Support the Internet Radio Equality Act
Current mood: hopeful
Category: Music

For Immediate Release                                     Contact:  Jake Ward (SaveNetRadioThursday, April 26, 2007                                                           202 420 8056

SaveNetRadio Applauds Congress's Attempt to Save Internet Radio

The Internet Radio Equality Act Would Level the Playing Field for Webcasters

          NEW ORLEANS, LA – The SaveNetRadio coalition today applauded Jay Inslee (D-WA) and Donald Manzullo (R-IL) for introducing legislation that could save thousands of webcasters from bankruptcy. "The Internet Radio Equality Act" would reverse a March 2^nd ruling by the Copyright Royalty Board (CRB) that increased the fees webcasters pay to play music online by a stunning 300 to 1200 percent.   

"Since the CRB's March 2^nd decision to dramatically and unfairly increase webcaster royalty rates, millions of Internet radio listeners, webcasters and artists have called on Congress to take action," said Jake Ward of the SaveNetRadio coalition.  "Today Congress took notice, and we thank Messrs. Inslee and Manzullo for leading the charge to save music diversity on the Internet."

The Internet Radio Equality Act would vacate the CRB's decision and set a 2006-2010 royalty rate at the same level currently paid by satellite radio services (7.5% of revenue.)  The bill would also change the royalty rate-setting standard used in royalty arbitrations, so that the standards applying to webcasters would align with the standard that applies to satellite radio royalty arbitrations. 

"The illogical and unrealistic royalty rates set by the CRB have placed the future of an entire industry in jeopardy," stated Ward. "This bill is a critical step to preserve this vibrant and growing medium, and to develop a truly level playing field where webcasters can compete with satellite radio.  The Internet Radio Equality Act is the last best hope webcasters, artists, and listeners have to keep the music playing.  I know New Orleans will be glad to hear it!"

SaveNetRadio, together with WWOZ, the official radio station of Jazz Fest 2007, is sponsoring the HOT 8 Jazz band in a live Internet concert during the New Orleans festival on May 2^nd.  The coalition is also educating Jazz Fest musicians about the possibility that Internet radio – an important medium for all musicians but independent musicians in particular – will all but die on May 15 when the CRB royalty is scheduled to take effect.

The bill would also re-set the royalty rules for noncommercial radio such as NPR stations that offer Internet radio music.

For more information on the SaveNetRadio coalition visit www.savenetradio.org

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Currently listening : Little Rock By Hayes Carll Release date: 08 March, 2005

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Internet Radio, Major Record Labels and Music Fans
Current mood: pissed off
Category: Music

Internet Radio, Major Record Labels and Music Fans

Al Delaney, VP OutboundMusic

Try this experiment.  Turn on your car radio and flip through the channels.  What do you hear?  In our largest metropolitan areas, you'll find maybe half-a-dozen different styles of music being broadcast—and across the country many stations will be using the same play lists.  Now go to your computer, Google "Internet Radio" and start exploring.  There are thousands of different Internet Radio stations all playing different music; you might like much of it but most will be unfamiliar.  What's going on here?  There are two market forces at work.  In the first case, the major record labels in partnership with corporate radio and chain discount stores are producing and airing only what they want you to buy—a business-driven market.  Contrast that with the "Internet" case, music enthusiasts putting out diverse content and letting the fans decide what they like—a consumer-driven market.  The problem; the major record labels want to control the Internet like they now control traditional radio.  They want Internet Radio to be business-driven, and they want to be the business doing the driving. 

How'd we get into this fix?  To thrive, the music industry has always needed to balance art and business.  But, in the course of few years, beginning in the mid 1980's, that balance shifted to favor the business over the art: The switch in formats, from LPs to CDs, demonstrated to the companies that a lot of money could be made without a corresponding investment in new art.  At about the same time a management vacuum was caused by the semi-retirements and drops in influence of many "music-loving" founding executives.  That vacuum was subsequently filled by corporate bean counters.  Two other events occurred with devastating results, devastating for music and for music fans.  First, changes in FCC rules allowed just a few companies to monopolize the air waves.  To reduce their overhead, those radio companies centralized and homogenized their programming.   Second, the growth of discount chain-retail stores with limited record departments, offering maybe 700 or 800 titles, began to undercut the specialty record stores that typically carried 20,000 or 30,000 titles or more.

