7.19.07 RADIO'S THE NEW SALVATION

This article originally ran on the 7/19/07 issue of Metroland.

You may have seen a lot of headlines over the weekend screaming about the death of internet radio that was supposed to happen on Sunday. It didn’t happen. Here’s what happened:

New royalty rates set by a federal board were supposed to go into effect on Sunday. These rates were proposed by the major record companies (who would be collecting the lions share of the revenues) and rubber-stamped last Spring by the federal board. Compared to the rates previously in effect, the new rates were insanely high, and, unbelievably, retroactive. So, if these rates went into effect, many internet stations, which are fledgling and don’t exactly have great revenue streams, would be not only out of business, but bankrupt as well. The bill for the retroactive royalty payments would simply transform the stations into hopeless debtors.

The effective date of the new rates was set for last Sunday, and in the meantime web advocates went to court and to Congress to get the new rates repealed. They struck out in court late last week, and meantime Congress has been taking a hard look at the issue, and telling the parties to try to resolve all of this with a compromise agreement. SoundExchange, the record company-backed organization that’s in charge of collecting and disbursing these royalties, has made some significant offers of reduced royalty obligations, especially for the smallest webcasters, the folks webcasting out of their basements, the real fringe folks. And negotiations are continuing.

So right now it looks like this: the new rates are technically “in effect”, but they’re not being enforced while Congress huffs and puffs and the various players are coming closer and closer to reaching some sort of agreement. The big issue right now seems to be how long a rate détente will last—larger webcasters want a long term agreement, so they can have some certainty going forward that they can continue to invest in their ventures and not have this royalty nightmare repeat in a couple of years. The record companies want a short-term agreement, because if web radio blossoms and becomes a big money deal, they want to share in the action through a greater royalty flow.

Meantime, web radio looks generally safe, at least for now. The tiny community radio station I’m involved with, for instance, won’t see a dramatic increase in royalty payments for its web stream, which maxes out at 20 listeners. Neither will the lunatics who play Hawaiian death metal 24-7 for a handful of fellow lunatics around the world. The folks who’ll get dinged the worst will be the big webcasters, like AOL and Yahoo, who can readily pay the royalties, even if the money isn’t coming directly out of their web-radio operations.

In other news, the renegade Russian download site, AllofMP3, is back. The site, which sold songs for a fraction of what iTunes charges, claimed that its operations were perfectly legal under Russian law, and even had a Russian court decision to back it up. Record companies everywhere claimed they weren’t getting paid, and tons of diplomatic and economic pressure was brought to bear on AllofMP3, including a pullout of service support by Visa, Mastercard and Amex. For a while the only major credit card that would work was Diner’s Club! The site disappeared a couple of months ago, but was resurrected this week with the new name MP3Sparks.com. The site looks and feels the same as AllofMP3, and for now it’s claiming to accept all major credit cards.

Who knows whether the site will still be there by the time you read this, but it took the powers that be a couple years to kill AllofMP3, so maybe it’ll hang in for a while. You can bet that there are a bunch of lawyers, diplomats, and trade officials going through conniptions right now.

Finally, a British economist just published a study about the optimal term of copyright. Using a dizzying array of assumptions, theories, formulae, calculations, and big words, this guy came to the conclusion that the societally optimal term of copyright is about 14 years. The term of copyright has been repeatedly increased since the laws were first created in the late 1700’s. 14 years is a lot shorter than the present term of the life of the author plus 70 years, which is tantamount to forever. It’s also pretty remarkable (or not) that 14 years is the original term of copyright provided for in the Copyright Act of 1790. You can read the study at www.rufuspollock.org.

7.5.07 DISAPPEAR CHANNEL

This article originally appeared in the 7.5.07 issue of Metroland.

It’s remarkable to see scum get even scummier. Sometimes we paint certain players as evil, and that’s often grossly unfair. Sometimes “I’m just doing my job” is a cop out, but sometimes it’s true. Things are almost never as black and white as we in the bitch-sheet business make them out to be.

