The battle over Web radio continues


Salon Staff
April 17, 2002 11:30PM (UTC)

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Because Steve Marks has named the station I manage, KSDS-FM, Jazz 88 in San Diego, I feel compelled to reply. Mr. Marks did call me after the New York Times article was published, and it was Mr. Marks who estimated that KSDS's annual royalties under DMCA would be $51 per year. I told him that it was not the money that would prevent KSDS from continuing its webcast.

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The reporting of up to 18 fields of information on each song is the most daunting aspect of the proposed rules for a college station like KSDS, which is not funded by the Corporation for Public Broadcasting and is not an NPR affiliate. (A side agreement was negotiated with the RIAA for CBP funded and NPR stations.) Our jazz library includes approximately 250,000 songs, many of them still on vinyl, and all available for airplay. To build a database of all these recordings containing all the required information would take at least a year and require additional staff.

KSDS operates with a staff of four full-time people. Our volunteer air staff can't be expected to manually enter all the required data for each song and still present a professional-sounding program.

Many local listeners availed themselves of the webcast to hear KSDS and we also enjoyed hearing from listeners around the world. One of our most frequent requests is for information on where to purchase the recordings heard on KSDS. We're happy to provide catalog numbers to help listeners find the music they are seeking. We believed we had a win-win situation with the recording artists and companies. The loss of the KSDS webcast is a lose-lose situation for the radio station, its listeners, and for the artists whose music will not be presented to a worldwide audience.

KSDS also complained to Mr. Marks that the DMCA's restrictions on playing more than two songs in row by the same artist would prevent the station from programming birthday salutes to artists, retrospectives of an artist's music, and profiles of various jazz and blues artists and composers. His answer was to just block those segments from the webcast. I would invite Mr. Marks to spend half of every day responding to e-mails from those Web listeners who want to know why they are excluded from these educational and informative programs.

There are few enough stations playing the honored 100-year history of jazz. Those that remain are primarily non-commercial educational stations at colleges and universities. It would be a shame to deny access to America's only indigenous musical art form to those who can only receive it via the World Wide Web.

-- Mary Woodworth, Station Manager, KSDS Jazz 88.3 FM, San Diego

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The impending fees and regulations are indeed a very hard burden for radio stations such as the one I help operate.

WMBC is the radio station for the University of Maryland, Baltimore County (UMBC). Currently, our broadcast options are Part 15 AM (covering only our campus) and Internet broadcast. We use Icecast for Internet broadcast, because the fees charged by RealNetworks are well beyond our budget. We are trying for low power FM, but that is a whole different argument.

It's important to realize that WMBC is completely non-profit. We can't have any advertising, and therefore don't have any "revenue." We get a (very) small amount of money from the university each year, and attempt to raise some money with our recording studio, and sometimes by putting on concerts with local bands.

We're also completely staffed by volunteers. College radio is difficult, because the people change every few years, and you're not always guaranteed to have a large bunch of really dedicated students. Forcing such a group of people to keep track of as much information as the impending measures will require (apparently 18 pieces of information per song!) is too heavy a burden for such a staff. Combined with the financial hit, it's too much. "Sure, we'd like to try to get more listeners, but we can't afford it." The bandwidth is provided by the university, but these fees would punish us if we tried to grow.

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Finally, a large portion of the music played on our radio station is released by labels not affiliated with the RIAA. Does the RIAA expect us to pay them to play this music? That's completely unfair, but this question hasn't been answered anywhere. Even if for some reason this was expected, independent CDs wouldn't necessarily have all of the little categories to report that commercial, mainstream CDs do. Bar code? No.

To clarify, WMBC does pay a small fee for the right to broadcast (airwaves) artists. This is a flat fee, and organizations such as BMI require us to report a reasonable amount of information for three days out of each year, which they select. We would not have a problem with doing something like this for Web broadcasting. Obviously, independent radio stations want to see the artists they play succeed and be fairly compensated. But the current proposal is terribly unfair and shortsighted.

-- Ray Shaw

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Steve Marks' letter seems very disingenuous. He claims that "they [Artists] deserve to be compensated fairly for the use of their recordings." But according to the original Salon article that he was referring to, Internet radio stations already compensate the artists, the same way that traditional radio stations [Payola aside] and nightclubs compensate the Artists -- by paying ASCAP and BMI fees. Those fees reimburse the authors of the songs at industry standard, acceptable rates.

Steve is talking about adding an additional "usage tax" simply because the medium is different. The real battle seems to be to prevent anyone from getting a toehold in a new medium by making it too costly to run an Internet radio station. This then ensures that RIAA members (who currently own most of the traditional mediums of distribution) will be the only ones who can afford to operate in the new medium.