With those changes was created a new type of major record company; one geared toward quarterly profits, geared toward minimizing overhead by focusing its marketing effort on the limited and uninspiring offerings that the new radio companies would support and the new discount chains would sell.  As a result, a lot less good music is coming out of the majors than at anytime in the past.  Most now is just McMusic.

Now the record companies are dealing with a new threat—the Internet.  Their response has been to use the strategic partnership between the RIAA (their lobbying group) and SoundExchange to attack innovative entrepreneurs.  By mounting a PR smoke screen—stating that they just want fair royalties for artists and they want to better serve music fans—they have successfully lobbied oppressive and unfair royalty rates into existence.  These rates will price Internet Radio providers out of the market. (You can read a short history of SoundExchange and its connection to the major record companies in my previous article, "Rate Hike Concerns Voiced at SXSW 2007".  It should also be noted that interchanging the phrases "RIAA and SoundExchange" with "the major record labels" is just acknowledging a reality.)  The suggestion that the RIAA and SoundExchange have any concern about the wellbeing of artists is ludicrous.  The major record companies view artists' works as a commodity to be obtained as cheaply as possible.  And they view music fans as just another revenue source willing to pay top dollar for their McMusic.

In an ideal world fans would be able to experience all types of music, and royalty rates would be fairly set.  But that's not the case now.  Traditional radio, what you hear on your car radio, pays no Sound Performance royalties at all and only broadcasts what the major corporations want you to hear.  Internet Radio stations, those playing what you want to hear, are being told to divvy up $500 per year per station plus $155 per year per listener (that's based on 15 songs per hour 24/7) and that rate goes up to $267/year/listener by 2010.  Who will be able to continue webcasting?  The only surviving webcasters will be those with major-label sweetheart deals that reduce or eliminate their royalty fees—another way of saying "little or no money for the artists and little or no music diversity for fans".  Just look at the numbers.  A company like Live365 has about 10,000 individual streams.  If only half those streams are music formats and those averaged just 500 listeners at any given time (not a very big number) Live365 will owe almost $400 million this year and that will increase to $700 million in 2010.  In reality that money won't be paid because Live365 will go out of business.  Music fans will lose. Music artists will lose. 

What would be a good statutory royalty rate?  I think 10% of radio revenues would be a fair rate and that it should cover all radio, not just the Internet.  That being said it would be unfair for just my opinion to rule.  Statutory rate negotiations should be between all parties (artists and broadcasters) with equal weight given to all opinions.  That was not the case when the current rates were decided. 

Currently listening : Ignite the Fuse By Nuffsed Release date: 17 January, 2006

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Music Diversity
Current mood: cheerful
Category: Music

Robert Vrijenhoek is a Senior Scientist at the Monterey Bay Aquarium Research Institute.  One of his long-term projects is studying two minnow species populating the same shallow watersheds in a desert canyon.  There is one important difference between the two species.  The first reproduces asexually—no genetic variation, the offspring is a clone of the parent.  While the second requires two parents to reproduce, assuring genetic diversity.  There is also a parasite living in this small ecosystem.  What Robert found out in his study was that the parasite was devastating the asexual minnow population but not the two-parent species—except in one instance.  When a long drought reduced the numbers of both species they both became susceptible to the parasite.  What had happened was that the two-parent species had been reduced in number to the extent that they needed to interbreed for the species to survive and this reduced their genetic diversity.  To the parasite, the two-parent population was no longer a genetic "moving target".  It was no longer capable of evolving defenses against the parasitic attacks. 

By now you're probably thinking, "What the *&%#@ does this have to do with music?"

