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Small webcasters enter the unknown of 2016

Things have gotten real for small webcasters. December 31 came and went like a silent specter, as the law which gave special royalty rates to hobby and semi-pro online radio stations expired, its death seemingly unattended by the institutions which have power to revive or replace it.

kevin goldbergSmall Internet radio operators, and larger companies which provide platforms for them, now have 15 business days to decide whether to continue streaming in 2016 with a much higher cost of music. “There is the February 1 deadline for filing the annual minimum fee,” attorney Kevin Goldberg, of Washington law firm Fletcher, Heald & Hildreth, told RAIN News. Goldberg explained that the February 1 payment of $500 is like a non-refundable deposit which allows a webcaster to stream a station in 2016 under the current royalty structure.

Unhappy New Year

 

That royalty structure is a problem for small webcasters with small audiences that earn small revenues. On December 16 the U.S. Copyright Royalty Board (CRB) set new rates for 2016. The applicable rate for non-subscription music streams (like most small webcasters) is 17 cents per 100 plays ($0.0017 per song per listener). That micropayment is a huge inflation of what small webcasters previously paid, which was based on a percentage-of-revenue calculation. The law which created that special webcaster category and defined its music licensing rate was the Webcaster Settlement Act of 2009 (WSA), and its term ended at midnight on New Year’s Eve.

marvin glass“While .0017 per performance is a big win for larger webcasters and FCC-licensed broadcasters, it is totally devastating to microcasters,” according to Marvin Glass, owner and manager of StreamLicensing, a platform for small and mid-size webcasting. “The Internet has been one of the last level-playing fields left for small, mom and pop or ‘hobbyist’-type webcasters,” Glass wrote recently. “That level playing field no longer exists for these very small webcasters and I’ve watched them close their stations by the hundreds over the last two weeks. I’m talking about watching disabled vets shut down their stations. Retirees on small pensions, those on disabilities, others visually handicapped, as well as ordinary working men and women who just want to play a few songs over the Internet for their friends. It happened almost overnight.”

Kevin Goldberg is currently representing StreamLicensing. “We are discussing the state of affairs, the lay of the land, and the road forward,” he said.

Who’s Got the Ball?

 

Some small webcasters rail at the CRB for failing to protect them, but it is not the CRB’s purview to make special deals for defined market groups. The Webcaster Settlement Act resulted from discussions between SoundExchange, the government-sanctioned organization which collects and distributes label royalties, and music labels. Similarly, side deals have been created for public radio station webcasts and college radio station webcasts. Both those groups are again protected in 2016. Why didn’t small webcasters get continued shelter from big-stream rates in 2016? Probably because they were not represented in the CRB process, where participation is too expensive for single stations, and where no organized advocacy came forward.

So — too late now? No. Special arrangements can be made at any time — witness the Webcaster Settlement Act of 2009 which became law during the five-year royalty period of 2006-2010, and extended its protection through the entire following period (2011-2015). The question is whether major market determinants (SoundExchange and the labels) are motivated, either by their own initiative or by external pressure, to talk about it.

What’s Next?

“We don’t know,” according to Kevin Goldberg. “There’s a lot of rumor going around, some of it better informed than others. The big thing is the lack of clarity about what will happen to small webcasters.”

Within the generally cloudy view of the future for small webcasters, Kevin Goldberg expressed hope that might border on optimism. “I do think labels, SoundExchange, everyone, sees the value in small webcasting,” he said. “I do feel there will be talks about this at some point. The landscape has changed since 2009, when the small webcaster settlement was passed. But there are reasons why everybody will want to at least talk about something.”

RAIN News has noted in previous coverage that the 2009 law was conceived to be a temporary adjustment in an immature market. We asked Goldberg whether the market was still conducive to a small webcaster settlement, as it was in 2009. “At the time, that’s probably how it was envisioned,” Goldberg observed. “It also seems to me that maybe the market hasn’t progressed exactly how people thought it would. Perhaps some of the then-small webcasters are no longer small, and no longer needing this. But maybe there are more small webcasters who do need that category with a percentage-of-revenue [royalty calculation] or some sort of price break. Maybe people didn’t appreciate [in 2009] that we’d still be there with regard to so many small webcasters.”