If this was simply about paying copyright holders for usage of the songs, ASCAP and BMI fees already do that. If this is not about leveraging control of a new medium, why is there a need for an additional fee for streaming Internet audio? This is not a rhetorical question. I really would like to know why there is a need for new fees? As pointed out in the original article, streaming audio is not an "exact digital copy" of the original, but is a low quality reproduction that can not be easily captured and saved by the end user. Is it the RIAA's position, (or SoundExchange's, or Steve's) that ASCAP and BMI fees don't adequately reimburse the artists and copyright holders? If this is the case, perhaps the RIAA would be better served by changing those rate structures, rather than creating new regulations and organizations to administrate a new fee.

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As an owner of a traditional book publishing company that gets all of its revenue because of copyright and intellectual property laws, I am very aware of the impact that piracy and theft have on IP holders. I feel very strongly that creators and owners of copyright should be fairly reimbursed for usage. But it bothers me when corporate monopolies disingenuously use copyright arguments as a tool to maintain and extend their monopolies. This seems to be the case here.

-- Jeremy Lassen, Owner, Night Shade Books

As one of the small, independent Web radio operators who was forced offline by the copyright-enforcement cartel, I have to disagree that bandwidth costs were the problem.

On my DSL, I was spending $100/month, which, with a 640K uplink speed, let me run 10 low-bit rate connections. Assuming that all 10 slots were filled 24/7, at their $.004 rate per five minute song, that comes to almost $900 per year in royalties, in addition to the approximately $1000 compulsory license from ASCAP/BMI/AESAC.

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Ridiculous! I just want to share some commercial-free music over my Internet connection. The record companies should be paying me to advertise their music... not the other way around.

The only fair way to handle this in my opinion is to allow a hobbyist license for anyone with less than 10 simultaneous listeners and no commercials; a compulsory $500 flat rate per year, which would cover all of the royalty agencies. I could live with bit rate restrictions if they are reasonable; say, less than or equal to 128k, although compression rates will most likely improve and make this a moving target.

It is also essential that webcasters be allowed to use the interesting features of the Internet, such as requests and feedback, which are currently not permitted. Perhaps the requirement can be that requests must take at least two hours before they can be played, unless they were already in the play queue.

I would also propose that there be a further reduction on the royalty rates for any webcasting site that has links from the list of songs that were played that take the listener directly to a site where the listener can purchase the CD. Most of the music that I would want to play is in print and available from Amazon; I would be happy to add a link to bring it down to $250/year.

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-- Mark Lehrer

I'm really amused at Mr. Marks' comments about how much Internet radio broadcasters spend on their bandwidth, hosting and overhead. I've been operating my domain for almost five years, with streaming audio on the domain for about the last 15 months. If you want to know what I pay out, here's the breakdown:

Hosting: Free. I co-own the domain and we sub-lease space for other domains which in turn break us even. We make absolutely nothing on our hosting.

Bandwidth: Free. Essentially, the above hosting pays for our bandwidth usage as well as our hosting. So, once again, we host enough sites to just break even.

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Equipment: Totally out of pocket, mostly "hand-me-downs" and what was once considered "state of the art" back in 1995, now considered "throw-aways" by the firm I work for in real life. We pay for all our equipment from income coming from our other jobs.

Audio: In just the last 15 months, I've purchased 94 CDs. All within a price ranging between $25.99 [Celtic Frost -- LIVE Wienheim 1985] and $6.00 [Slayer -- Reign in Blood -- used]. That averages out to about $1500.00 in CDs, or roughly $100 a month since I started broadcasting. Also all out of pocket, paid with funds from my "real job".

I am not a "true" broadcaster. I am a hobbyist. I play audio to an audience that has never reached the 25 connection limit, having peaked once at 19. I stream at 24kbps in mono. It does a definite injustice to the quality of music, but I still see the same IP addresses connecting day after day. These people are fans who cannot find their favorite heavy metal music played on the local radio or other Internet radio stations.

We're not thieves, as some would lead the public to believe. I have in my possession receipts for my CDs, and the CDs from which all my MP3s were created and archived on hard disk. CDs for which I paid a good deal of money, when I could have alternatively "downloaded" the music I stream from any number of sources.

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And, thanks to the current state of affairs regarding Internet radio, my station has gone private, and my fan base will only grow through word of mouth, never exceeding the 25 listener limit, due to bandwidth constraints I set on myself because I just break even.

I do this for fun, entertainment, and because I like to share with my friends the music I like to listen to. If it was for the money, I'd shut down my equipment and start banking it.

So, that's where the money comes from, and that's how it's spent, at least that's how it's spent by a hobbyist, one of thousands, and one who believes it's his right to enjoy what he pays for, just as much as you believe I should be paying to enjoy it... even though I paid for it once already.

