We are writing to clarify several issues raised by your article "Web Radio's Last Stand," which discusses the recent arbitration decision setting royalty fees to be paid by webcasters for using sound recordings. As you might imagine, this is a complex issue, one that resulted in more than two months of hearings in which more than 50 witnesses testified. And it is also an extremely important issue to record labels and artists. Simply put, we want Internet radio to succeed. Given that labels and artists receive royalties from webcasters -- as opposed to traditional radio -- we obviously want webcasters to flourish. The opposite conclusion just doesn't make sense. In fact, these royalties will be an important stream of income for many small labels and artists. And, contrary to the statement in the article, artists get 50 percent of the royalties by law.
During the last three years after the DMCA took effect, we sought to engage webcasters and encourage them to sit down with us to resolve these issues. Many did -- we signed more than 25 deals with individual webcasters. But many more did not. Instead, they chose to sit back and use recordings without paying a dime. Believe it or not, the law gives them the right to do this. Webcasters don't have to pay until an industry-wide rate is set. As it turns out, that rate won't be set until almost four years have passed since the time the law was enacted.
Other webcasters met us with a much more aggressive tactic. They, their lawyers, and their trade association, DiMA, exhorted webcasters not to do deals with us. Instead, they signed up expensive lawyers and economists who they said were skilled in getting low rates in an arbitration, promising webcasters everywhere that the arbitration would be to their benefit. The result was a multimillion dollar arbitration exercise that webcasters are now complaining about -- even though the final rate was almost twice as close to their proposal than to the proposal of the labels and the artists.
A couple of other things. The compulsory license for webcasting was not just about protecting labels and artists from digital copying. It was much more about ensuring fair compensation to the creators of the recordings upon which webcasters have built their business. Doesn't it seem fair that a company using someone else's property should pay for that use? Most webcasters pay huge sums of money -- many times their revenues -- for bandwidth, marketing, hardware, software and other things necessary for their business. If they can pay for all these things, they surely can pay for the single most important asset they have -- the recordings that labels and artists created at great risk and expense.
Again, labels and artists want to work with webcasters. They want webcasters to succeed. And they deserve to be compensated fairly for the use of their recordings. Evidence from both the marketplace and the arbitration demonstrates that all those things can occur.
-- Steve Marks, senior vice president for business and legal affairs, the Recording Industry Association of America (RIAA)
I am one of those small webcasters mentioned in the article "Web Radio's last stand."
I have long felt that we should be dealt with just like a broadcaster because that is what we do; we do not distribute our music in a way that would result in a copy. To that end, I have written both my senators in hope of gaining support in Congress to amend the CARP fees accordingly. I had to shut down a couple of months ago until I can raise enough money to make ASCAP and BMI happy, and then much more on this station could kill it off permanently. Like most new endeavors, it started for me as a hobby and grew into a part-time "job" -- maintaining broadcasts and setting up playlists and all that goes into running a decent (albeit small) Internet radio station.
My main point is this: We need to make sure that Internet radio continues to be a source of discovery for folks and a viable broadcasting medium as we move forward. I agree that right now the quality is not high, but if folks lose interest in running their stations or get "scared out of" starting an Internet radio station, the technology will never improve, and I think that it should be allowed to flourish as TV and radio did when they were new. This technology could be our generation's contribution to technological development and indeed could be as profound as TV and radio were in the early 1900s.
One thing you can do, apart from the possibilities mentioned in the article, is to support your favorite Internet radio station! Send a donation of any size ... it all helps.
It's literally up to all of us to determine the fate of this medium, both the listener and the content provider.
-- J. Mike Needham
The purpose of the Digital Millennium Copyright Act and associated legislation was not just to compensate copyright holders for potential losses due to illegal copying. It was also to recognize a copyright for the performers of music; a right that is recognized in virtually every civilized country other than the United States. Performers deserve compensation for the rebroadcast of their intellectual property just as much as do songwriters.
Predictions of gloom and doom for webcasters are overstated. There is a real and substantial cost to stream audio over the Internet for the webcaster; the figures I've seen put it at around $.07 per hour per stream. Assuming 15 songs per hour and the highest rate set by CARP, the additional cost to the webcaster for payments to performance copyright holders would be $.02 per hour. No doubt it's a burden that webcasters don't want to bear. But musicians have been bearing the burden of being ripped off by broadcasters since the dawn of radio. Information may want to be free -- but musicians need to eat.
-- Robert Levine, chairman, International Conference of Symphony and Opera Musicians
As a 30-year veteran of the music business, I must say that I am totally astounded that anyone is falling for this BS. Major labels pay through the nose to have their products played on traditional radio. From traditional radio you can make a cassette, DAT, or MiniDisc copy and put it in your computer, turn it into an MP3 and join Napster. Yet no label is trying to get traditional radio to pay for the use of their product. It's the other way around. Has anyone heard of payola? It is now called radio promotion, and it costs labels nearly $500,000 per major release. The stations DO NOT PAY THE LABELS! THE LABELS PAY THEM!! Is that clear enough? If their product is played on Internet radio it is exactly the same kind of promotional push that they would receive (for pay) from traditional radio. I don't see the difference. I can make a copy of a $250,000 video from MTV and give copies of it to my friends, but if I copy one song from the Internet, I'm a criminal? Who's kidding who?!
This is a multinational corporate enterprise flexing its considerable muscle (especially in light of their Capitol Hill shenanigans) in public. The people are being fooled. Don't help it along by printing the lies their publicists send you.
-- Steve Merola
Few industries have become greedier in recent years than those seeking to suck copyright royalties in perpetuity from everyone they can. This latest move to siphon the lifeblood out of Internet radio is something that the government should stop rather than support.
Little, and even not-so-little, Internet radio stations have shallow pockets, or no pockets at all, and this DMCA copyright proposal is the latest attempt at authorized theft by the powers that control government by their corporate "gifts." It's time the U.S. Department of Justice stepped in, said "enough is enough," and stopped these robbery attempts. The airways and cyberspace are public domain, not the private fiefdoms the greedy seek.
-- Scott Hessek