all work out...

      For them. Whether they'll be any room for the consumer in their perfect little world is another story entirely.
  • it would seem pretty stupid for them to insist on it.
    • Streamripping produces a perfect copy of what was "transmitted" which can be copied perfectly ad infinitum. Recording off the radio onto tape produces a lower fidelity analog copy and subsequent generations of copying of that copy introduces more noise at each generation.

      • Re: (Score:3, Interesting)

        by bmo (77928)
        "Recording off the radio onto tape produces a lower fidelity analog copy and subsequent generations of copying of that copy introduces more noise at each generation."

        You just time traveled from what decade?

        FM Radio cards:

        http://www.cel-soft.com/RadioCard.htm [cel-soft.com]

        http://www.tigerdirect.com/applications/SearchTool s/item-details.asp?EdpNo=2905632&CatId=1425 [tigerdirect.com]

        USB radio:

        http://www.engadget.com/2004/07/13/usb-radio-dongl e/ [engadget.com]

        http://www.redferret.net/?p=7760 [redferret.net]

        So how is saving a stream off the net any different than reco
        • Case in point, I recently downloaded some nice drum and bass mix sets that were apparently recorded from some station called "Radio One" in England or something about ten years ago. My copy is a perfect duplicate of the original recording made from the air.
          • The copies that you 'found' somewhere have travelled long & far from where they would have been pushed via mainstream "music industry" backed means, meaning that as a promotional mechanism new frontiers have been found. You now know about "Radio One" and might google it and tune in via the internet, you might also search out more mixes by those D&B artists or even search out some of the individual tracks in the mixes. You might not also, but getting those files to you from the 'copy of the broadca
            • DAB is *lower* quality than FM radio. The people responsible split the available spectrum into so many channels that each one is rather low quality. (Or so I understand it; I've naturally not seen firsthand proof, but then who has?)
        • FM Radio cards:

          http://www.cel-soft.com/RadioCard.htm [cel-soft.com]

          http://www.tigerdirect.com/applications/SearchTool [tigerdirect.com] s/item-details.asp?EdpNo=2905632&CatId=1425

          USB radio:

          http://www.engadget.com/2004/07/13/usb-radio-dongl [engadget.com] e/

          http://www.redferret.net/?p=7760 [redferret.net]

          The Tigerdirect link is also a TV tuner card. You can record more than just the radio.

          I have one in my Ubuntu box. It's kind of a pain to tune with the command line, but it works well. As an added bonus, it ignores Macrovision for converting your old VHS tapes.
            • May I suggest MythTV?

              Absolutely. I have had this hardware for only a month and I don't have all the toys installed yet. I just built the Core 2 Duo box and tossed Feisty on it last month. Give me time to finish configuration. Priority is first getting DVD Author to work to burn captured VHS tapes to DVD.
        • Why talk about FM? With a DAB receiver, you can record an exact digital copy of what was broadcast, without any noise coming from analogue transmission.
      • Does HD Radio have any sort of DRM? I personally believe the best way is to set up the rules the same for Internet Radio as they do for traditional radio. That's as long as the Internet Radio is only streaming music to you like a traditional radio instead of allowing you to choose what is playing, when it's playing, etc.
      • Yeah, but most streaming radio stations aren't that high quality to begin with. There are a few out there that broadcast at 128k or sometimes even higher, but most don't. My own darkwave radio station [mirrorshades.org] (plug!) broadcasts at 96k, actually, and I do this for a few reasons, which are also the same reasons other broadcasters do it.

        First, because it's a reasonably decent fidelity without hammering the connection (mine or yours). 96k isn't that fantastic but it's still quite a bang for the buck, as it were. Se

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