Just before the holiday break 2015 the CRB (Copyright Royalty Board) handed down the decision on new royalty rates for all webcasters. Prior to this decision there was a special CONGRESSIONAL LAW titled the “Small Webcasters Agreement of 2009” or SWA which made these insanely expensive royatly fees affordable and kept innovative programmers and new emerging artists on the air. (The SWA expired on Jan, 1 2016 at midnight ) They are now being SHUT DOWN by the tens of thousands.. Nearly 100,000 small webcasters will go off the air without YOUR help!
With this new ruling by the CRB there was NO provision for small webcasters and the prognosis is not good for about 100,000 United States small internet stations. The old rates under the Small Webcasters Agreement of 2009 (set by congress) were adequate, as long as you didn’t make over $1.25 million a year and had less than 5 million listener hours monthly. These NEW rates, albeit lower, apply to everyone and there is NO provision for the small webcaster. These new rates are effective January 1 2016, but we can change this if we act NOW!
Here’s how this insane system works:
The new royalty rates apply to EVERY COMMERCIAL BROADCASTER at .0017 per performance. If you had 1000 listeners on at all times, each song would cost you $1.70 to play. If you play 15 songs an hour, the royalties alone are $25.50 an HOUR! That’s $612.00 per DAY and $223,380.00 per year.
Here’s the reality:
In stream advertising rates are currently $1.69 per thousand impressions. That means if there are 1000 people on line and hear an ad (commercial), you make a whopping $1.69 (less 60%). That is the “going rate” nationwide. With 8 commercials an hour, (we will use 1000 listeners as a basis here). and 1000 listeners plus a 100% “fill rate” (meaning all 1000 listeners receive an ad), you would make $13.52 an hour, less 60% commission leaving $8.11 net revenue per hour.
It doesn’t add up and it’s designed that way:
Net Income is $8.11 minus SoundExchange royalties $25.50 = ($17.39)
That is negative income of ($17.39) per hour.. That adds up to a net loss of ($152,366.40) annually in negative cash flow.
No small business can survive this.
This does not include royalty rates from ASCAP, BMI, SOCAN or SESAC, music purchases, overhead, employees (really?), computer hardware, software, web and stream hosting costs..
AM & FM radio pays ZERO!! They are EXEMPT from these royalties. Could you imagine if an FM station had to pay over $2 Million in annual performance royalties for every 10,000 listeners in their market? The airwaves would be silent! The only difference between AM & FM and webcasting is how the audio is delivered. I don’t care how you monetize, a small webcaster can’t come close to breaking even under these rates and neither can AM & FM. (That’s why they’re EXEMPT)
We’d be better off sending our listeners each a check for $200 and telling them to go out and buy some CD’s
Webcasting is the only businesses where a large audience is far more likely to be a liability than an asset. Who would possibly want that?
This is crony capitalism at it’s finest. Internet radio was just regulated out of business in the dead of night just before the holiday break. We were told, ” you’re done.” It shouldn’t be like this. Everyone deserves to be heard.
RAIN news stated that deliberations were going on for two years.. Really? NO small webcaster knew.. No small webcaster was notified. NPR was notified, Pandora, Spotify, Sirius/XM, college and high school radio was represented as well. ( they receive special rates for royalties the small webcaster is not privy to)
The small webcaster was NOT represented.
Small webcasters were not represented because they cannot afford to be represented. If they could they wouldn’t need Small Webcaster Agreement of 2009 to begin with. If one’s future were being decided in a court of law one would at least get a court appointed attorney. But there’s no such provision in copyright court. That should be a eye opening concern – an entire segment of the industry is effectively denied representation in government hearings that decide their future. In my mind that ought to be grounds for a lawsuit. But of course if one could afford a lawsuit one could afford to have been represented.
What kind of insane, screwed up system is it where an organization does not have any way of knowing at all what their cost of doing business will be beyond two weeks into the future? How are any of these radio stations supposed to make any operational or business decisions when one doesn’t know what one’s expenses will be or even whether one will even be able to remain in business? Why isn’t there some law that requires advance notice? It isn’t like nobody knew that rates for 2016 would need to be set. What were these people doing? Why did they sit on their butts and wait until the very last minute with no announcement? Are they afraid that the small webcasters will go back to Congress before the decision takes effect as they did in years past?
And of course this will kill niche formats and reduce opportunities for small and niche artists. The big corporate webcasters will just strike direct licensing deals with the major mass market labels. So new artists will not only have the usual struggle just to be noticed by programmers their music will be more expensive to play because they are too obscure to make it worth anybody’s while to cut a direct license deal. Most new and niche artists would gladly swap the pennies they get in SoundExchange royalties for wider exposure. It is the small and niche stations that provide such artists their best opportunity of getting airplay and exposure. And with small stations off the air those artists, even if they did prefer royalties over exposure, won’t likely get anything at all from SoundExchange. That will probably make SoundExchange’s bookkeeping easier not having to mess with tracking royalties for all those names that nobody ever heard of before except for freaks who listen to “pesky small” stations.
The end result is that major label music has less competition from unsigned artists. Despite their posturing and professed concern about “artists” the only artists the major labels are concerned with are those they have under contract. All other artists are long tail competitors and thus a potential threat. If an emerging artist can build up an audience and following without signing with one of the major labels – then what are the labels good for in a digital world?
The whole thing stinks from beginning to end from the lack of representation of small webcasters to waiting until the very last minute. Where is the oversight? Who holds these people accountable? It seems to me that maybe this needs to once again be brought of the attention of Congress.
We are asking congress to step in quickly and put an INDEFINITE STAY on the Small Webcasters Agreement of 2009 OR DISCONTINUE RADIO ROYALTIES altogether and represent the tens of thousands of small webcasters facing execution. All radio stations PROMOTE the artist being played.. It’s a trade off that has been in place for decades. This is reverse payola.. AM & FM pays nothing, why should anyone else?
The THOUSANDS of companies and radio outlets affected:
All shoutcast stations,
All icecast stations
All live365 stations
iTunes internet radio.
Windows Media Guide
Car radios and players on the internet..
The list goes on & On
The execution has started already with live365 shutting down operations, firing their staff and vacating their offices, January 1 2016. There’s still some time to save the rest of us, Please help! Sign the petition and save net radio.