Music fees - How much should we pay?

[Groove1670]

Congessman Jerrold Nadler a democrat from New York
has decided that radio stations should pay a a fee directly to artists for playing their music— adding to the fees we already pay to music licensing organizations.

#1 - Has any of these people (Congress) ever had a real job, made payroll, paid bills, or operated any type of business. Small market radio (small business in general) is fighting to stay alive. I invite Mr. Nadler to spend a day at my business to see how the real world is.

#2 - How much money has artists and record folks made because we played their records. Maybe we are due for some retroactive compensation. By the way, radio is still the top choice for listeners to discover new music.

#3 - Let the free market decide what will happen with music fees.

#4 - Quit whining Pandora - If you claim to have this large audience. Your share of music payments should be in accordance to your audience. BTW you are not broadcast radio, and should not fall into our category. For a small market station, we serve our community. Let the artists ask for a larger share of the pie from the music licensing
organizations.

#5 - We are not Pandora - Quit putting us in the same class. According to "P" we are dying, and we will have a very small share of the market.

 

[Casey]

The idea is to tack royalties onto web streams of broadcast radio temporarily until an industry-wide solution is reached.
http://nadler.house.gov/sites/nadler.house.gov/files/documents/NADLER_153_xml.pdf

This is not what Pandora wants. Pandora's idea of leveling the playing field is to have their royalties lowered. This bill wants satellite and broadcast to pay more in royalties and doesn't lower Pandora's at all. That doesn't help Pandora and in fact Nadler criticizes Pandora. It wasn't that long ago that many radio groups tried to come to some agreement by offering to pay what, 1%? It was foolish to insult the bear (music industry). Now they are going to go for all they can. Better hope it doesn't truly turn out to be what Pandora pays. That's 70%. I think this bill is dead from the start, but the debate is far from over.

 

[Groove1670]

Pandora's idea of leveling the playing field is to have their royalties lowered.

Small radio stations will be pulled into this battle, a new rate structure will benefit them.

 

[Groove1670]

I think this bill is dead from the start, but the debate is far from over.

I agree.

 

[TheBigA]

The fact is there is no fair way to come up with a new royalty. Because what they're doing is taking something that had been free and placing a charge on it. I challenge people to come up with examples where that has happened.

I think what we have seen, by the example of the digital royalty, is that leaving the rate up to a group of copyright judges isn't good for anyone. The digital royalty has almost killed internet radio, with rates set on the basis of revenue rather than profit. Place those same royalties based on the same methodology on OTA radio, and you have the end of an industry.

I believe the Big Machine-Clear Channel deal should be the model for this kind of royalty, where OTA gets a break in digital royalty in exchange for a small OTA royalty. Small market stations would be exempt. And the government should get back to what it does best: doing nothing.

 

[Surfer]

Personally, I'd rather see no royalties paid at all. Radio promotes the artist to increase album sales. If they can't do that, both the music and radio business needs work...badly.

 

[TheBigA]

Personally, I'd rather see no royalties paid at all. Radio promotes the artist to increase album sales. If they can't do that, both the music and radio business needs work...badly.

I think we're all starting to see that the record labels are no longer in the business of selling albums. They're in the licensing business. They own copyrights, and radio stations want to use them. Artists, on the other hand, benefit from air play in terms of concert ticket sales and career development.

 

[Goat Rodeo Cowboy]

#3 - Let the free market decide what will happen with music fees.

"Free Market" has become an overused cliche in our conversations today. If I am growing a field of tomatoes and there are potential customers putting together meals, we have a chance to see 'free market' at work. I have a field of product that will rot on the vines if I do not find a way to market them, and there is a village full of people who will become hungry and/or unhealthy if they do not acquire suitable, tasty, healthy food. At some point... we find a price that I am willing to accept and a price that the hungry are willing to pay. Both sides have something at stake: I lose my investment in seed, fertilizer and labor if I fail to find a buyer. The consumers lose their enjoyment of life and maybe their health and their ability to do daily functions if they do not acquire food. THAT is a market!

The current music fees battle lacks the same kind of elements of the market place. Will the music spoil in the field if not picked? Will your children grow up with a reduced I.Q. if you do not feed them a minimum daily requirement of music? Music Licensing is more of a wants-and-wishes option for everyone involved.... thus it does not seem the fit the playing field of "The Free Market".

 

[TheBigA]

The current music fees battle lacks the same kind of elements of the market place.

I agree. The music industry has been operating as a government-sponsored cartel, using MusicFirst and the Copyright Royalty Board to impose excessive royalties on internet and satellite broadcasters for 15 years. If I don't like the royalty rate set by the CRB, there is no recourse or competitor. The rates keep increasing, while revenues aren't. Rates also increase when usage increases. The whole system penalizes success.

 

[Groove1670]

The rates keep increasing, while revenues aren't.

Pandora and other large webcasters will nee to change their business model. A subscription or ad based model will be needed.

If you claim to have millions of listeners, you need to pay music rights based on that number.

For a large webcaster to assume they should have the same rate as small market station with a population of 15,000 well......

