Its time to roll up your sleeves…

An additional note: While I was on a press conference call this morning for the launch of this coaltion the news came through that the CRB has rejected the request to hear an appeal of this decision…so…the only way we’re going to get action now is to have Congress step in and do what’s right. It’s MORE imperative than ever that people contact their congressmen/women and make their voices heard before the music gets silenced.

 

This is a call to action that was sent via the Roots Music Association this morning:

 

RMA Membership Memo – April 16th 2007

Dear RMA Members,

On March 8th, 2008 we informed you of a decision by the US Copyright Office Copyright Review Board regarding performance royalties for music played on Internet radio. The assigned fees are based exclusively on the number of people tuned into an Internet radio station with no consideration given to what, if any, revenue is generated by the broadcaster and are retroactive to 2006. We expressed concern about the potential cultural and economic impact of this decision on the roots music industry.

We wish to extend a thank you to the many RMA members that took the time to respond to our previous memo. Your continuing support in this effort is greatly appreciated.

It is, of course, our contention that reasonable royalty rates are warranted, but that the rate table should reflect equitably on all artists in the music industry including the independent artists and labels and that consideration and weight of the promotional benefit of internet airplay should be a given in the determination of those fees such as it is with terrestrial radio.

It is the RMA’s vision that the independent roots music industry will be able to compete on as much of a level playing field as possible and we believe that an integral component to that is equitable exposure in the marketplace for all artists.

Since our previous membership memo we have been actively collaborating with a number of agencies and individuals that are working diligently to have the CRB decision reconsidered.  

One of the largest uphill battles that the independent industry has historically faced is the inherent isolation that occurs when issues such as this arise and the subsequent issue of how to make a multitude of individual voices and opinions heard against the stronger, more organized efforts. It is with that in mind that the RMA has been working in collaboration with a number of entities to help maximize the opportunities and therefore, collective voice, of our membership. One of those partnerships is with the SaveNetRadio coalition. The Roots Music Association is a primary coalition partner alongside of Live365, Pandora and Kurt Hanson of R.A.I.N. (Radio and Internet Newsletter).

SaveNetRadio will be launching their website today and we encourage those of our members who wish to add their voices to do so by visiting www.savenetradio.org and participating in its campaign. The partners in this effort are looking to initiate a proactive, equitable structural solution on behalf of consumers, industry partners, artists and webcasters with respect to the issues that exist with the current webcasting royalty rate decision. The efforts coordinated via this site will help bring attention to the issue and pressure policymakers to work toward creating a viable structural solution to this issue.

The website campaign offers opportunities for interested advocates to have their voices included in this large arena in a number of ways. The opportunities include:

1.       Become a partner

2.       Sign the petition

3.       Write a testimonial – This section will allow you, if you so desire, to tell your story about how internet radio has affected you or your business. The songwriters in our organization will certainly relate to the value of sharing a story and it’s essential in this effort to have consideration given to the promotional impact and economic value of internet radio exposure for independent artists.  The site will be posting different testimonials each day to help illustrate the points of the campaign.

4.       Upcoming Concerts – There will also be a calendar function that will allow artists, if they desire, to input dates and locations of upcoming concerts. Once this information is uploaded, visitors to the site will be able search by location and date for upcoming concerts of our coalition’s artist-partners.

We also encourage you to share this information with your colleagues and friends, if you are so inclined, to help maximize the voice we’ve been given the opportunity to create. We have included facts/information at the bottom of this memo that helps to explain the urgency of this issue.

As always, it is the primary goal of the RMA is to provide information, opportunities and education towards helping to create a level playing field for independent roots artists.  We believe in the inherent power of one and the incomparable power of many. We encourage those of you who are interested to participate in this opportunity that’s been created to help you become part of the solution.


Respectfully,

Your RMA Executive Board

INTERNET RADIO

Ø       Internet radio enables people to find a range of content that is far broader than what is available on terrestrial or satellite radio. For example, while a traditional radio station may have only 30 songs regularly rotated through its playlist to ensure that listeners hear one of a handful of songs during a short car ride, our corresponding station might have over 650 songs, including many more independent artists.

Ø       The American Association of Independent Music (A2IM) reports that less than 10% of terrestrial radio performances are independent music but more than 37% of non-terrestrial radio is independent music. 

Ø       According to the latest ratings, more than 4.5 million people are listening to one of the top four Internet broadcasters (Yahoo!, AOL, Clear Channel and Live365) everyday. (Arbiton)

Ø       According to Arbitron and Bridge Ratings, between 50 and 70 million Americans listen to internet radio a month.

Ø       In just the last year, the number of Internet radio listeners has increased from 45 million listeners per month to 72 million listeners last month. (Bridge Ratings)

Ø       Bridge Ratings & Research estimates that the Internet radio audience will double by 2010 and grow to nearly 200 million monthly listeners by 2020.

Ø       41% of the listening audiences are young adults between the ages of 18 and 34.  (Arbitron)

Ø       Internet radio listeners are 20% more likely to have purchased downloadable music than the average American. (Arbitron)

THE ECONOMICS

Ø       Internet radio pays proportionately more royalties to recording artists and record labels than all music broadcast media – traditional AM/FM stations, satellite or cable radio.