Large and Small Players

In our conversation, Kevin Goldberg noted that labels have a self-interest in caretaking a healthy music exposure ecosystem that works for both recording stars and less-known artists. In this view, small artists are the clients of labels; as such, they need to be provided promotional outlets that can foster discovery. “All webcasters provide some measure of value even beyond revenue,” Goldberg asserted. “Small webcasters certainly do that with regard to independent artists, in a way that radio stations and big webcasters sometimes don’t. And [labels] value that; the question is how to quantify it, in a way that really does benefit the artists.”

“Let’s face it,” Goldberg concluded. “Soundexchange and the labels, they have clients, and they need to provide a service, which is to make sure [artists] get proper compensation for their creative work.”

The Small Webcaster Timetable

These are upcoming dates and actions for small webcasters still streaming, provided to RAIN News by Kevin Goldberg:

  1. February 1 (extended from January 31 which falls on Sunday): File an annual minimum fee and statement of account form and pay $500 per channel. That fee is due separately for each station, in cases where a webcaster operates multiple stations. It is non-refundable. The money goes toward royalty obligations, but any excess at the end of the year is not paid back to the webcaster.
  2. March 15: Submit the the year’s first monthly statement of account and pay your licensing bill. Those are due within 45 days after the end of each month. The first deadline is for January’s streaming.
  3. Along with #2, submit your report of use, which contains data about every song you played during the month.

Kevin Goldberg predicted that SoundExchange could be deluged by annual minimum fee submissions (step #1) at the eleventh hour, as small webcasters hopefully wait for a sign of support … or quickly organize to agitate for that support. If, instead, that date marks the end for most small webcasters, in the dire words of Marvin Glass, “much of the vitality of Internet Radio is gone.”

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53 Comments

      • Hi Brad, your coverage on small streaming services in the US is very informative. I would like to get more information about countries like South Africa which might not necessarily have a streaming licensing regime yet. Can I please have your email address.

  1. Has anyone heard anything about what the following are planning to do:

    Radionomy – Nothing on their board or their Facebook page informing listeners about this.

    181.fm – Nothing on their Facebook page informing listeners about this.

    Boomer Radio (www.boomerradio.com) – Are they US-based? There’s nothing on their website about this. I haven’t been successful in finding a Facebook for them.

    • Music Lover – I’ve emailed those streaming sites to find out whether or not they will be shutting down.

      • Thanks for doing that.

        I’ve heard that Radionomy is based in Europe but their are a lot of American stations that use their service. I’m curious if Radionomy will be dropping the American stations because of this?

        181.fm is similar to the Radiotunes.com site that Why mentioned. Their headquarters are in America. They play some commercials and they have voluntary donations. I’m just wondering if they can survive on that alone?

        Boomer Radio is channels aimed at Baby Boomers. Not sure if they are American based. I’ve heard a small handful of public service announcements played. Again, I’m wondering if they can survive on only playing public service announcements?

        • Lol. PSAs are unpaid. That’s why they are a “public service”.

          The speculation should be aimed at the issue at hand. Not at who may or may not afford it.

          • As a listener, what stations will and will not still be streaming is the issue on hand for me. It will help me determine if I should start seeking out some European radio stations to listen to that play Soft Adult Contemporary artists such as The Carpenters, Elton John, Whitney Houston, Celine Dion, etc.

        • @Music Lover – Here’s an Irish station that plays that kind of music: heartbeatfm.net
          Because it’s in Ireland, it’s not affected by the CRB rules.

          • @Idol Girl – Thanks for that link. FM radio doesn’t play that kind of music anymore. Even on the Internet, I’ve had a hard time trying to find stations playing that. I guess it’s because it’s not “hip” or a “party” style music.

          • Here’s another station from overseas that plays Soft AC artists that are familiar to American listeners: sunshineradio.ie

          • Thanks for the link Soft Rock Chick.

            One of my favorites from Stream Licensing – Soft Rock Radio Love – has moved to Radionomy. He’s just gotten it set up. It’s amongst their Easy Listening stations.

