RIAA and Net Radio Broadcasters Reach Agreement

An anonymous reader writes "The RIAA and internet web broadcasters have reached a royalty agreement. Instead of facing massive increases per song played, they will be generally charged 10.5% of their yearly revenue."

This is unheard of, but...

...it's also a sign that the RIAA knows it is outdated and is only grasping at the few straws remaining.

If you're thinking of starting a business venture, there are two words for you: supply and demand.

No amount of laws or regulations can overcome supply and demand in the long run. The RIAA relied on preferential laws and regulations to maintain their control over distribution. Recorded music has a near-infinite supply in terms of distribution online. Hence the price of it should fall to nearly zero (yes, some people who see value in compensating the artist will never believe the price should be zero).

The RIAA is screwed, no matter how you look at it. Most monopolistic corporation unions who rely on legislation and not on supply and demand are just as screwed.

Re:This is unheard of, but...

100% of nothing is nothing. If you are going to charge your distributors more for your "product" than your they will make selling that "product", then you get the full 100% of nothing. On the other hand, if you see that they will walk away and find some other line of work if you insist on the full 100%, then you know it's time to come to somewhat more reasonable prices.

Re:This is unheard of, but...

Very true.

The future will be "Songs are our promotion, and concerts are where the real money's at."

For about $5,000 you can buy a complete set of recording equipment - the necessary laptop, software, mics, etc. to go with your instruments. If you want to do it on the cheap, well... that's why recording studios exist. How often do you hear about recording studios going bankrupt and having an unsuccessful business model? They don't.

The RIAA is the middleman that can be cut out far too easily. All they have going for them is their marketing power, and as they lose money that will be waning as well. Artists will form coalitions, collaborations, etc. and pool their resources to get the word out - like a record label, but less concerned with selling plastic discs and more concerned about advertising.

Either the RIAA is going to reinvent itself into a successful business or it's going to collapse under its own weight. Either way, it will be interesting and the artists will survive.

Re:This is unheard of, but...

For about $5,000 you can buy a complete set of recording equipment - the necessary laptop, software, mics, etc. to go with your instruments. If you want to do it on the cheap, well... that's why recording studios exist.

5 Grand isn't needed. Using a laptop, free software (Ubuntu Studio) an inexpensive interface, small mixer, & mics can be done for about half that. It works fine for the band I record. Many small bands already have most of the supplies already such as a laptop, mixer and microphones. If these already exist, then free software and an under $300 interface will work nicely.

Cheap is the under $30 Berhinger which does CD or DAT sample rates and bits. In Linux Ubuntu Studio it it truly plug an play as a USB input/output device. Open Audacity and select the USB audio for the source and hit record.
http://www.zzounds.com/item--BEHUCA202 [zzounds.com]

Don't record off a Sound Blaster compatible card except for maybe webcasts and other lower quality work. The hardware has a fixed bitrate, regardless of what you set in software.

The next step up in hardware will give you 96K 24 bit recordings.

Many studios are finding competion from the inexpensive gear that just works.

My setup excluding the already purchased computer cost under $500 for the mixer, a couple mics, and the interface. I have the ability to record 4 tracks at once and and layer over 30 tracks for post processing and adding wet tracks.

A typical session is recording the 4 drun tracks to a click track which are then played back while recording the back-up vocals, bass, keyboard and lead guitar. These are synced (remove latency) and then the lead vocal is recorded while the prior 8 tracks are played back. This is followed with adding wet tracks with EQ, effects, delay, reverb, etc. prior to the final mixdown for the CD.
Under $200 4 channel interface able to do 96K 24 bit recording is here;
http://www.bhphotovideo.com/bnh/controller/home?O=&m=Y&IC=PRI1394&A=RetrieveSku&Q= [bhphotovideo.com]

For a little more money, recording 8 tracks at once is the studio standard for PC based recording studios, but mics, mixer, and interface will run over $500 for that set-up.
http://pro-audio.musiciansfriend.com/product/Echo-AudioFire8-8-Channel-FireWire-Audio-Interface?sku=247003 [musiciansfriend.com]

The cost of the set-up is less than a typical studio session. This recording in your own studio is common now that the high cost has been eliminated.

