RIAA and Net Radio Broadcasters Reach Agreement 284
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."
Re:10.5% of the yearly revenue? (Score:5, Informative)
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? (Score:5, Informative)
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.
Re:This is unheard of, but... (Score:5, Informative)
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:I'm not sure I understand... (Score:5, Informative)
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!
Mod Parent Up (Score:5, Informative)
Re:10.5% of the yearly revenue? (Score:5, Informative)
Re:This is unheard of, but... (Score:5, Informative)
The compression is done first on the master and then finally even further at the radio station.
So yeah it's not entirely incorrect to say that engineers are to blame, after all the mastering engineer is called such for a reason. BUT a general rule of good practice is that the mastering engineer not be involved in any of the recording, mixing or production process at all until the final master. The reason behind this is that it's considered to be a very good idea to have a completely fresh set of ears on the mastering. When you listen to an album over and over and over again your ears start putting on all kinds of filters and your objectivity goes down the toilet. It's one of the many reasons that mastering engineers (as a specialty) exist.
But yeah, of course professionals can do a bad job. I'm not disagreeing with your post. Just trying to point out that compression is almost never performed before mastering (which has nothing to do with recording or mixing). The only exception being on a track-by-track basis where compression is deemed required to achieve a particular effect on a particular instrument. Only the mastering compresses the entire recording. Then radio stations compress it even further for playback.
Re:This is unheard of, but... (Score:3, Informative)
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.
To give credit where it is due, I've read a number of times over the years that the pro engineers don't have a choice. They do know how to do it right, but the people who write the paychecks - RIAA MBAs - are telling them to do the over-compression on purpose. They can do it, and get paid or they can not do it, get fired, and the next guy will do it anyway.
Re:Supply and demand, indeed (Score:2, Informative)
Re:This is unheard of, but... (Score:5, Informative)
The Slashdot summary is wrong. (Surprise.) It's 10.5% for places that allow the user to pick his/her songs. But broadcast internet radio, where the DJ controls the music, is still unresolved. They are still paying the "per play" royalty fee.
So places like Shoutcast are still in danger of going bankrupt due to the tyrannic fees imposed from above.
Re:This is unheard of, but... (Score:5, Informative)
The way I read the agreement, it seems to be 10.5% of gross revenue, so basically for a break-even operation this would essentially be a 10.5% operating tax.
This doesn't appear to affect Pandora though. FTFA:
Re:This is unheard of, but... (Score:5, Informative)
"Yes, but 0.1% of something really large is still a significant number. I agree that the price can't go to zero for buying a song online, but I fail to see how it couldn't go down to say $0.10 per song."
The laws would have to change for this to happen. Mechanical royalties (we're talking downloads, not the new interactive streaming model discussed in TFA) are around $0.08 by law. The lyricist and the composer of the music each get their own mechanicals, and this doesn't include performance royalties -- the per-track royalty that the performer negotiates with the label.
There are exemptions and other tricks that the labels use to lower the mechanical royalties, but for a track that, say, has music written by Joe, lyrics written by Fred, and is performed by Lindsay who's negotiated $0.05 per track, the royalties are liable to be more than $0.20. Record companies can't hold back mechanicals to pay for production costs, but even if they hold back Lindsay's $0.05 because the record hasn't yet made money (which is the case for most records), the record label still owes the mechanicals.
There's also a big disagreement about the true costs of producing a track. Many Slashdotters believe that production costs are next to nothing, and that record companies don't have significant costs for marketing, salaries or overhead. This helps foster the notion that each download is cost-free to the record label. The popularly understanding among people who are familiar with business is that record labels do indeed often have significant costs, and those costs are amortized into the cost of sale.
Your assertion that there's no reason that tracks won't go to $0.10 is hugely popular on Slashdot -- no doubt about that. I encourage everybody who truly believes this to start their own record label and sell music for $0.10 a track. Paraphrasing Gandhi, you can be the change in the music industry that you want to see.
Re:Supply and demand, indeed (Score:3, Informative)
Being a bit of a devils' advocate here;
1. The band is doing cover tunes and so don't "deserve" the money, they need to pay the people who wrote the music who do deserve it.
Why? The people who wrote the music aren't there slogging through 4 sets to 1:30-2:30AM, 3-4 nights a week in a smoke-filled bar sweating their butts off, and didn't invest in the instruments and equipment needed to play it.
In fact, one possible reason why the bars pay the bands so little is because they have to pay the collections societies so much.
Bars pay a flat rate that really isn't that much comparatively-speaking. Bars also pay bands roughly the same or less now as when I started out about 30 years ago.
2. The band is doing their own music and will get paid once by the bar owner and a second time by the collection society.
Now, somehow, I think it might not all work out this way and be cool but whose "fault" is that exactly?
Bars, to my knowledge, pay the same flat rate whether the band plays covers or original material. A band/musician has to register copyrights on their material and license it through ASCAP/BMI/SESAC, jumping through all their hoops to do so. Despite how much these organizations collect, because of the way they count plays (Hollywood accounting?) you might, as a small original artist, get a check for $20 at the end of a year. Maybe.
Here's a link that describes better than I could what happens and how:
http://everything2.com/e2node/ASCAP%252C%2520BMI%2520and%2520SESAC [everything2.com]
Cheers!
Strat
Re:This is unheard of, but... (Score:5, Informative)
You've actually amplified my point. There's a huge difference between parts cost and actual cost per sale, and an essential difference between net margin and gross margin.
That mouse you might see on sale for $19.99 might have less than a couple of bucks worth of plastic. But the cost sheet developed by Acme Mouse Incorporated might have a dozen line items consisting of R&D charges which are amortized into product costs based on forecasts. These are very real costs that can't be ignored. You're correct that they're paid upfront, but Acme needs to get the money, and if Acme is in the sole business of selling mice, then they recoup those costs one mouse at a time. The amortized overhead and development costs are as real and genuine as material costs in the eyes of accountants and investors. It's not play money; it's not "soft dollars." If the mouse has $2 in material costs and another $4 in burdened development costs, if they sell the product into distribution for less than $6, they're losing money.
And record companies aren't much different than than mouse companies. Even with digital goods (and whether it's a song or a piece of software or a stock photo), up-front costs are amortized as a cost of sale. Record labels are primarily in the business of selling music, so it's the sales that must recoup the development costs.
I know this may seem counterintuitive or even nonsensical for many Slashdotters. But it's a concept that folks in the retail industry understand all too well.
Some folks have pointed out that if supply of digital goods is theoretically infinite, then amortized cost per sale should be a limit approaching zero. The issue here is that amortization applies to sold items. If you sell 10,000 instances of software and a metric squillion copies are pirated, you're only allowed to amortize your costs over those 10,000 sold. Taking the analogy to hard goods, Acme Mouse must amortize R&D costs over the forecast of units sold; even if they bury a million mice in the Arizona desert or shoot a billion into orbit via Space Shuttle missions.
Re:This is unheard of, but... (Score:4, Informative)
Actually, in order for it to be profitable, it HAS to apply to the cost per download SOMEHOW.
No, it has to apply to the price per download.
Cost and price are different beasts. You can't say that there was a big up-front cost and then just magically call that some sort of per-download cost.
Yes, they need to charge a certain amount of money as part of the per-download price to make up for the up-front costs. But that does not change the simple fact that their per-download cost is very nearly zero.
Re:This is unheard of, but... (Score:2, Informative)