-- Phil Benton

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Claiming RIAA and SoundExchange are separate entities seems stupid when you do a whois on SoundExchange.com. RIAA is both the administrative contact and the billing contact. Of course, most telling is the registrant, John L. Simson, an individual acting on "behalf" of SoundExchange and who also happens to be Senior Director of Membership, Recording Industry Association of America.

-- Rich Pulham, EmeraldBayRecords.com

I am writing regarding Steve Marks' recent letter regarding the royalties to be paid under the DMCA recently set by the CARP. Throughout the letter he manages to entirely miss the point, he repeatedly states that 50 percent of the royalties will go to the artists, then justifies all sorts of costs being taken out of the royalties. The point is that the rate that the royalties have been set at exceeds the amount of revenue generated by webcasters (often by 400 percent or more) and that they will simply go out of business. Therefore there will be little money available for distribution to the artists and what money there is could easily be gobbled up by the fixed costs imposed by the RIAA's costs to enforce a law it lobbied for in the first place. What we would be left with is big broadcasters that enter into separate, more restrictive, agreements determining what they can and can't broadcast in return for more reasonable revenue based license fees, and broadcasters owned and controlled by the records companies. The only party to gain out of this agreement are the record companies who get a huge boost in their bid to make money at the expense of artists and music consumers alike.

As a side point a lot of people miss the fact that the DMCA and the RIAA are only applicable in the United States and they do not cover the rest of the world. If I were to broadcast here in the UK, I would have to pay a fee to the Performing Rights Society based on between 3 and 5 percent of revenue, with a minimum of #1,050, which is affordable considering the other costs involved in webcasting.

-- Ben Robinson, Handsome Dog Records

I currently run a tiny Shoutcast station through my home PC as a hobbyist. After reading the debate over the recent royalty proposals, I have a few thoughts of my own to add to the fire...

1. Although many hobbyist webcasters broadcast through larger stations such as live365, there are still a fairly significant number of webcasters who use free software such as Shoutcast. With the new royalties coming into being, how does the RIAA/CARP intend to track the usage of these webcasters without violating current privacy laws. (i.e. sniffing the packets sent to and from there computers)?

2. As a webcaster I am being required to provide what I can only describe as an unreasonable amount of tons of extra information about my listeners. I do not have the time to track that kind of information about my listeners accurately, as currently I do little to no maintenance on the Shoutcast broadcast itself. How are we, as hobbyists, supposed to pay for: #1: the royalties themselves, #2: the time and effort it takes to track the information required by the law, and #3: the extra maintenance it would take.

3. Many hobbyists use a local ISP connection that is being paid for as a residential Internet connection, $40/month on average for a high speed connection. On average, I have two listeners on at all times... that equates to around 17000 listener hours a year... this would equate to royalties of in excess of $2000. This far exceeds the price of bandwidth.

That's all my thoughts for now... I hope other hobbyist webcasters speak up as well.

-- Thomas Stratford

As an Internet radio programmer at both MusicMatch and Onradio between 1999 and 2001, I had meetings with the key attorneys from DiMA and the RIAA. Both sides were as bull-headed and confrontational as Israel and The Palestinians. Having been there, most of what Steve Marks says is correct. Per the issue of paying for bandwidth, my personal experience was that dot-coms were paying what I considered highway robbery amounts to servers which, at the time, was the overwhelming obstacle to survival, as Marks suggests. Many, many programmers such as Onradio.com went bankrupt (before CARP rates) "without paying a dime" for all the copyrighted music they served (even though they had agreed to pay, but never did).

There are some programmers who in fact did not pay bandwidth costs at all because they were/are being supplied for free which creates an unfair business advantage for them versus those who have to pay for bandwidth. Ironically, one of those programmers who had (has) an unfair competitive free-bandwidth advantage has consistently complained the loudest about the RIAA! Perhaps these webcasters who do not pay for bandwidth are the ones for which CARP is now the "bigger cost?" While the royalty rate may have ended up too high, I agree that high rates resulted partially from ill-conceived and confrontational negotiating positions by DiMA, and the RIAA.

Finally, readers will say that a webcast is a promotional tool and thus should negate such royalty payments at all. I believe that will be true many years from now. Unfortunately, the top record promotion firm in the world, McClusky Associates of Chicago, and many major labels, tried in vain through 2001 to convert webcasting to a provable promotional model. To date, it has been a near total failure. The CARP assertion that there were little to no promotional benefits to the labels also helped lead to these high rates. I believe Web sites and the Internet media could have helped labels better promote sales of music (and thus lower royalty rates), but instead they chose to fuel the rise of free MP3s and to this day continuously portray themselves as anti-label/anti-RIAA. The Internet community is as much responsible for this mess as the music industry.

-- David Bean


Salon Staff

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