Joel Salkowitz Shutters 'Pulse 87' Because Of The New Royalty Rate On Small Webcasters
AccuRadio Surviving, But Sees Growth Elsewhere
January 4, 2016 at 3:12 AM (PT)
As ALL ACCESS reported before CHRISTMAS (NET NEWS, 12/23/15), a variety of smaller "pure-play" webcasters are concerned that the new CRB rates could put them out of business, as well as discourage new entrants in the field. Small webcasters will soon be forced to pay a higher per-stream rate at 17 cents per hundred streams. Unlike the WEBCASTER SETTLEMENT ACT of 2009, there is no a carve-out for small webcasters based on total revenue, which erases the difference between pureplay webcasters and radio station streams.
CHICAGO radio vet RICK O'DELL shut down his website and online radio station, SMOOTHJAZZCHICAGO.NET on THURSDAY, DECEMBER 31st (NET NEWS 12/28/15) , and LIVE365, which for the past 17 years, offered small webcasters the opportunity to stream music and talk content, has announced a downsizing, due to the new royalty rates established recently by the COPYRIGHT ROYALTY BOARD for 2016-2020 (NET NEWS 12/30/15).
Programming vet JOEL SALKOWITZ, who operates the online "PULSE 87," is the latest to throw in the towel -- and has strong opinions of why this hit on small webcasters is bad for all involved.
SALKOWITZ wrote to ALL ACCESS, explaining "The announcement of the new 2016 royalty rates from SOUNDEXCHANGE and the COPYRIGHT ROYALTY BOARD (CRB) just put a whole bunch of nails in the coffin of Internet Radio. For us here at PULSE 87, the new rates would mean close to a 2,000% increase in our royalty payments! This is simply far more money than the station could ever hope bring in through advertising given the very low rates being paid for streaming ads and would mean a loss of tens of thousands of dollars a year. Furthermore, as our audience grows, our royalty payments would grow at a much larger multiple than any increase we could ever hope to see in advertising revenue.
"Apparently, SOUNDEXCHANGE has decided, on behalf of the artists whose interests it purports to represent, that they would rather get 100% of NOTHING versus some reasonable percentage of SOMETHING! We have always supported paying a reasonable royalty rate. Artists should receive compensation for their creative works. The Small Webcasters License, under which PULSE operated, provided just that. Artists were compensated based on the financial performance of the Internet station. Now they will get nothing and will lose an important outlet for new artists and new music. Thousands ... very likely tens of thousands of Internet stations will go off the air depriving artists, many of whom can’t get the time of day from terrestrial radio, of a substantial platform to expose their music. LIVE 365 alone streams over 5,000 stations and they may well be completely gone in the next month or so.
"It is remarkable to see a music industry that has bemoaned the shrinking opportunities to expose new artists and new music in an increasingly consolidated radio world so blithely force the shuttering of one of the best and few remaining platforms to do just that. Many of the artists that you hear on mainstream radio today got their first exposure on Internet radio. Then six, seven, 12 months later they were 'discovered' by the corporate Programming folks at radio. Bring back the Small Webcasters License that would put us all back on the air. Return an important outlet for artists and new music discovery. We’re happy to pay a reasonable percentage of revenue for music royalties. We simply can’t pay many many times MORE than we can ever hope to take in. Do you know any business that can?"
AccuRadio: Surviving, But Growth Outside The Border
Also potentially impacted by the new CBR rates is pureplay webcaster ACCURADIO, but as the site Founder KURT HANSON noted, "ACCURADIO falls in a unique category: We don’t have the kind of large and successful sales force that PANDORA has, which would make the new CRB rates reasonably manageable, nor we don’t benefit from having, like most broadcast companies that stream their stations, a corporate parent with its own large sales organization. On the other hand, ACCURADIO is probably in a stronger position, both in terms of audience and monetization, than the most of the truly 'small webcasters' (i.e., under $1.25 million in revenue, typically niche-appeal brands) that are most at risk of survival under the CRB decision.
"We’re kind of uniquely in a middle category, and one of the options we’re looking at is to focus our growth efforts going forward on CANADA and other countries where the royalty decisions are more reasonable," he continued. "Decisions like JOEL SALKOWITZ’s point to the fact that the CRB decision, if not modified by a peace offering to small webcasters from SOUNDEXCHANGE, will lead to a drastic thinning-out of the medium and a strong impediment to future new entrants. And that will be bad for webcasters, musicians, independent labels, and consumers alike."