The well-stream of music diversity, what assures the future health of music, is the Independent Music Scene.  The homogenized monotony of corporate music is slowly driving fans away with its banality.  This is the real reason for 10% and 12% and 15% drops in corporate music sales over the last few years.  The general public is slowly becoming musically apathetic.  To maintain their market share the corporate entities, the major record labels, are trying to control all the musical outlets.  They've already done it with traditional radio and now they're doing it with Internet Radio.  What they fail to see is that while they might be maintaining market share, they are at the same time reducing the overall size of the market.  As the stage for Independent Music shrinks, music diversity also shrinks.

Oh yea, the majors also want us to reproduce asexually. 

Currently listening : River of Hope By Joel Dilley Release date: 01 November, 1998

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South By Southwest 2007
Current mood: content
Category: Music

South by Southwest 2007

By Al Delaney-Vice President OutboundMusic.com

SXSW is over for this year.  We had a good time, met a lot of people, had some fun, promoted OutboundMusic.com and promoted all our artists.  Bill Reveles and Thom and Melody Mann were in town and performed at our booth—Bill actually helped out at the booth for a couple of days before playing his showcase Saturday night.  Some others in the fold also played showcases.  Future Native, from Australia, probably traveled the furthest, and Radial Angel came from a little closer in.     

There was a lot of talk at the festival about the most recent statutory Sound Performance royalty rate hikes for digital streaming (Internet and Satellite Radio). 

Some historical perspective:

In 1999 Mark Cuban and his partners sold broadcast.com to Yahoo for $5.7 billion.  It was Internet-bubble times, and Yahoo saw great possibilities for Internet streaming; both audio and video.  Mark helped frame a deal with the Recording Industry Association of America (RIAA) for the use of music content, but he left Yahoo before the deal could be signed or implemented.  Since then, Mark has said that he framed that deal specifically to drive competitors out of business.  That deal, that very same model, was what the RIAA proposed to the copyright office and what the copyright office at first "somewhat" accepted and now pretty much fully accepts.  When digital performance royalty's edition 1.0 first came out a few years ago, it was met by popular and then congressional resistance.  So we got edition 1.1 which was 1.0 with somewhat reduced rates.  Recently the copyright office accepted the recommendation of SoundExchange to increase the royalty rates plus eliminate any revenue bases for the rates—edition 2.0 is pretty much the original 1.0.

How high are the rates?  For 2007 it is set at $0.0011 per performance per listener and by 2010 it increases to $0.0019.  That might not sound like a lot but here's a quick comparison.  If you averaged the Arbitron ratings for the seven Clear Channel radio stations in Houston for this past year, then knowing the size of the metropolitan Houston market, you can calculate the average number of simultaneous listeners.  Dividing that number by Clear Channel's overhead for those stations (I'm on the board of a Houston community radio station and can ballpark that number) gives you the amount it costs Clear Channel to deliver content to each listener.  That amount is about $25/listener/year.  An Internet Radio channel with similar content will owe SoundExchange $155/listener/year just for licensing in 2007 and that amount will increase to $267/listener/year by 2010.

What is SoundExchange and where did it come from?  SoundExchange is a nonprofit organization originally structured by the RIAA and peopled mostly by friends of the RIAA.  It was anointed (with some changes in how it was staffed and governed) by the copyright office to administer digital performance royalties.  Charitable it is not; about 50% of what SoundExchange collects in royalties, it keeps to run the organization.  I was informed by Barrie Kessler, SoundExchange COO, that the organization's 18-position board is 50% artists and 2/3 of the board members are Indie centered.  I must not have heard her correctly.  With the help of Google.com, I counted eleven of the eighteen members (61%) with strong RIAA connections.  Many of the remaining seven are attorneys whose client lists are not public, and only a very small handful of the board members could be considered active artists by any reasonable definition.  A source attending SXSW who had worked for the RIAA told me that SoundExchange and the RIAA regularly hold joint strategy sessions. 

It appears to me that we have a major-record-label controlled entity with gatekeeper power over Internet Radio.  It's not really about proper and fair royalties.  It's about the use of unreasonably high statutory royalties to force competition out of the market—after all, those Internet Radio stations working with the majors will have third-party deals (sweetheart deals) reducing their commitment or exempting them outright from paying the fees.  It's about the major labels deciding who gets airplay on the Internet.  Sound familiar? 

