Will internet station royalty fees be going up big time in 2016?

[gregg75]

I keep reading hints and predictions that internet station royalty fees are going to be going up, and drastically. If so, how much? If you ask me they are too high already. If my royalty fees doubled I would have to consider closing the station. They've already gone up twice (popularity) which is both a good and a bad thing. What are your views and thoughts on this?

 

[thelegacy]

Even Marvin from Stream Licensing says its a good chance its only gonna get worse. If it gets so bad the only thing you can do is to go part 15 micro broadcasting on FM. You may get out a few blocks which isn't much but on good Radio's even a 250 Micro volt signal @ 3 meters could go 1/4 mile. Plus there is a little known fudge factor of 1,000 Uv/M before the FCC will go after you unless your causing harmonic spurs from a dirty transmitter. This means you may be able to transmit 100 mW to 500mW on FM without hassle as long as you use a blank frequency between 88.1 (not 87.9) and 107.9 Mhz. Use http://www.radio-locator.com/cgi-bin/vacant as a reference point and a car Radio to make sure your chosen frequency is blank and check it once per hr for 3 months. Temperature inversions will cause far away stations sometimes 100's of miles away to come in. If you can't find a blank frequency you may have to go cough cough boo hiss AM. You can legally use 100 mW there from 530-1600 Mhz and there are AM Stereo transmitters however very few AM stereo receivers. You could then put up an outside AM antenna and your station could go more than 1 mile away. I don't know when there is another window for LPFM but you'd have to get an organization like a moose club to get a license under their organization. Maybe an organization that teaches students and you would be having to teach students about Radio a few hrs a day but you'd have a 100 watt licensed station in the process that could go 20-30 miles.

Its not fair the music Nazi's can ask for such high rates when the artists won't see any penny more than what they are getting now. Just another way to shackle the public to Top 40 and Rock N Rap trash.

I'm already gonna get a FM Transmitter to supplement my Internet stream but if it does cost too much I'll be forced to go micro broadcasting only. Otherwise you could order an offshore Shoutcast server for a monthly fee and broadcast to it (With A VPN) in hopes you'll never get caught. We truly are living the end of days.

 

[Casey]

It could get ugly. SoundExchange wants to keep building on their current rates. And not the reduced pureplay rate. They are seeking $0.0025 per play in 2016 or 55% of revenue, whichever is greater. It's unclear if small webcasters get a break or not.

This is quite honestly pure insanity. The biggest company in internet radio, Pandora, is currently paying $.00140 and they are still paying over half their revenue in royalties. This rate would be over 100% of their revenue. There wouldn't even be any adapting to the rate. Free, advertising-supported service would be impossible. Subscription services would have to exceed $10 per month, at which point they would lose all their subscribers. No one will subscribe to an internet radio music-only service at $10+ per month when Spotify is $10 per month. Internet radio will literally die at these new rates.

Hopefully the CRB will realize these rates are completely unrealistic and use a proposal from one of the various major services participating in the debate. They are asking for rates lower than what is currently in effect.

 

[TheBigA]

Hopefully the CRB will realize these rates are completely unrealistic and use a proposal from one of the various major services participating in the debate. They are asking for rates lower than what is currently in effect.

The problem with having judges set rates is it removes the free marketplace from the equation. The judges have no experience with music. They don't understand that right now, the basic value of music is free. Consumers want free music. On the other side, the providers are stuck paying rates that are designed to hurt success. The more someone listens to your stream, the higher your rate. That's counter to the rules of the free market. In a free market, you should get a discount if you're more successful. But judges don't think that way. That's why this whole system is bad for music, bad for broadcasters, and bad for consumers.

 

[thelegacy]

In other forms of business this would be considered a monopoly. The RIAA is indeed a monopoly or at least a duopoly. SoundEX, BMI, SESAC all part of the RIAA which is one single entity. Its the same as Cricket and AT&T even though they are made to look like different brands of cellular service. The reason the FCC would not allow T-Mobile and AT&T to merge was because the twin bells would then have a monopoly on GSM cellular technology in the USA. So too should happen with the RIAA it needs to be broke up and artists should have the choice to have their music available digitally. In fact there should be separate record labels for Digital and physical content. This way an artist would have to sigh two separate contracts to say have their albums made into a CD or on digital streaming services. This way the digital services would actually pay the radio stations to play their content.

