Internet Radio Is Saved

http://blog.wired.com/music/2007/07/breaking-news-o.html

Pandora Exec: SoundExchange Will Not Enforce New Royalty Rates on Sunday
By Eliot Van Buskirk July 12, 2007 | 7:35:30 PMCategories: Save Net Radio  

At today's Congressional hearing about the new rates for online radio that would essentially destroy it (as readers of this blog already know), SoundExchange, which was scheduled to receive the new royalty payments on Monday morning (since the enforcement date falls on a Sunday), made a startling statement, according to Tim Westergren, founder of Pandora.
The SoundExchange executive promised -- in front of Congress -- that SoundExchange will not enforce the new royalty rates. Webcasters will stay online, as new rates are hammered out.
Westergren expressed relief that Pandora wouldn't have to shut down on Sunday in response to the new rates. He said, "It was getting pretty close. I always had underlying optimism that sanity was going to prevail, but I was beginning to wonder."
He said everyone who called their Congress person about this should feel that they had an effect on the process. "This is a direct result of lobbying pressure, so if anyone thinks their call didn't matter, it did. That's why this is happening." The flyer DiMA distributed to Congress today probably helped a bit too, but overall, it appears Congress intervened due to pressure from web radio listeners.
Funnily enough, Westergren told me this mere hours after a representative of SoundExchange said
that the new rates are "etched in stone." Evidently not.
Update: Another source -- close to the situation although not inside today's closed-door hearing -- confirmed the following: Pandora was there; "progress was made"; the minimum fees are indeed off the table; and SoundExchange and the webcasters that were part of the Copyright Royalty Board hearings are going to have another chat about the rates.
However, the source said the big question right now is whether webcasters not part of the CRB hearing might still have to pay the rates set by the board, minus the minimum fees.
Westergren had more to say, lending insight into a process that was largely opaque to non-participants. Apparently, the per-channel minimum fees mandated by the Copyright Royalty Board were never taken very seriously by those involved. They've now been taken off the table completely, saving Pandora, Live365, and other multicasters from their most imminent threat.
"No one thought those per station fees were remotely rational. It only makes sense that they're being taken off the table."
As for the Copyright Royalty Board? They're entirely cut out of the process, having set the rates and then refused a rehearing. Going forward without the royalties being collected, SoundExchange and webcasters will negotiate a new royalty rate with Congress looking over their shoulder -- "and last but not least, the public looking over Congress's shoulder." Alternatively, Congress now has time to consider the Internet Radio Equality Act, which would set webcaster royalties at 7.5 percent of revenue and allow them to continue operating pretty much as they have been.
Either way, this is a big win for webcasters and their listeners. [My second source confirmed that "it was a good day."]

Declare War on SoundExchange

Declare War on SoundExchange
by Jerry Del Colliano

Article taken from www.kurthanson.com

The "Day of Silence" to attract attention to the unfair treatment of Internet streamers at the hands of the Copyright Royalty Board (CRB) is over.

Now, it's time to take off the gloves and hit SoundExchange where it hurts them the most -- in Congress.

That's what those of us interested in promoting fair access to Internet streaming wanted the "Day of Silence" to do. It succeeded to the extent that the protest brought the issue into a more general public discussion, but the execution of many small Internet radio operators is still on for July 15th when a new, draconian rate structure will be implemented that could drive many streamers out of business.

A pardon is out of the question. That is a pardon to the CRB.

SoundExchange, meanwhile, has given us a glimpse of their Achilles heel.

They want to avoid getting Congress involved in this issue. It's their worst case scenario.

How do I know?

While the recent protest was being planned SoundExchange made a lightning fast offer to cap streamer's administrative fee structure at $2,500 per organization with royalties still additional. How cool is that?

Not cool at all.

And the proposal was only an 18-month deal. So, security for streamers would still be out of reach of their business plans. And, by the way, how can you have a business plan when your rate structure is renegotiated in another 18 months?

SoundExchange, the group that collects the streamers royalty money, wants the administrative fee reduction in return for a signed agreement that proponents of lower rates would abandon their legislative efforts to protest royalties in the future. This fact was not immediately transparent when SoundExchange was spinning their offer to Internet radio and Congress.

Congress has shown no interest in pursuing the legislative approach to Internet royalty justice. You've heard the politicians -- and they've heard you (yada yada) but Internet streamers remain on their own with the huge increase in fees only a few days away.

Internet radio is going to have to own up to what's going to happen on July 15th. No sniveling and no pity parties. They also don't have to take it sitting down.

Now it's time to hit SoundExchange and the music industry they represent hard where they've indicated they don't want you to go -- Congress. It's kind of like two parties in a lawsuit threatening each other knowing that over 95% of the cases get settled out of court. And why not? Who wants to hand control over to a third party. After all, it's Congress that helped cause the current dilemma in the first place. SoundExchange doesn't want that.

From July 15th forward lobbying and pressuring Congress should not be one day, one month or a one year event. It should be an ongoing fight. Hire the best lobbyists money can buy (that sounds dirty, doesn't it?). Get the best minds together to do a better job articulating the issue to bring about sustained pressure from the general public.

Our elected representatives understand one thing very clearly -- voters.

If the Internet streaming business is worth fighting for -- and it most certainly is the future -- shrewd lobbying and grass roots, gloves-off political maneuvering is a requirement going forward.

The gun lobby gets stronger and stronger even when children are accidentally killed by handguns that their parents did not responsibly safeguard -- when a nut case opens fire on a university campus and police officers are needlessly killed by automatic weapons the public doesn't need for recreation -- even when public outrage against guns hits the boiling point.

Yet the NRA is a force to reckon with. Elected officials from all sides wish to avoid their ire and many Congressmen welcome their political and financial support.

Internet streaming is not like gun control, but death of a young industry is possible before it takes hold. It's worth no less of a fight. No less of a top notch political machine.

Now, to my friends in the Internet streaming business, get smart and make July 15th the "Day of Reckoning" -- the day SoundExchange and the labels will remember as the day when they went too far.

Don't settle until Internet streamers receive fair and equal consideration in royalty fees.

Don't settle until you win stability -- not just measured in years without having to fight new rate hikes -- but in increased influence that guarantees you'll pay your fair share and not a penny more.