There's nothing illegal in what the majors are doing (at least in this case—there is the payola thing and the for-promotion-only CDs ending up being sold at flea markets and the percent of royalties held back to cover breakage—for download sales???…).  It's not like the cigarette industry where customers are being encouraged to play a sadly effective game of Russian roulette to the tune of half a million deaths a year in this country alone.  It's not illegal, and it is a business strategy most MBAs would embrace for companies producing widgets.  But it's not good for the music industry.  It's bad for the fans, bad for the artists and bad for the music.

Why am I talking about all this?  The hikes don't affect OutboundMusic.  We have sweetheart deals with our artists so we can effectively promote them.  We also encourage them to get as much airplay as they can on other Internet Radio stations.  It's just good marketing and about the only regular airplay they can get—until those Internet stations are driven out of business.  I'm talking about it because it hurts music in general and Indie music in particular.

Currently listening : Days Like This By Andi and I

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Why We Support Digital Freedom
Current mood: peaceful
Category: News and Politics

OutboundMusic.com was born out of our love for the music, respect for the talent who made that music and disappointment in how that talent had been exploited by many of the industry's major players.  Artists cataloged with us are family, and as such we involve ourselves only in campaigns that specifically benefit them or benefit Independent Music as a whole.  The Digital Freedom campaign is one we are happy to be a part of and this is why:

Currently listening : Beautiful Mess By Welbilt Release date: 23 December, 2003

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Digital Freedom Campaign
Current mood: optimistic

OutboundMusic.com has joined the Digital Freedom Campaign and has issued the following public statement in support of the campaign:

"Since the introduction of digital tape in the seventies, the major record labels have fought to undermine the public's use of new technologies.  This is understandable.  They wish to preserve their dated business models.  In fact, each new technology; digital recorders, CD-Ws, PCs, audio compression technologies, the Internet and satellite radio, has benefited artists and their fans at the expense of the major record companies.  It is a truism: those who don't embrace and work the new technologies are destined to become irrelevant."--Al Delaney, Vice-President OutboundMusic.com

If you haven't already, please consider supporting this campaign by signing the petition at http://www.digitalfreedom.org/take_action/index.html.

Currently listening : Inside Gospel Garage By Bill Reveles Release date: 01 November, 2005

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Indie artists will be hurt by the SIRA bill
Current mood: cranky
Category: Music

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Building A New Fan-Base
Current mood: content
Category: Music

Just got the website OM Blog up and running.  Our first article, by Al Delaney, is posted.  Please take a minute to check it out.

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Radio Stations
Current mood: creative
Category: Music

Listen...OutboundMusic Rock Channel

Listen....OutboundMusic Pop Channel

more channels...GO

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RIAA
Current mood: angry
Category: Music

My thoughts on the Recording Industry Association of America (RIAA)

Aaaak! It doesn't take much to upset me these days. Just say "RIAA" and my blood pressure rises. Why don't people get it? Might I suggest you go to the RIAA site and read up on "Who We Are" in their "about us" category.

Here, let me save you the trouble. A quote directly from www.riaa.com:

"The Recording Industry Association of America is the trade group that represents the U.S. recording industry. Its mission is to foster a business and legal climate that supports and promotes our members' creative and financial vitality. Its members are the record companies that comprise the most vibrant national music industry in the world. RIAA® members create, manufacture and/or distribute approximately 90 percent of all legitimate sound recordings produced and sold in the United States."

Who are its members? Oh, I see. It states right there in writing. "Its members are the record companies that comprise the most vibrant national music industry in the world". And the mission of the RIAA is to "foster a business and legal climate that supports and promotes our members' creative and financial vitality"?

Did I read that correctly? So am I understanding that the members are the small handful of major record labels that have had a choke-hold on all of the entertainment industry (until recently), and the mission of the RIAA is to "support and promote the creative and financial vitality" of those major labels? Gee, that sounds rather self-serving to me. While one might expect an entity like RIAA to have it's own agenda and interests at heart, it's still disappointing when others, like the copyright office and congress, fail to see through their act. And if it weren't so sad, it would almost be comical that the industry big guns with their history of dubious bookkeeping, royalty shaving and payola, now try to claim the moral high ground.