I did read somewhere I think from a LinkedIn article where Pandora won a major case against one of these entities which could mean lower rates for all.

 

[TheBigA]

I did read somewhere I think from a LinkedIn article where Pandora won a major case against one of these entities which could mean lower rates for all.

Not exactly...just that ASCAP can't unilaterally increase Pandora's rate, and can't withhold some recordings. This was for the songwriting royalty, which is the lower of the two.

 

[davideduardo]

In other forms of business this would be considered a monopoly. The RIAA is indeed a monopoly or at least a duopoly. SoundEX, BMI, SESAC all part of the RIAA which is one single entity. Its the same as Cricket and AT&T even though they are made to look like different brands of cellular service. The reason the FCC would not allow T-Mobile and AT&T to merge was because the twin bells would then have a monopoly on GSM cellular technology in the USA. So too should happen with the RIAA it needs to be broke up and artists should have the choice to have their music available digitally. In fact there should be separate record labels for Digital and physical content. This way an artist would have to sigh two separate contracts to say have their albums made into a CD or on digital streaming services. This way the digital services would actually pay the radio stations to play their content.

The RIAA is a trade association, like the NAB in broadcasting or the AMA in Medicine. It lobbies for legislation favorable to recording companies and promotes their interests.

ASCAP, BMI and SESAC are performance rights collecting agencies for the writers and composers of songs. They collect fees for any public performance of their members' compositions, including radio, streams, restaurants and stores, stadiums and such.

The RIAA is not related to the performance rights agencies.

Sound Exchange is separate from all of these. It is an organization set up to collect digital performance rights per the DMCA and to distribute the amounts in a specific proportion to artists and labels.

The CD is nearly finished as a mass distribution. Artists are concerned with downloads and on-demand streaming for revenue.

Since even downloads are decreasing in volume in favor of on-demand services, there is no interest and little chance that radio would ever be paid for digital performances by streaming radio stations. That is where future revenue for music lies.

Note that AM and FM stations don't pay Sound Exchange for their non-digital performances, but they do pay for them on their streams.

 

[davideduardo]

I don't know when there is another window for LPFM but you'd have to get an organization like a moose club to get a license under their organization. Maybe an organization that teaches students and you would be having to teach students about Radio a few hrs a day but you'd have a 100 watt licensed station in the process that could go 20-30 miles.

If the protected contour for a Class A FM, which is 3000 watts at 100 meters is 17 miles, 100 watts at 100 feet is going to have useful coverage of only 5 to 6 miles.

And anyone can create an entity to apply for an LPFM. You don't have to seek out an existing one controlled by others.

Its not fair the music Nazi's can ask for such high rates when the artists won't see any penny more than what they are getting now. Just another way to shackle the public to Top 40 and Rock N Rap trash.

The current DCMA mandated Sound Exchange fees are proportioned between artists and the record labels acting as their representatives.

 

[TheBigA]

The thing to know about ASCAP & BMI is that they license the song. And their royalty is about 1/10th that of what SoundExchange gets for the same song. That is at the core of the disagreement. How is it possible that the creators of the song make so much less than the performers and their label? Part of the answer is the way in which those royalties came about. The songwriter royalty is negotiated. The performer royalty is imposed by judges. And that is the crux of the argument. Should royalties be negotiated or imposed? And when you have both methods being used over the same piece of work, you have issues. The RIAA likes the imposed royalty, as they would since they make more money. Everyone else wants to be able to negotiate.

 

[Music Lover]

If the greedy music industry makes streaming die, that will be the end of my family's radio listening days. We're definitely not gonna return to listening to AM/FM, that's for sure.

 

[davideduardo]

If the greedy music industry makes streaming die, that will be the end of my family's radio listening days. We're definitely not gonna return to listening to AM/FM, that's for sure.

The problem is that the "greedy" music industry does not make money.

The business model that worked for nearly a century was destroyed by downloads, and the industry is looking for any way to survive.

