You probably already know that the US Copyright Royalty Board is finalizing royalty rates for internet radio for the period 2006-2010. The premise seems noble: Raise royalty rates on the internet, so artists can make more money. The practical result of this royalty hike is most small internet radio broadcasters will be pushed to bankruptcy, leaving only the largest (and mostly consolidated) broadcasters left. Before we take a look at how this has gone down, here’s my take on this:

This is not about royalty money. Money is one of the most powerful tools of distraction in our society. The issue here is who will have the power to broadcast on the internet. Deregulation of media ownership is moving online, and by limiting who will have the legal right to broadcast music, the RIAA is attempting to control our tastes, and therefore protect their flopping sales.

According to the Copyright Royalty Board’s Final Determination – Docket No. 2005-1 CRB DTRA, Page 71, “SoundExchange was…an unincorporated division of the Recording Industry Association of America.” SoundExchange’s argument during these proceedings: “it would be inefficient for the Copyright Royalty Judges to select more than one agent to receive and distribute royalties.” “Only one party in this proceeding, SoundExchange, proposes that Noncommercial Webcasters should be subject to a rate structure incorporating a revenue-based metric… SoundExchange specifically proposes that Noncommercial Webcasters pay according to the same structure and rates applicable to Commercial Webcasters.”

SoundExchange has a summary of this ruling on their site. On page 4, it states, “Upon review of the evidence…the CRJs concluded that ‘selection of a single Collective represents the most economically and administratively efficient system for collecting royalties…’ The CRJs also found ‘no credible evidence that demonstrates that copyright owners and performers suffer increased costs from a system with a single Collective.’” (Check out this summary to see all the great reasons for establishing a monopoly).

In the songwriting realm, we have freedom of choice with Collection Societies, mainly ASCAP, BMI, or SESAC. This competition allows artists to have leverage in how they are treated, and the rates they pay. So why would the CRB rule in favor of a single royalty collection entity for internet broadcasting? And why choose an entity that started as an extension of the RIAA?

Back in 2004, The Register reported that thousands of artists unclaimed royalties would be kept by the RIAA unless claimed by the end of the year. Here’s a couple of articles from Techdirt, Slashdot, and Daily Kos from late April ’07 dissecting the CRB ruling. it turns out that SoundExchange is actually the recipient of all internet royalty payments, whether RIAA members or not.

Here’s a quote from the SoundExchange Site:
“What about webcasting? The recent U.S. Copyright Office ruling regarding webcasting designated SoundExchange to collect and distribute to all nonmembers as well as its members. The Librarian of Congress issued his decision with rates and terms to govern the compulsory license for webcasters (Internet-only radio) and simulcastors (retransmissions).”

Let’s take the Polyvibe team as our example. We are not affiliated with the RIAA in any way. Our first priority is having the music heard, royalties or not. We are required to register with SoundExchange and pay their fees to get our royalties. We haven’t made their unpaid label list yet.

If they know who they are collecting money for, and they have a meticulously cataloged list of unpaid labels and artists, isn’t it easy to send out a form letter? Here’s a recent post from Wired’s blog, “SoundExchange Distributed Only 60% of Collected Royalties in Q1 2006” (SoundExchange is only required to keep records for three years, ain’t that a kicker).

The most recent ruling by the CRB is in the Federal Register on May 1 (The ruling was March 2). Our last hope is HR 2060, which will overrule the CRB ruling. The bill is sponsored by Don Manzullo and Jay Inslee.

Free the Airwaves!
Save Net Radio!