And how is it that this small group of companies can "create, manufacture and distribute 90 percent of all legitimate sound recordings produced and sold in the United States?" Could it be because they have historically pretty much controlled what music is distributed to retailers because those companies also own all the major distribution companies? And could it also be that they have pretty much controlled what music the public gets to hear on syndicated radio?

Yes, we all thought there were laws protecting against such things. True, a record company would be breaking the law to pay a radio station to play certain songs by certain artists. That would be payola. They don't do that anymore. My understanding is that they now pay 'personal agents' of their artists to pay the radio stations to play certain songs by the certain artists. That seems to legally squeak by.

Hey, and what about the other 10 percent of all legitimate sound recordings produced and sold in the United States? The RIAA doesn't mention that that other 10 percent of recordings makes up 95 percent of the music being created. The 90 percent that the major companies produce and sell is actually only about 5 percent of all the music that's out there. There is a lot of really great music out there. You can easily find it on the Internet. Just do a search for "Independent Music".   Check out OutboundMusic.com.

So why is the RIAA (remember the RIAA's members are the major record companies) raising such a stink about music on the Internet? Could it be that they have not yet been able to take control of that media? Could it be that they want to position themselves to take control of that media? They seem to be aggressively lobbying themselves into that position.  They're aggressive lobbying already led to the passing of the CARP ruling that requires licensing for broadcasting music over the internet.  Who is supposed to pay?  Anyone who broadcasts music over the internet.  And, who gets paid?  The RIAA...or the major labels.

Let me pause here to tell you how I feel about the theft of music.

I despise the theft of music. I'm all in favor of songwriters and artists being fully compensated for their creative work. I think piracy is a serious crime and should be dealt with as such. The Internet has allowed for the theft of music by illegal downloading. A solution to this problem is needed.

But how will artists and songwriters really benefit from the lobbying efforts of the RIAA? Well, one might surmise that that 5 percent of all artists who are represented by a major label would benefit. But what does a major label really do for an artist? My take…they insist on extremely high-budget productions and other high-budget expenses (which are recouped from artists' royalties), they typically offer artists meager royalties of from 8 to 12 percent of record sales (at a wholesale rate), and they are likely to drop an artist at a moment's notice. Oh yes, and the artist may get his or her 15 minutes of fame. So, if this is what the major labels already do for artists, how do I expect their artists to benefit from all this lobbying? I fear that once again, the record labels are the ones who will benefit the most, not the artists, and not the songwriters.

Well, for the other 95 percent of artists who are not signed to a major label, how will they benefit from all this lobbying? How do they benefit from the CARP licensing?  They don't. In fact, Internet sites that broadcast music are now faced with hefty RIAA licensing fees; fees that small, independent companies can't afford. 

So with small indie artist broadcast sites folding, only well-financed broadcasters will remain. Certainly any Internet broadcast affiliated with one of the five major record labels will be sufficiently funded for such operation.

Congress passed the CARP ruling, but thankfully, drew a line. Only those who broadcast music that is owned by an RIAA label must be licensed.  So, there is seemingly a solution for small internet broadcasters like OutboundMusic.com--only allow for broadcast of music that is not owned by an RIAA label.  Sounds simple enough.  But, oh yes, the big companies have thought of that too.  They swarm conferences and events such as South by Southwest trying to entice independent bands and labels to join RIAA.  They argue that this affiliation will help them with matters such as Grammy nominations and whatever other nonsensical lies they can pull over on the unaware.  This affiliation does nothing for the independent bands and labels except prevent their broadcast on non-RIAA internet stations.  Anyone can be nominated for a Grammy.  No RIAA affiliation is needed.

But the bottom line is this: What happens to artists and songwriters and to the future of music is up to you. Educate yourself about what the RIAA is doing to retain, or perhaps, regain control of the industry.  Don't be suckered.  Check out the site, www.RIAAradar.com.  They have information on various labels' affiliation or non-affiliation with RIAA.

Courtney Delaney-President OutboundMusic.com

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