Streaming Royalty Rates going up

Kurt Hanson has a nice review of the dramatically increasing Internet radio royalty rates, noting (among other things) that the costs of rights fees would exceed the revenue for many smaller online outfits.

This is, of course, typical RIAA stupidity that rewards the big hitmakers (who will net all the revenue) and punishes the little artists and baby bands who likely depend on nichier online outfits for exposure, and who will see their outlets dry up if they depend on a model that involves profits rather than charity. It’s like the Screen Actors’ Guild hiking scale such that an entire tier of actors is thrown out of work.

That said, it’s not the job of the RIAA to finance the existence of small and independent webcasters. And higher rates or not, the Big Guys are likely to keep on streaming.

So if these rules become final the end result, in my estimation, is that the “long tail” will be a tad shorter than anyone expected, but still a heck of a lot longer than it is now.

Radio will still face an ocean of online competition.

UPDATE: I know about lots of stuff, but not a lot about this area. Here’s a note from someone who knows a lot more:

If this stands, it will wipe out a HUGE percentage of webcasters. No more long tail at all. Pandora.com will likely be gone. Smaller traditional broadcasters, many of whom couldn’t justify the cost of streaming in the first place, will now completely ignore Internet streaming.

For 2006, the annual price per AQH listener is about $100, It will more than double by 2010. I now have an instant debt of about $20,000 and getting larger with each song I play. Getting listed on iTunes just means my obligation is going through the roof. The RIAA is not financing the survival of smaller webcasters. You can’t collect more money from significantly fewer clients. This even ends PBS non-commercial music streaming with an AQH of anything over 222 listeners per station. History.

We can thank the DMCA, passed in the late 90’s that made all of this possible. The RIAA won a huge victory while radio was sidetracked with its love affair with consolidation.

Personally, I can only continue right now day-to-day with the hope that saner minds will prevail – soon. It’s that or shutting down right now and somehow paying off this huge new bill. Ironically, I got another email from a record label TODAY asking me to play a song from a new artist as they go for new adds. Now that’s real chutzpah!

And here’s why all of this is bad for radio:

Because:

A) Broadcasters will be discouraged from streaming

B) While other big players are not.

C) And many small players will be shut out

D) And the victory will go to radio’s new – and big – competitors

E) Whoopee.

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