            One I came across this morning on iTunes is Easy 101, an FM station in Ontario.

            Familiarity is the key thing for me. I don’t mind a station mixing in some indie artist(s) with a Soft AC sound, but I want some familiar mainstream Soft AC artists in the mix to make the station more accessible, more relatable.

          • Of the ones that have been suggested to me, I like the Heartbeat FM station best. I like that they play non-stop music without interruptions. DJ chatter can get on my nerves the most.

        • Someone from the staff at Radionomy’s US office replied. He said they cover all royalty fees for their broadcasters. Basically, he didn’t answer the question I had asked.

          • Soft N Easy Net Radio – another Stream Licensing station I enjoyed, which recently shut down – had tried out Radionomy. He said his experience with them was not all “warm and fuzzy”.

          • I see the Soft Rock Radio Love guy has shut down his Radionomy stream. He may not have liked the experience either.

          • @Idol Girl – His stream is back up now. Maybe he’s testing it out.

          • An artist I like has a stream for his music on Radionomy. In addition to playing his music, his stream plays artists and songs that have inspired him.

        • Point of order. Radionomy OWNs the full, legal rights to ALL streams played on it’s service as specified in its agreement with webcasters who are DESIGNATED as “producers” NOT owners.

          Radionomy is outside US law, the Copyright Royalty Board (CRB) and the Recording Industry Artist of America (RIAA). Rather than working with small broadcasters and webcasters, the folks who worked out the new rates with the CRB decided this was their chance to squash competetion and to only allow the mega-webcasters like Pandora and a few others survive. This is NOT surprising … this same tactic has been in the works in every year since 2001. Well, you guys won … you got what you wanted … the end of the little guys who play music you don’t make as much money for when it’s played, and in the process you wiped out the small artists and musicians who would LIKE their music to get some airplay. Greed has prevailed but doesn’t it always. So now that you have forced small webcasters to go off shore, you hope and suspect you can force these companies to BLOCK broadcasting to the U.S. market and to DUMP all U.S. based webcasters and broadcasters. Good luck; you’ll need it.

      • Someone posted on the Radionomy forum, asking about the CRB ruling. board.radionomy.com/viewtopic.php?f=35&t=18385

  2. Musiclover,
    Has it occurred to you that the sites you keep mentioning are just going to pay the new rates? Seems to me they generating income. I’m sure they aren’t happy about the rates, but will most likely survive.

    What you should be asking is why isn’t LIVE365 making mention of this on their website? Those are SMALL MICRO stations that don’t make any money at all. They should be very concerned! Further, LIVE365 is near completely shutting down, so they should have this all over their site!

    Accuradio should have this all over their site as well. They have more channels than I’ve seen. They don’t seem to be helping anyone else either.

    Same applies for DI.fm and Radiotunes.com. In this time of crisis, they should be promoting the petitions for the greater good of ALL USA based Internet radio. Instead, seems they’ve taken the approach to just try to help themselves by putting up a letter asking their listeners to pay for a subscription. This isn’t helping this cause at all. Seems to me they’d be fine with paying the new rates and eliminating all the clutter of smaller internet radio stations, much like Pandora. They’re out to save their own skins.

    • Those sites that Music Lover asked about are small too, just like Live365, and should be warning us listeners about the possibility of shut down if they are unable to pay the rates.

      • Of the sites Music Lover mentioned, Radionomy is the most similar in nature to Live365 (i.e., made up of individual hobby stations)

        181.fm is more similar to Accuradio. I read somewhere it’s considered medium sized.

        Boomer Radio is also more similar to Accuradio, but channels are more specifically aimed at Baby Boomers.

    • I emailed Live365 at the end of December about why they didn’t have anything on their website nor their Facebook about this. They have not bothered to reply, probably due to the staff being fired.

      • In my opinion, lack of communication only serves to anger and drive off your listeners.

    • Does anyone know if Radionomy pays SoundExchange? I’ve looked on their quarterly filings for 2015 and do not see the company mentioned once.