Ø       Terrestrial radio, an industry with $20 billion in annual revenue is exempt and pays no performance royalties to record companies or recording artists

Ø       Satellite radio, which has nearly $2 billion in annual revenue, pays between 3 and 7% of revenue in sound recording performance royalties. 

Ø       The recent CRB decision imposes a much higher royalty rate on Internet radio that for many small webcasters will exceed 100% of their revenue.

Ø       The Copyright Royalty Board (CRB) decision increases the royalties that Internet webcasters pay to play music by nearly 300% for the biggest webcasters and up to 1200% for small webcasters.

Ø       Under the new CRB royalty scheme the smallest webcasters will pay the highest relative royalties in amounts shockingly disproportionate to their revenue. 

Ø       The CRB ruling imposed a $500 per channel minimum royalty that for many services will far exceed the annual royalties that would otherwise be due even after the CRB decision. This per channel minimum has particularly devastating consequences for services like Live 365 that has 10,000 radio stations or Pandora, where each of its millions of users has the ability to help create stations. This fee alone could cost $5M a year in royalties for a mid-size webcaster and up to $50M a year for larger webcasters.

Ø       Before the CRB ruling Internet radio royalties were already paying double what satellite radio pays; this ruling distort the competitive environment even further.

Ø       Prior to this decision all small webcasters and some large webcasters had the choice of paying royalties based on a percentage of their revenue that typically equaled 10-12%.  But the CRB decision did not offer a revenue-based royalty option for any webcasters. 

Ø       For all webcasters, the new royalty rates, according to J.P. Morgan Securities Inc, will become the single largest expense item before any other operating and other royalty costs. 

Ø       The CRB decision represents a 30 percent increase in royalties paid to the record labels retroactively to the beginning of 2006, and then another 30 percent again in the following three years, an increase that will cripple most Internet radio webcasters. 

Ø       The 2005 royalty rate was 7/100 of a penny per song streamed; the 2010 rate will be 19/100 of a penny per song streamed. 

Ø       The vast majority of Webcasters will not be able to generate enough advertising revenue to pay their new, higher royalty fees.

Ø       The CRB rates are retroactive to January 1, 2006 and payable on May 15, 2007. This decision could bankrupt many Internet radio services immediately, even if it is effective for only one day.  Past due royalties alone will be enough to bankrupt virtually all small and mid-sized webcasters, many of whom are the hallmarks of programming diversity. 

Ø       Based on an analysis of Net radio BridgeRatings for November of 2006, the four largest Internet-only radio services anticipate combined annual revenue of only $37.5 million, but will pay a whopping 63% (or $23.7 million) in sound recording performance royalties under the new CRB ruling.  Similarly, the projected revenues for 2008 would total only $73.6 million, but royalties will be 58% or $42.4 million.

Ø       When you apply the projected growth rate of Internet radio for the next three years, and also take into account the 2010 royalty rate of $.0019 per performance, BetaNews projects that AOL Radio could owe $146.4 million in royalties in 2010 alone. LaunchCast would owe $113 million, Clear Channel would owe $61.7 million, and Live365.com would owe $42 million. Just the top four streamers would be billed $363 million during the same year that all 14,000 ..:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />
US radio stations combined would be billed $550 million.

THE IMPACT

Ø       One advantage of Internet radio is that it is not limited by spectrum capacity or bandwidth capacity, which enables several services literally to offer 10,000 or 100,000 stations and more.

Ø       This ability to offer an unlimited number of stations enables Internet radio to provide a much more diverse and rich experience.

Ø       The demise of Internet radio will be particularly harmful to independent artists and record labels that need this exposure to reach new fans.

Ø       If most Webcasters are bankrupted, the diverse programming that exemplifies today’s Internet radio will disappear.  Even webcasters large enough to survive will likely have a much less rich offering in order to keep their operating costs down.

Ø       By penalizing this innovation, creativity and diversity the CRB further ensures that Internet radio will become less creative, less dynamic, and provide less of an opportunity for non-mainstream artists and genres.

THE SAVENETRADIO COALTION

Ø       We are a coalition of artists, labels, listeners and webcasters who benefit from the success of Internet radio, and have a great interest in seeing this innovative industry, and the diversity of music it features continue to flourish.

Ø       Our mission: To save Internet radio as the new mass medium that enables a vast diversity of voices to gain exposure.

Ø       The coalition believes strongly in compensating artists, but Internet radio as we know it will not survive under the new royalty rates.

Ø       Our goal: The coalition seeks to pressure Congress to create a structural solution for this problem and create an environment where Internet radio, and the hundreds of thousands of artists it features, can continue to grow for generations to come.

Ø       When Congress provided webcasters a guaranteed “statutory license” to perform sound recordings, Congress intended that Internet radio would flourish as a competitive medium offering diverse programming and paying a royalty.  Tripling webcasters royalties undermines all these goals. 

Ø       Internet radio has created a wonderfully rich and diverse music environment that should be encouraged and promoted.  We’re fighting to protect this rich and diverse music environment. 

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