Could Web Royalty Deal Lead To Radio Performance Fee?
July 8, 2009 at 3:50 PM (PT)
Not everyone is happy with the just-announced royalty deal between SOUNDEXCHANGE and "Pureplay" webcasters (NET NEWS, 7/6). In a column on TECHDIRT.COM entitled, "Why Should Webcasters Pay 25% Of Revenue To Promote Musicians?" writer MIKE MASNICK asserted that the deal is too generous to the labels, while at the same time could be used against them in the looming performance rights battles.
"Royalty rates that traditional broadcasters do pay (to composers/songwriters/publishers) averages out between 3 and 4% of revenue," he wrote. "So ... a reasonable rate to pay performers ... would start around that same 3 or 4%. Even that would be a pure bonus for performers who are used to getting nothing as a royalty (tax) from radio. But... no. The agreement is an astounding 25% of revenue as a bare minimum, with a requirement to kick-in $25,000 just to be a webcaster at all.
These rates, certainly, will likely influence any eventual 'performance right' that's added to terrestrial radio, and could significantly jack up the cost of running a regular radio station as well
"PANDORA claims they're happy about this because it keeps PANDORA in business ... But it's a stunningly large percentage of revenue that will make things prohibitively expensive for most webcasters to really stay in business. You now have to have huge margins to get anywhere in a notoriously competitive business.
"Who loses? Well, just about everyone outside of SOUNDEXCHANGE/RIAA. PANDORA is sharply curtailing its free service, and if you listen to more than 40 hours per month, you'll need to start paying. Most webcasters now have a huge expense that will make it difficult for many of them to remain in business. Musicians are severely harmed as well. While a few top musicians might get a new royalty check from SOUNDEXCHANGE, most musicians will now get less exposure, making it that much more difficult for them to put in place the successful modern business models needed to succeed today."
Some might say the NAB and traditional radio stations also make out nicely ... but even if the radio stations are happy in the short-run, it's a bad deal. These rates, certainly, will likely influence any eventual 'performance right' that's added to terrestrial radio, and could significantly jack up the cost of running a regular radio station as well."
Read the entire piece here.
What's more, while RADIO AND INTERNET NEWSLETTER Founder KURT HANSON hailed the deal, RADIO PARADISE Founder BILL GOLDSMITH told the Net newsletter, "This is hardly a victory for webcasters," GOLDSMITH said. "It perpetuates a situation where the ability for the Internet radio industry to grow and prosper is hampered -- to a nearly fatal degree -- by the record industry’s blatant attempt to recoup some of the money lost by their mismanagement of all things digital."