      • According to this article, supposedly they do. evolver.fm/2012/09/18/radionomy-get-paid-for-being-awesome-at-music/

        According to Wikipedia, they pay some Belgium agency called SABAM. en.wikipedia.org/wiki/Radionomy

        • The Soft Rock Radio Love guy moved another station of his to Radionomy and has info posted a page about their licensing. softrockradio.net/musiclicensing.html

          • The Soft Rock Radio Love guy has posted some info on his Facebook page regarding how Radionomy works. facebook.com/softrockradio/posts/1728336414051846

    • I’m sorry about the broken sign-up link. It is fixed now, but I added you to the newsletter subscription list. Thank you. No need for you to take any action.

  3. To be clear, the $500 per station is misleading. If a small webcaster operates a streaming radio service that enables “personalized radio” (e.g., each user’s stream is unique to that user, based either on choosing a genre, an artist, etc.) then EACH STREAM is a station or channel under the statute. So if that service has 500 users, that would be AT LEAST 500 stations, which at $500 per station would come to $250,000. For this reason, the statute caps the per-station minimum at $50,000. So that Feb 1 payment could be a lot more than it seems. See http://www.soundexchange.com/service-provider/rates/commercial-webcaster/

    • Deborah, you’re pretty knowledgeable. Everyone is talking about SoundExchange and their rates, but I was under the impression that small webcasters also has to pay BMI, ASCAP and SOCAN. Do you or anyone else here know about the ins-and-outs of those music licensing companies or how these changes will affect those payments? Thanks!

      • According to this station’s Facebook post, they have to pay those other agencies as well. facebook.com/kliteonline/posts/1044701305581459

        I’ve heard that SOCAN is a Canadian agency.

  4. I am not sure what we are waiting on.

    Is there or isn’t there going to be a neogation? This wait until it’s the 11th hour is getting really old.

  5. Don’t hold me to this, but the likely reason DI.fm, Live365, Radionomy, and many of the others aren’t reporting this issue to users directly is, that they’ll most likely block U.S listeners if there isn’t an 11th hour agreement.

    That way they dodge the need to pay the fees, and don’t scare existing users of the services by announcing the problem ahead of time.

    • DI already started blocking US traffic across all third party directories (try iTunes Internet Radio for example) and heavily limits free streaming (without registration) on their websites to only 30 minutes.

  6. Perhaps some of us are waiting to win the $1.3 billion Powerball jackpot.
    Then, that way, we can be like Clear Channel, CBS and Pandora and pay the judges off?

    • Of these larger streaming companies, I like Pandora because I can create my own personalized station using songs and artists that I like as seeds and I love being able to skip songs that I hate on the stream.

  7. Live365 has been warning us via e-mails. The site has lost a lot of broadcasters to Radionomy and the Live365 forums have been busy in the past week discussing the issue, However L365 laid off a bunch of people and vacated their offices. Except for a few remaining staff who are working there from their homes, their webmaster was probably one of the folks who was let go. L365 has now started closing accounts and the L365 forum is becoming extinct.

  8. Facebook page to save internet radio. facebook.com/Save-Internet-Radio-742604289204489/?hc_location=ufi

  9. This definitely is an issue that needs to be handled and it is going to take us making some noise about it. Yes, many stations have shut down and many more will for the fees are just too much for most small webcasters. This is why the SIREN campaign (stands for SAVE INTERNET EXISTENCE NOW!) was created to sound the alarm and make others aware of how they can help bring this issue to the forefront.

    It was created by a network who had to shut down all but one of their 14 stations until this is resolved. For they were doing the right thing and had all their stations licensed and now they are being charged per station per listener per track! Can you imagine what that would be a month!!!

    We can’t just shut up and shut down – That’s what they want!!! We need to come together in order to take this to the next level. Just as the majors stand strong we need to as well. Visit the site to stay up to date on what’s going on and all the links petitions in circulation or on the site! Go sign them all! Time to Sound the Alarm!!!

  10. Hot Rocks Radio has started a “Go Fund Me” on Face Book to try to raise enough funds to stay on the air. It would be so sad if we had to close our doors after all the years we have been active. Many of our DJ’s (including myself) are disabled or live on Social Security. It is our only source of entertainment in some cases.

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