Check this out if you are into internet radio streams. I have Radio Paradise streaming all day long in my workshop & home. This internet streaming radio station has led me to purchase 3 CD's this week by exposing me to new artists that I did not know about. This streaming radio station is an asset to those 3 musicians I supported this week. I would not have purchased these albums had I not heard them on RP.
More to be outraged about
here!
RIAA
RIAA
RIAA
Kurt Hansen explains the rate structure a little here:
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.
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!)