Re:This is unheard of, but...

For about $5,000 you can buy a complete set of recording equipment - the necessary laptop, software, mics, etc. to go with your instruments.

I believe that Steve Albini [wikipedia.org] may disagree with you.

If you don't know who he is, this essay [globaldarkness.com] is extremely interesting.

Re:This is unheard of, but...

Or compress it to sound louder...

Re:This is unheard of, but...

And experienced professionals can make it sound like raging crap as well. Listen to most of the stuff out there now. They compress it hard so most of the dynamic range is not there, plus they EQ it for some pimply faced 16 year olds cheap car stereo and speakers propped in the back window.

It's very hard to find a RIAA disc that was mastered by a pro that did it right instead of their cookie cutter nastyness they have been creating lately.

Re:This is unheard of, but...

The RIAA is screwed, no matter how you look at it.

As long as they can buy laws, copyright regulations, and even international treaties, they're doing just fine. Sooner or later, their influence will probably wane, but don't hold your breath waiting. They've got a lot of life left in them, sad to say.

Re:Supply and demand, indeed

Everything you say is true. The problem is that there is no evidence whatsoever that the RIAA contributes anything toward the ability of musicians to make a living off their music. Given the numerous horror stories about just how much industry parasites suck out of the music buyer's dollar on its journey from the buyer's wallet to the musician's bank account, it's quite reasonable to believe that it is more difficult to make a living as a professional musician with the RIAA around than it would be in the absence of such an organization.

Re:Supply and demand, indeed

It's an expensive habit, most of us are just trying to break even.

Re:Supply and demand, indeed

It's an expensive habit,...

Yeah, I think that statement should be in the running for some sort of award for "Most massive understatement in a /. post".

most of us are just trying to break even.

Anything that's music-related...instruments, amps, etc...is extremely pricey. A decent brand-name USA-made professional-quality electric guitar will set you back $2,000-$3,000, and the same with an amp (thinking of an example of a new Gibson Les Paul and a 50 watt Marshall half-stack). That's the best part of $10,000 for just *ONE* guitar players' personal rig in an average good-quality bar/club cover band!!

That's not counting effects pedals and/or rackmount effects/processors, cabling, strings, picks, stands, microphones ($100-$150 each), PA gear, and the maintenance costs of keeping all the equipment (which can be quirky) and the instruments in shape. Heck, just a new set of tubes for a guitar amp can easily run $200-$300! That's just for starters. Then there's transportation and storage costs for all the equipment, and personal transportation and lodging plus food costs, and even laundry for those on the road, on top of that for all the band members.

Most average bar/club bands don't come anywhere near to paying even ongoing expenses, never mind also recovering their investment in the equipment and instruments when you factor in all the costs. Most bars only pay a band $350-$500, many even less. Many times a band will get stiffed altogether by shady bar owners. These guys do what they do because they love playing and entertaining. Please keep this in mind the next time you go to a bar or club and see a tip jar at the edge of the stage.

Cheers!

Strat

10.5% of the yearly revenue?

What about the radios that don't make any profit?

I am specifically thinking of SOMA FM [somafm.com] and WCPE [theclassicalstation.org]. I know that WCPE is a non-profit, for instance, and they are two of the best radios I know.

Are these exempted or not? Does anyone know?

Re:10.5% of the yearly revenue?

What about the radios that don't make any profit?

Revenue is what they bring in total. Profit is what's left after expenses. In other words, they want 10.5% off the top, regardless. And the RIAA doesn't have a history of sympathy for the argument "But I wasn't making any money off of the music I was sharing," so while it would be nice if they'd give non-profits a break, it would be out of character.

Re:10.5% of the yearly revenue?

I had to do a double take when I read 10.5% of yearly revenue. 10.5% of profits sounds excessive, but 10.5% off the top is outrageous.