But sometimes they are. Case in point. You might remember that in 2005 then-Attorney General Eliot Spitzer nailed a bunch of radio stations and record companies for indulging in payola, the illegal practice of exchanging money and gifts in return for guaranteed airplay of the record companies’ “product.”

Millions of dollars of fines have been paid, and there was one addition piece of fall out: an airplay agreement between Big Radio and a trade association of independent record labels. The indy labels don’t have the scratch to buy airplay, but somehow had enough juice to get a seat at the table while the likes of CBS and Clear Channel were getting spanked. Much of this indy label / Big Radio agreement strikes me as unenforceable, feel-good hooey, a list of “rules of engagement” for how the corporate radio world will behave in the future. But one provision had some teeth: a promise by Big Radio to devote airtime to artists on independent labels.

This part of the agreement looked a little sketchy, referring to 8500 half-hour “blocks” of indy music played on corporate radio stations, but it was better than nothing. The agreement says the blocks can run anytime between 6 AM and midnight. And you know that that means. Seems to me that having an indy music show segregated and dumped onto a Sunday morning is tokenism at best. One would think these stations’ genius “music directors” might find a way to stick something by Wilco or The Velmas in the middle of a typical set by Steve Miller, Freakin’ Zeppelin, Freakin’ Skynyrd (man), and Steve Miller, and make it work. The rest of us could do it, and we’re not even “professionals.” But, whatever.

And then Clear Channel tried to fastball one by. Last week Clear Channel stations began their “initiative” to hold up their end of this bargain, by asking indy bands and labels to submit music to individual stations for consideration. Again, the genius “music directors” can be bothered to seek out indy music to play. Let’s have bands submit! Like a big contest! It’ll be fun!!!

And the kicker: by submitting, bands have to click-through a “license agreement” in which they agree to waive all of their rights to the royalty payments. Here’s the relevant part:

1. License. You grant to Clear Channel the royalty-free non-exclusive right and license, in perpetuity (unless terminated earlier by You or Clear Channel as set forth below), to use, copy, modify, adapt, translate, publicly perform, digitally perform, publicly display and distribute any sound recordings, compositions, pictures, videos, song lyrics, still images, Your name, picture, portrait, photograph, band information data, graphics, trademarks, text, information, screen names, profiles, newsletters, gig listings, playlists, podcasts, blogs, broadcasts, messages, software, XML, RSS and links and/or other content (collectively, the “Content”) submitted by You to us on this website (the “Site”), including portions, composites, likenesses or distortions or alterations of same, in whole and in part, and to prepare derivative works of, or incorporate into other works, the Content, in connection with the preparation transmission, operation, production and advertising of and for (all media and methods checked by you above (check all that are applicable).


Whoa. So, for the “privilege” of getting played at 7 AM on a Sunday on your local Clear Channel station, you agree that you won’t get the same royalty payments as, oh, Steve Miller, etc. In fact, you agree that you won’t get any royalty payments at all!

And what happens if hell freezes over, and your indy recording becomes a hit, and the genius musical directors at these mind-numbing cabals of banality stick you in rotation with “Cocaine,” “Sweet Home Alabama,” and “Hot Blooded”? Oops! Adios, simoleans!!!

The strange thing here is that all of these cash-cow stations already pay blanket licenses to the various performing rights organizations that disburse royalties to artists and songwriters, or have sleazed themselves exemptions out of paying them, like in the sleight-of-hand exemption Big Radio got from Congress on HD streaming royalties. So it’s really hard to see what Clear Channel gains here by treating indy artists so profoundly different from the handful of major label artists played repeatedly, day after day. Except, perhaps, for the sublime pleasure in screwing somebody, anybody.

And what’s truly disgusting is that this is all in the midst of Clear Channel’s fulfilling obligations that arose from having been caught breaking the law. To paraphrase the fine folk at the Future Of Music Coalition, does this sound like an act of contrition to you?