Webcasters: Here's Your Chance to Sound Off On SoundExchange
When the Copyright Royalty Board announced a sharp increase in the royalty rates to be paid by webcasters for the years 2006 through 2010, many predicted the imminent demise of Internet radio. That hasn't happened..yet. But it's not for lack of trying by the recording industry and the CRB. Have you ever heard the term "kick 'em while they're down". Well, the CRB appears to understand it, as it issued a Notice of Proposed Rulemaking on December 30 which could result in a six-fold increase in a major administrative responsibility of most webcasters.
While the webcasting community's anger toward the CRB predictably stems from the royalty decision, we often find that the attendant administrative requirement of filing information with SoundExchange concerning all the songs played on your Internet stream for two seven day periods of each quarter is an effective barrier to entry for those radio stations who are not already on the Internet. This is especially true for smaller stations or those that allow their DJs to engage in a more free flowing format which increases the breadth of songs played.
Our instruction to clients that the regulations formally known as "Notice and Use of Sound Recordings Under Statutory License" require that they compile information about each song played (including song name, artist name, IRSC code or album title and lable and the frequency of play) in ASCII format and either: (a) in Microsoft Excel or (b) Corel Quattro Pro format AND send it to SoundExchange, Inc via: (a) File Transfer Protocol, (b) E-mail, (c) CD-Rom or (d) on a floppy disc each quarter has been met with a pretty standard response of "that will require me to hire at new staff person -- or at least a part timer".
The December 30, 2008 NPRM proposes one significant rule change and several smaller ones. The really bad news, especially for smaller broadcasters, is that the CRB is proposing to make this quarterly report an actual "census filing", which means it would cover the entirety of every quarter, instead of just being a "representative filing" consisting of two weeks of the quarter (it likely will also require all webcasters to engage in precise performance counts, which could bring the added expense of updating your streaming software). The CRB explains that this change is needed to ensure that royalties are paid out to copyright holders based on the actual use of their works, not just the estimated use. The CRB does, however, exempt three services from this year-round reporting requirement:
- Pre-existing satellite digital audio radio services (Sirius XM);
- New subscription services; and
- Business establishment services.
The CRB also seeks answers to the following questions as a means to improving the technological delivery of these records to SoundExchange:
- Has any commercially available software become available since 2006 that would allow for this information to be delivered in a spreadsheet format other than Microsoft Excel or Corel Quattro Pro? Woudl they be compatible with SoundExchange's software format? What would be the associated cost?
- Have there been technological developments, including improvements to security, that would allow web-based delivery to be added as a fifth accepted method of sending quarterly reports to SoundExchange? Would web-based delivery be more efficient and cost
effective?
- Are there any other improvements to the reporting system that can be made in light of the technological developments of the past two years?
The last question seems to be an open invitation to let the CRB know just how onerous the recordkeeping requirement can be and enlighten them as to the deterrent effect it is having on small radio stations that wish to have an online presence. Whether you want to make a bold, far-reaching statement or simply let the powers that be know that two weeks of playlists per quarter is plenty, your comments must be filed by January 29, 2009.
So I spend a lot of time talking to and working with small-market stations on this very issue via a service I run that helps them generate these reports of use.
The thing is, the vast majority of these stations and their staff agree on the idea of artist compensation. They get it, that in a perfect world, this huge onerous recordkeeping that they have to do is supposed to benefit the artists they play, and actually get a royalty paycheck into their hands at some point.
No, they're not happy that it means having to retool their streaming setup, retool their business processes, retool their recordkeeping, and sink a lot of staff hours and time into it. But at the end of the day, if what they're doing **actually helps get the artists paid** then the majority of them support the idea and are willing to head in that direction.
The problem is that these stations jump through the hoops - and then they see that SoundExchange only pays out a little over half of the money it takes in. And that SoundExchange absorbs the royalties in 3 years if they aren't claimed. And that SoundExchange can't find artists like "Metallica" and "The Mormon Tabernacle Choir" and people that you and I can find in a minute using a single brain cell and Google. And that SoundExchange is siding with and funding even more efforts (via musicFirst) to hamstring and cripple Internet Radio with regulation and even more onerous legislation...
So guess what a lot of them say? "Forget it. If what we're doing doesn't actually get the artists paid, forget it."
And now the CRB wants to raise the recordkeeping bar again. Bad idea.
The CRB needs to stop looking at the front-end part of the equation and start concentrating on shaping up the back-end, ASAP, if they don't want the whole thing to collapse.