Re:10.5% of the yearly revenue?

Strangely, being a "non-profit" does not mean you are not allowed to, or even that you typically dont, make a profit. Being a non-profit simply means that the stated goal of the organization is something other than profits, and so the directors of the organization do not have to justify their decisions in terms of how much profit it makes for the organization. There's also different accounting regulations, like publicly declaring the assets and expenditures, etc.. and in exchange they get a tax break.

Remember to pay the tithe you teabaggers

Perhaps if there were some mention of what broadcast radio stations were paying for their tithe or per-song charges we could make a reasonable comparison. Somehow I doubt that all-talk/mostly-talk broadcast stations are paying 10% of revenues in tribute.

Turn their own tactics on to them...

We've all heard about RIAA tricks to scam the artists out of their fair share. Like taking a percentage of revenues for 'breakage' based on the rates of vinyl records breaking in shipping even though CDs are much more sturdy and MP3 downloads are impervious.

So I suggest the radio stations change their business models to run revenue-free. Like becoming an ancilliary service that does not generate revenue under normal conditions - like you can pay a fee so outrageous for the radio service that no one in their right mind will pay it, or you can get it 'free' as part of membership (paid or advertising-supported, or some other scheme) with some other web-site or service provider. Let the free-radio and the revenue-generating service be subsidiaries of the same parent company and you are all set.

Of course I am writing this without actually reading the details of the contracts - those MAFIAA lawyers are really good at putting together contracts that fuck the other guy in novel and unexpected ways, so anybody trying to fuck them back needs to pay real close attention to the details.

About time

Profit motive is a fascinating thing. It's not in the RIAA's best interest for web radio stations to go offline, because they generate no money from web radio that way. Whatever they charge is going to be the highest possible without alienating their customer base, which is the web broadcasters. It took them long enough to finally admit that their pricing was extraordinary to say the least.

I do find it fascinating that the major labels, via "Independent promotors" actually pay radio stations to broadcast specific songs, whereas they do no such thing for web radio services. I would think that something like the web radio in iTunes would be a perfect target for this.

10.5% of yearly revenue...

Is that their monthly fee?

I'm not sure I understand...

I read TFA and something is seeming strange to me.

You pay 10.5% of all revenue to the MAFIAA. Does that mean that they're waiving the current royalties? Or is this tax in addition to the old royalty rate?

If this is all they pay does that mean I can:

* Stream RIAA music all I want if I don't make any money?
* Broadcast it DRM free?
* Get from the RIAA their music to play?

Clearly I'm missing something big somewhere, 'cause there's no way the RIAA would allow that chain of events.

Re:I'm not sure I understand...

Taking the definition of "revenue" then you'd only be able to do that if you didn't bring in any money at all, not if you don't make money (profit). Even then I suspect they might have other ways around it (like not selling the music to you in the first place and then enforcing copyright/DMCA legislation on the CDs that you probably got the music from).

It'd be great if some rich person did put their money towards a station that brought in zero money (including no ad revenue) though!

Only for on-demand services

Sorry for posting as AC but I just would like to point out that this agreement is only for On-Demand services and not pre-programmed web radio services (which most web radio stations are).

So for most stations this does not change anything and the insane royalty rates that threatens the whole web radio industry is still very much in place.

Mod Parent Up

He's spot-on [pcmag.com]. This agreement only covers services such as Imeem, Last.fm, and Napster, which are based on streaming individual songs. It does not cover services such as Pandora, AOL Radio, or Digitally Imported, which stream pre-programed/tailored stations like a meatspace radio station does. Those guys are still fighting to avoid having to pay the massive $0.0019/user/song that the Copyright Royalty Board passed down last year. Generally when people are talking about internet radio they are talking about these services, so internet radio is not saved.

RIAA or MAFIA?

Seriously. RIAA is acting like a mafia. Asking for a flat cut as protection money. Civilized extortion.

Ahhh...how biblical

It's the RIAATithe©.