Experts say webcasters fears of CRB disaster well-founded

www.kurthanson.com

BY PAUL MALONEY
Small webcasting entrepreneurs (or employees of larger webcasters) are now less than two weeks away from the CRB-mandated due date for 17 months worth of webcasting royalties that all logical economical analysis says will shut down their businesses and eliminate their jobs.

SoundExchange and its spokespeople fail to see this — or perhaps, more insultingly, call the peril facing webcasters “overblown” or “not realistic.”

During last week‘s House Small Business Committee hearing, we heard a children’s music artist complain about the cost of $2,000 Martin guitars, but doubt the sincerity of webcasters who say they’ll lose their businesses. A record label owner moaned about his costs, but claimed small webcasters’ “rhetoric” was for the benefit of huge companies that simply didn’t want to pay fair rates. [Video of the hearing is on YouTube here.] SoundExchange executive director John Simson has repeatedly characterized the situation facing webcasters as exaggerated.

Yet, SoundExchange fails to point to a single webcaster that wouldn’t be gravely damaged by the CRB rates. Not a single Internet radio operator has come forward and said, “Okay, these CRB rates are fair.”

Indeed, experts not affiliated with either side see the danger looming for Internet radio. Technology news source TopTechNews (here) reports Gartner analyst Mike McGuire (left) told them the situation is grim for webcasters of all sizes. “The industry wants to extract as much revenue as it can, but asking for too much, too soon risks foregoing or foreclosing significant revenue opportunities in the future,” he said.

Jeffrey Smith (right) is assistant professor at Central Michigan University’s School of Broadcast and Cinematic Arts.

He says, under the CRB rates, small webcasters “will be hardest hit, but not the only ones forced to go silent.

“If this seemingly biased fee increase passes unchecked, the June 26 ‘Day of Silence’ will become permanent for many Webcasters,” Smith says, “and with that silence will come a deep loss for listeners, content providers and musicians across the globe.”

Smith’s colleague agrees. Heather Polinsky (left) is also an assistant professor at at the school. She thinks the real fight is for sound recording performance rights for broadcast, and that Internet radio is an easy target along the way.

“The RIAA has long been trying to get performance royalty rights for services that use their recordings… Performers have been snubbed by radio and television broadcast deals for music royalties, but on the other hand, paying performance rights is an undue burden on Internet radio operators, many of whom provide a service for little or no profit.” (Read Smith’s and Polinsky’s comments here.)

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