And, the bigger issue: if this board is called "Radio Discussions" and you have left radio and "not gonna return" why, exactly, are you here? Your statement sounds like the perfect raison d'etre for a troll.

 

[TheBigA]

If the greedy music industry makes streaming die, that will be the end of my family's radio listening days.

Expecting money in exchange for a service is not greed. You pay for the food you eat, you pay for the clothes you wear, the gas in your car, and everything else. Why is it greedy for musicians to expect you to pay for the music you enjoy?

 

[Music Lover]

And, the bigger issue: if this board is called "Radio Discussions" and you have left radio and "not gonna return" why, exactly, are you here? Your statement sounds like the perfect raison d'etre for a troll.

Timothy here. My wife, Mary, aka, Music Lover, decided to start posting here after reading the complaints in the AC/Soft AC forums about AC no longer playing Celine Dion, Michael Bolton, etc. She's working on posting some on-going lists in those forums of some non-AM/FM AC/Soft AC stations that still play them.

Also, she's been posting some music news in those forums. She posted some news about Josh Groban's new album, some news about a Bryan Adams concert on PBS, she has an ongoing discussion about David Cook's next album. That's the kind of discussions that listeners would like to read in these forums, not just the tech and business stuff you guys always talk about.

 

[Music Lover]

Timothy again. A new study talking about the optimal pricing for streaming: http://rainnews.com/new-study-what-is-optimal-pricing-for-streaming-music/

These poor economic times has caused average middle class American to seek out cheap options for their food, gas, entertainment, etc.

 

[TheBigA]

Cheap is what the public wants. The average middle class American seeks out cheap options for their food, gas, etc.

That's fine, and that's what AM/FM radio is, and endeavors to provide to hundreds of millions of people. You and your wife seek something custom, something personalized that suits your very particular taste. That's not cheap. Cheap is taking whatever you get.

So you want these online radio stations to give you the music you want, ignoring the fact that those stations you enjoy are struggling financially because of increasing royalty rates. Then you call the musicians greedy. Do you see the conflict here? The money from these royalties doesn't go to "the music industry." It goes to the artists, musicians, and their record labels to compensate them for the money they no longer make from CD sales.

What I'm saying is that people like you & your wife, and anyone else who has specific music taste that isn't being covered by ad-supported AM-FM radio need to take a more pro-active role in supporting the music you love. Not just be passive listeners, but active participants in the funding of that music and the services that make that music available to you. That means paying for it. Otherwise, it will go away. Understand?

 

[Music Lover]

Timothy here. It's not just about seeking out music that doesn't appeal to the MTV-crowd, it's about being fiscally conservative as well. Many people can't spend frivolously.

 

[TheBigA]

Timothy here. It's not just about seeking out music that doesn't appeal to the MTV-crowd, it's about being fiscally conservative as well. Many people can't spend frivolously.

Then you can't expect that the very specific and particular music you love will always be available for free. How much you spend is your business. But if you want to enjoy the product of someone's labor, you should pay for it. The article you linked said the average price is $5 a month. That doesn't seem too much for a month's worth of music.

 

[Music Lover]

The article you linked said the average price is $5 a month. That doesn't seem too much for a month's worth of music.

Timothy here. I think that's a reasonable price for someone who can afford it.

My wife and I like this guy's idea of tiered pricing and PAYG being options. https://musicindustryblog.wordpress.com/2014/10/31/why-its-time-for-a-streaming-pricing-reset/

PAYG is what my wife and I currently do, if the stream offers that.

And, by that guy's level of spending, my wife and I would be in the mainstream music fans level.

 

[TheBigA]

My wife and I can but there are some people who can't even afford that because high medical bills and and other more important expenses drain their monthly budgets.

If you read the comments to your linked article, it's pointed out that people will pay the cheapest option regardless of their ability to pay. That's not good. So the idea of 'pay as much as you can afford' is not very practical. People will take that to mean payment is voluntary.

The topic of this thread is internet royalties, and they are set by the government. Internet radio stations pay a set amount per song per user. It's only fair that their costs be passed on to the users.

 

[Music Lover]

the idea of 'pay as much as you can afford' is not very practical.

Timothy here. Sorry but my wife and I both think it's very practical. When you have to live on a limited budget, then you'll understand that.