The Day The Music Died

As of now, the day the music dies will be on July 15th, 2007.

I wish that was mere poetic license on my part. Regretfully, it is far too close to being a reality.

The Copyright Review Board, part of the United States Library of Congress, issued their final ruling (Large PDF warning.) on May 1 regarding the increase of royalty rates for music streamed over the internet. For the small internet-only audio streams, the verbose language can be summed up in three words:

You are screwed.

Per-listener per-song per-“channel” fees will be raised for the time beginning Jan 1, 2006, and late fees assessed for failure to pay on time, with a payment due date of Jul 15, 2007. There is no consideration for revenue generated by the stream.

You ask yourself, “So. What does this terse unhelpful legalese mean in the real world?” Glad you asked.

1.FM, one of the top-rated stations in the US, crunched their numbers for this Wired.com comment. With an average of 32 thousand listeners per day, the retroactive bill comes out to approximately $8000 to $12000, including late fees.

Per day. Which sums up to approximately $3.6 million for 2006 alone.

But wait. There is more.

Using both the CRB numbers and Arbitron ratings for the largest listener-base on the web, which is unsurprisingly America OnLine, the Radio And Internet Newsletter crunched numbers a bit more. For November, 2006, alone, the royalty obligation runs at $1.65 million. Translated into a full year, that becomes upwards of $20 million.

But wait. There is more.

Live365 will have to pay $350,000 per month, not including the “per-channel” designation. The prototypical kid in his basement hammering away with tiny revenue streams and 100 listeners will now be paying $6,000 per month in royalty fees. Your favorite terrestrial over-the-air station that streams their broadcast through their website will be paying an additional $1000 per month on top of their contractually established royalty payments. Yes. Even National Public Radio stations. (It is unknown at this time whether MTV’s royalty-free video broadcast agreement will apply to their own multiple-stream stations. If it does not, the per-annum numbers will be on the close order of $100 million.)

And this is on top of the royalty fees already being paid by on-line radio stations across the country.

To gain attention to the cause, many streams went dark for a day last week in order to show to their listeners exactly what will happen when they are faced with ruinous royalty increases and are forced to declare bankruptcy. With this virtual Sword of Damocles hovering over the industry’s head, there is only one avenue of recourse: Congress itself.

Fortunately, they have responded with speed. In the House, Representatives Jay Inslee (D-WA) and Don Manzullo (R-IL) introduced H.R. 2060 (Small PDF warning), the Internet Radio Equality Act, setting internet broadcast royalty rates at 7.5% of revenue or $500, the same rates as paid by Sirius/XM satellite radio channels. In the upper chamber, Senators Ron Wyden (D-OR) and Sam Brownback (R-KS) introduced companion legislation. (Bill number unassigned at the time of publication.)

Hopefully, Senator Graham will realize his penultimate error when he authored the Platform Equality and Remedies for Rights Holders in Music Act of 2006, for the PERFORM act has performed beyond all expectations for its beneficiaries and beyond the worst fears of the webcast community.

Please contact your Senators to voice your support and urge the immediate passage of the bill. Contact you Representative to urge them to join the bipartisan list of co-sponsors to H.R. 2060.

In closing, I fear that I must fall back on a previously published work of mine and quote Christian Slater.

Keep the air alive.