Small Business Committee hears testimony

The House
Small Business Committee heard testimony today from a variety of webcasters, artists and record label execs both in favor of and against  the Copyright Royalty Board’s decision to dramatically increase performance royalty rates for webcasters.

Given the impact of the CRB royalty rates on webcasting small businesses, the Small Business Committee could be a key ally in pushing the legislation. Currently, 12 Representatives who have co-sponsored H.R. 2060 sit on the Small Business Committee.

Below is a list of participants in today’s hearing, divided into columns by witnesses who will be testifying against the CRB rate hike (left) and in defense of the new rates (right):

Bryan Miller
La La Media, Inc. & WOXY
Palo Alto, CA
Tom Silverman
Tommy Boy Records
New York, NY
Joey Allcorn
Columbus, GA
Cathy Fink
Washington, DC
Kieran Kelly
Stunning Models on Display Records
Astoria, NY
Thomas F. Lee
American Federation of Musicians
New York, NY
Richard Eisworth
President, General Manager & CEO
Cincinnati Public Radio
Cincinnati, OH

RAIN will continue to update the table below with excerpts and highlights from the hearings as footage of the event is released. Below the table of highlights from the hearing, we’ve prepared excerpted versions of some of the written testimonies provided to the Comittee prior to today’s meeting.

Nydia M. Velazquez (D-NY): “…Though Internet radio broadcasters of all sizes offer webcasts,many of the leading providers are small companies employing fewer than 50 employees.”Given the consolidation of media ownership that we have seen in recent years, the growing popularity of a broad array of small and independent webcasters is a promising sign. Listeners want greater choice with respect to music content and Internet radio services of all sizes are providing just that.”
chabotSteve Chabot (R-OH): …Time is of the essence for all the parties…“…The exposure and audience reach that artists have experienced because of the Internet is beyond compare, providing opportunities for a diverse range of artists and labels who never thought it possible… However, the recent decision by the Copyright Royalty Board to increase royalty fees may jeopardize the mutually beneficial relationship [between webcasters and artists]… The decision and the outcry that has resulted raises questions and concerns.

“I find it somewhat troubling that we are here revisiting these issues yet again just 5 years [after the 2002 CARP hearings]. This lends me to question the effectiveness and flexibility of sections 112 and 114 of the Copyright Act, and the ability of these provisions to promote and encourage creativity, encourage the use of the most advanced delivery mechanisms…, and ensure fair compensation for those who have created works protected by the Copyright Act.”

Bryan Jay Miller, GM “Whatever you hear or believe about big webcasters being able to pay higher royalties, the truth is that smaller independent webcasters are still struggling to get by in this very exciting but still very young industry. There is a tremendous challenge to deliver the value and innovation that listeners demand while maintaining a viable business.“The CRB’s decision is grossly out of sync with the economic reality of small webcasters… We deliver something so unique for artists and music fans that our existence should be supported and encouraged and not hindered during the early years of our industry.

“Musicians stand to lose valuable exposure provided by Internet radio outlets. One of the reasons millions of people visit Internet radio sites every month is that they’re looking for something new. Consumers are now turning to Internet radio to discover new artists.”

“Webcasters going out of business is a lose/lose for artists… Consumers will also lose if there’s a mass extinction of Internet radio stations.”

tom silvermanTom Silverman, owner Tommy Boy Records: “As to the fairness of the rates, they were determined by three impartial judges specifically selected for their knowledge and understanding of this industry… It was a fair decision…“What irks me… is the attitude expressed by a few small webcasters who became engaged in a grassroots campaign primarily financed by large webcasters. They got people’s attention, including some members of Congress, by claiming that small webcasters would be hurt.

“Congress asked SoundExchange to give webcasters below market royalties… to allow them a chance for the businesses to gain more steam… That discount offer does not seemed to have stopped the push to cut our royalties. I know what that’s about: it’s about ‘Big Net Radio’.

“Our businesses are very different from webcasters, some of whom simply pay a monthly service fee, plug in their computers and stream… it’s all about fairness.”

Witness testimonies were followed by a protracted “Question & Answer” period conducted by the members of the Committee. A few highlights from that part of the session include:

  • When asked about a possible way forward for all parties that would produce a compromise, AFM President Thomas Lee said that “SoundExchange has offerred to put a $2500 cap on [the $500 per channel minimum fee].”Later, Lee went on to posit that “SoundExchange is attempting to resolve the differences with [small webcasters] because we understand that perhaps in the CRB procedure there may have been a flaw, and that flaw needs to be corrected.”
  • Artist Cathy Fink, when asked about the existence of any “common ground” between webcasters and artists, said that she felt that fears of widespread bankruptcy among small webcasters as a result of the new rates were overblown, noting that, “It is unrealistic to portray this as if every small webcaster is going to go down the drain because of this. I don’t think that’s a fair portrayal of what’s going to happen here.”
  • Artist Joey Allcorn, prompted with the same “common ground” question, responded, “The common ground for artists is that Internet radio is a viable promotional tool for people like us. I want to get royalty payments, I depend on them… but is it worth attacking these webcasters and putting them out of business with these extreme royalty rates?… Is the promotional value worth more than the royalties? In my case, I say yes.”

Joey Allcorn, independent artist from Columbus, GA: “Internet radio is one of the greatest opportunities for the 21st-Century recording artist. It helps fans find new music, it helps artists find new fans, and leads to new and unexpected performance and touring opportunites, and yet still pays royalties. What a great combination.

“But if the Copyright Royalty Board royalties are implemented and webcasters go silent permanently as they did Tuesday for the Day of Silence demonstration, then all these benefits will be lost. The higher royalty rates from fewer webcasters will benefit only a few big artists, just as broadcast radio benefits a few but leaves most independent artists like me ‘high and dry.’..

“None of my success comes from mainstream FM radio or happens in Nashville where the major studios are based. My business… grows and thrives on the Internet… Internet radio changed my business and expanded my opportunities a thousand-fold…. Artists just like me have found a home on Internet radio where we can reach people who appreciate the kind of music we do…

People would come up to me at shows and say, ‘I bought your album on the Internet,’ ‘Heard your music  on,’ or ‘Pandora‘ or any of these services, and that changed my world

“It’s ironic that Internet radio is helping me make my career and is one of the best places for me and those like me and my fans to discover one another, but these royalties might completely shut these opportunities down

“With low barriers to entry into Internet radio, I can build my audience one listener at a time, one city at a time, with the music that I love. In a way, I guess you can call Internet radio the greatest grassroots music movement ever.

“All this opportunity makes these drastic new royalties even more bizarre to me. Here’s a new radio outlet that has  broken the industry wide-open for independent artists and small labels. It pays royalties to artists who don’t get paid on broadcast radio and is the only medium with a ‘Buy’ button next to the song titles. Yet three judges from somewhere I’ve never heard of decide to raise webcasters’ royalty rates so they will go out of business. And if that happens my career, my small business, and my fans will suffer…

“These new royalties will kill the small webcasters first, but then, one-by-one, as time goes on, they will kill the larger ones as well. If that happens, the opportunities lost for independent artists will be painfully real

“Please understand this isn’t about greed or pointing fingers at some big radio or big label conspiracy. The beauty of Internet radio is that it supports so many artists and genres, many of whom corporate radio and major labels would never be interested in anyway.”

One Response to “Small Business Committee hears testimony”

  1. Wow, Joey Allcorn really just hits the nail on the head there, doesn’t he? I think I’m going to go buy his record just to say thanks.

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