More on internet radio

For anyone who might be unclear about the effect of the new fee structure recently set by the Copyright Royalty Board on small internet broadcasters, let me draw an illustrative parallel. It's not a perfect analogy, but it should give you a rough idea of the problem.

Let's say you're in a band. For the last year or two, you've been playing at a club called "The Royalty Lounge", and charge $5 a head to get in. You've agreed to give the club a 12 percent cut of your door proceeds; each week you average about 100 people, so you pay the club $60 and split the remaining $440 with the rest of the band. Fair enough, and simple too.

Now one day the club owners have a meeting and decide they're not getting enough money from you. Instead of a flat percentage, they want you to pay them a fee of 12 cents per song per person for every song you play. So the first thing you have to do is count the exact number of people in the club during each and every song in your set (which is a pain because it adds a layer of record-keeping you didn't have to deal with before), and tally up all the figures at the end of the night. But let's assume for this example that it averages out to the same number of 100 people. You play four sets of ten songs each, which means you owe the club 40 x 100 x 0.12 = $480, which is 800% more than you had to pay previously! That leaves you only $20 for yourself and the band.

Now let's take the analogy one step further, and add this wrinkle: due to increased competition from other clubs who don't charge a cover, "The Royalty Lounge" decides it's going to become non-commercial, which means that you can no longer collect the $5 entrance fee, so you now have no income whatsoever. But, at the end of the night you still must pay the club 12 cents per song per person. How long could you and your band survive under these conditions? It wouldn't be long before you were forced out of business.

This is the position that small internet broadcasters find themselves in as a result of the new CRB rules. I may seem a bit reactionary about the sinister motives of the RIAA in this matter, but there's no question in my mind that this is anything but a coincidence. The music industry was totally blindsided by the mp3 phenomenon back in the Napster days, and is determined to avoid any loss of control over their "product" as technology continues to change the way music is made, distributed, and consumed. Sure, they want to keep selling you CD's at inflated prices, but despite outward appearances it's not about the money from webcasting fees; killing off internet radio is an attempt to turn back the clock to the days when the major labels had total control over who could hear what, as Lucas Gonze says on his website:

To the major labels, revenues from webcasting royalties are not significant in comparison to revenues from the iTunes store and comparable online distributors. The iTunes store, mainly. If the webcasting industry disappears from the face of the internet, that is an acceptable level of collateral damage as long as revenues from premium services like iTunes rise enough.

Lost in all of this is any concern whatsoever for the public's exposure to new and eclectic artists, or for independent commercial-free stations that play what they want to play without pressure from labels or advertisers. The music industry wants whatever remains of internet radio after this debacle to become a boring corporate medium overrun with ads, mediocrity, and payola -- just like commercial broadcasting is today. And their lobby is powerful enough that they just might get away with it.

UPDATE:

A recent development offers some hope; last Friday, Rep. Jay Inslee (D-WA) introduced legislation co-sponsored by Rep. Donald Mazullo (R-IL) and captioned "H.R.2060, The Internet Radio Equality Act" which would set aside the flawed CRB decision, establish an equitable fee schedule on a par with other radio services, and keep independent voices from being silenced.

Today (5/1), webcasters will be converging on Washington for a "Hill Walk" to make members of Congress aware of the measure and petition their support. If I were closer and physically able, I would be there -- but instead I've done what I can do, which is to contact my own representative in the House, Rep. Louis Gohmert (R-TX). He sent me this reply:

There are many Stations in East Texas that are operated by volunteers and radio enthusiasts that are harmed by the CRB's ruling. It is my hope that Congress will exercise oversight in this matter and come to a resolution that ensures these Stations will be able to continue to offer listeners a broad range of music and program content.

All right! So it would appear that Louie "gets" the issue and is on board; with any luck there will be enough noise from the general public that this legislation will move forward. If you'd like to help, see here for details, including links to write your Congressperson.

Ask them to please support H.R.2060, The Internet Radio Equality Act. Thanks.