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Saturday, March 3, 2007
RIAA moves to kill Internet Radio 
| | The creation of a public culture staggers again. The latest blow came down Friday, Sheila Lennon reports.. Here's how Daniel McSwain at RAIN (Radio and Internet Newsletter) puts the news: |
| | The Copyright Royalty Board (CRB) has announced its decision on Internet radio royalty rates, rejecting all of the arguments made by Webcasters and instead adopting the "per play" rate proposal put forth by SoundExchange(a digital music fee collection body created by the RIAA). |
| | Below at that same link, Kurt Hanson elaborates: |
| | How does this affect large webcasters?
Let's look at AOL as an example: |
| | According to the comScore Arbitron ratings report for November 2006, the AOL Radio Network had a average audience ("AQH") between 6AM and Midnight of 210,694 listeners. Multiplied by about 16 songs per hour, 18 hours per day, and 31 days per month, plus adding an additional 10% to account for overnight (Mid-6AM) listening, suggests that AOL played about 2.1 billion songs that month. At the CRB's royalty rate ($0.0008 per play), I'm guessing that would create a royalty obligation to SoundExchange for the month of November of about $1.65 million. Annualized, that's about $20 million for 2006. |
| | Here at RAIN, we're guessing that Pandora has an audience approaching that size. (Pandora founder Tim Westergren claims that Pandora now accounts for 1.5% of all Internet traffic.) Such a royalty obligation might exceed the total proceeds of all their recent rounds of venture capital plus all their sales revenues to date. |
| | Since Last.fm is based in the U.K., another possible outcome is that Pandora dies and Last.fm becomes the "social music networking" player. |
| | How does this affect medium-size webcasters? |
| | Radio Paradise's Bill Goldsmith notes, "This royalty structure would wipe out an entire class of business: Small independent webcasters such as myself & my wife, who operate Radio Paradise. Our obligation under this rate structure would be equal to over 125% of our total income. There is no practical way for us to increase our income so dramatically as to render that affordable." |
| | And Radio Paradise is perhaps the most-successful webcaster in its class! For most operators, this rate looks as if it would be >150-200% of total revenues. |
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How does this affect small webcasters? |
| | Webcasters who stream through services like Live365 may be in jeopardy, as such firms' business models probably never envisioned a royalty rate this high. (Live365's royalty obligation for 2006 is running in the range of $350,000 per month, and that's not even addressing the question of the $500 per station mininum!) |
| | How does this affect terrestrial broadcasters who stream? |
| | The principles are the exactly same, but at the individual radio station level, the dollar amounts are of course are smaller. Clear Channel's total corporate obligation for November 2006 based on comScore Arbitron ratings and assuming 13 songs per hour, would be about $500,000... but if that's for streaming, let's say, 500 stations, it would only be a royalty obligation of about $1,000 per station per month in 2006. Are those stations selling enough online spots and website banners and sponsorships to make that affordable? I'm not sure. (The decision has no impact on news and talk stations who stream.) |
| | The rate of increase in future years is huge — faster than it would seem possible that advertising revenues could possibly keep up with, much less catch up with. 2007's rate is a 37.5% increase over 2006; 2008 and 2009's annual increases are about 28% per year; and 2010 adds another 5.5% increase. |
| | I followed the fight between the nascent Internet radio business and the RIAA back in the early '00s. Here's one of my last pieces in a long series on the topic (see the links near the bottom of that one). |
| | As it developed, Internet radio didn't die. Instead, what happened was the growth of talk radio on the Net, mostly in the form of podcasting. No doubt an unintended consequence of the CARP ruling (creating high bureaucratic and financial costs for broadcasting RIAA-sanctioned music on the Net) was the growth of podcasting. |
| | But what could have been a flourishing new medium was instead crippled in its cradle by what Bob Frankston perfectly calls The Regulatorium. |
| | Now it's terminal. Unless we do something. More about that later, over in Linux Journal. |
| | Alas, I'm seldom available for talk radio of any sort. If I'm coding or making pages or writing, I can't pay attention to others' thoughts and words. I need music then. My commute is short, and I'm seldom alone, uninterrupted, long enough to catch an entire podcast, no matter its length. |