A message to the large webcasters: Time to end the free streaming option. and time to generate revenue.

Because of a poor economy we have decided to offer everything a "loss leader", and music delivery options and services have jumped on this bandwagon.

 

[TheBigA]

The rates keep increasing, while revenues aren't.

Pandora and other large webcasters will nee to change their business model. A subscription or ad based model will be needed.

If you claim to have millions of listeners, you need to pay music rights based on that number.

Pandora IS an ad-based model that also offers subscriptions without ads.

The problem is the RATE increases as the number of users increases. The rate should be consistent regardless of number of users. In fact, there should be a discount for a larger operator. Large advertisers get discounts on ad prices. That should carry through to royalties. If revenues increase, then the amount of royalty will also increase. The value of the song stays the same regardless of the number of users.

 

[Groove1670]

Pandora IS an ad-based model that also offers subscriptions without ads.

Full disclosure, I have never listened to Pandora. How many units are they running in a market per hour?

If they are inserting 2 minutes of inventory or less per hour, the revenue is probably not there.

A subscription base model is probably going to be tough (I don't know maybe the subscriber base is good) with so many choices available.

Only time will tell.

 

[TheBigA]

If they are inserting 2 minutes of inventory or less per hour, the revenue is probably not there.

The problem isn't Pandora. The problem is the way the royalty is being officiated by the CRB and MusicFirst. Pandora is paying more than 50% of their revenues to the music industry. They're not looking to dodge their obligations. But when you look at this specific royalty compared to all the other ones, the music royalty seems to be uniquely unfair. As I said, there is no competition, there is no recourse, and the agency that collects the royalties is owned by the recording industry. It's a cartel.

 

[Casey]

The problem is that artists and their labels feel they are entitled to 100% of the profits made by anyone who uses their music because it should be illegal to make a cent of profit off of someone's work. If those companies don't turn a profit, then they have a bad business model. Either way they are never paying enough. In fact we should tax ISPs and Google so artists can get paid again. In addition we should have our government subsidize music and pass a much more powerful version of SOPA. Why? Because all artists deserve a decent living, because they work hard or worked hard creating a song at some point in their lives and deserve to be paid forever.

I have been discussing this with a number of independent artists/labels on other boards and industry blogs and this is their mentality. It never ends. In some debates artists admit they think a "decent" payout per song is $0.10 per play by Pandora and Spotify (they always group them together). The music industry is rapidly going from crazy to complete insanity.

 

[CTListener]

[A subscription base model is probably going to be tough (I don't know maybe the subscriber base is good) with so many choices available.

Only time will tell.

Until every online music streamer is behind a paywall, the subscription-based model will struggle. Look at the trouble newspaper websites are having. Nobody's going to pay for your content, no matter how in-depth and well-written, if local TV is covering the same stories and giving its coverage away for nothing on its websites.

 

[willdav713]

I think a surcharge should be placed on I-Tunes, Storage Media, and Blank Media, have the fund go to the FCC and have it dispersed equally to the record /TV companies, like they do with Universal Service with Telephone Services. That way, royalties can be compensated, without hardship. But it is the Government, and they don't like simple solutions, and that goes for both sides of the isle.

Rather it be 9-9-9 or Patient Affordable Care Act.

Yes both sides of the isle, I will elaborate further in the next paragraph.

The OP mentioned a Democrat from NY, There is at 2 Republicans that probably cosponsored, Lamar Smith R-TX, and Orrin Hatch R-UT, and another Democrat Pat Leahy D-VT.

And Smith's bills on this are worse for instance SOPA, he drafted it.

Also, Lamar Smith is in my district, I will be voting for his Libertarian opponent.

 

[bmcglynn]

Pandora IS an ad-based model that also offers subscriptions without ads.

Full disclosure, I have never listened to Pandora. How many units are they running in a market per hour?

If they are inserting 2 minutes of inventory or less per hour, the revenue is probably not there.

A subscription base model is probably going to be tough (I don't know maybe the subscriber base is good) with so many choices available.

From what I understand, Pandora is doing 2 minutes/hour, or assumably 4 units/hour. I originally thought the revenue was not there, but found that to be not true. Since they are a public company, their financial disclosures (from the IPO and subsequent filings) show that they are doing quite well on the revenue side. They really only have a cost issue where there is a single supplier for music rights.

To see their performance and compare to radio, you'll need to normalize radio rates (national and local) to CPM and compare against what Pandora gets on a CPM basis. All the necessary data is available and once you do the math, you'll find that Pandora gets roughly the same CPM per hour with fewer units than radio gets with 2-3x the units. This says that they are ultimately doing well by the advertisers perspective to get that sort of premium on their inventory.

Online media has a unique advantage to terrestrial radio: a 1:1 relationship with the listener's device. Using this, Pandora targets ads to the listener and can report precisely on how many ads are abandoned (channel changes), as well as transacted on (when listening at a computer). This provides high value to advertisers for accountability, plus has the "coolness" factor to get the premium.

Brian

 

[Casey]

Pandora has visual ads as well.