| | I would so much rather hear little niche streams from the "record collections" of friends and kindred souls than the loops of music "stations" on cable TV. These must still be passed around privately. |
| | Podcasting isn't a substitute. |
| | I should have made three things clearer: |
| | 1) Music radio did not die on the Net. A few hardy plants (e.g. RadioParadise, Pandora) survived in the salted soils of the new regulatory regime. Many (e.g. KPIG) did not survive. The new regime will very likely kill even the hardy plants. |
| | 2) While an unintended consequence of this soil-salting was to encourage the growth of non-music and non-live workarounds to severe restrictions on Internet radio (especially talk-based podcasting), they are not across-the-board substitutes for live radio — over the Net or the air. They are new, but they are also different. |
| | 3) Podcasting actually faces an even more severe set of restrictions around music than those allowed in the salted soils of Internet radio. Ironically, Internet radio's salted-soil regime does give a set of permissions for playing music. Yes, there are costs and other complex requirements; but at least the permissions are there. With podcasting there is no regulatory regime other than the need for the podcaster to "clear rights" with the copyright holder. If the podcaster doesn't do that, he or she faces being considered a very public and traceable form of pirate. |
Question of the day
Splotting glue
| | With his One Million Splotz of Glue Campaign, Lloyd Y. Asato is doing an important and commendable thing: building community through "everyday actions". He's talking about real communities here, where people actually know and care about each other — rather than the abstract demographic variety. He adds, These actions have the cumulative effect of increasing the quality of life in a community. By deliberately doing more of these specific activities we can build the kind of community we want to live in. |
| | Takeaway number one - Splotz of Glue can be snowballs, narrative points from which we begin a conversation on improving neighborhoods or the process of community building. It is not about the collecting and cataloging of glue, but of the contemplating and discussing. This is new to me. In my old career I needed to understand in depth and breadth so as to anticipate unintended consequences. Now I can do the snowball thing and enjoy the emerging consequences, intended or not. |
| | Takeaway number two - ³community² and ³community building² are very loaded terms and I need to be more aware of that. In this context I use ³community² to describe geographically bound neighborhoods and ³community building² as the process to increase or enhance social capital. |
| | Takeaway number three - which is an incomplete thought - is there something I am supposed to burn? Is it my process-centric thinking? Can someone help me with this part? |
| | Glue, snowballs and fire are all metaphors. Which means they frame a subject without being the subject itself. |
| | I've thought of "rolling snowballs" and "setting fires" as two frames on the same subject, which is spreading interest in, and conversation about, a subject. Not (I now realize) about building communities. |
| | With glue Lloyd's got something else going on. He also uses the verb build. So we're talking about construction here. Building community is barn-raising. Everybody contributes in their own way to something larger than themselves. So, two actions occur to me, as ways to build community. |
| | The first is to stop watching so much television. Community builds around communication (which it would have to, just to function), and communication in its most fundamental form — conversation — is two-way. TV is one-way. It is about consumption, not production. I'm not saying TV is Bad here. I am saying that it is too often a bad substitute for productive activity. For communities, it is more solvent than glue. |
| | The second is, build stuff. I've been amazed lately at the growing difference between conferences and workshops. Conferences are like television: everybody in the "audience" faces speakers and panels that comprise the conference's "program". In workshops, everybody participates. They get together in rooms and around tables and talk about common interests with purposes in mind. Progress usually happens. Stuff moves forward. It's amazing how well this works. |
| | You have to do workshops in person. Kurt Vonnegut writes, |
| | Electronic communities build nothing. You wind up with nothing. We are dancing animals. |
| | How beautiful it is to get up and go out and do something. We are here on Earth to fart around. Don't let anybody tell you any different. |
| | That's from Kurt's excellent short book, A Man Without a Country (Random House, 2005). Buy one from your local bookstore. |
| | I don't think he's saying "don't use electronics". I do think he's saying get together and talk to each other. There's no substitute for that. |
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