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Andreas Gregor 26 Carluke Ct. #1206 Toronto On. M2L 2J2 Canada Email: [email protected] March 5th, 2007 Hello everyone, My name is DJ Formaldehyde. My wife and I have hosted a show called “A Darker Shade of Retro” at www.flashbackalternatives.com for over two years. As an internet broadcaster as well as a musician, I need to raise awareness about an issue that is very close to my heart. As of Friday March 2nd 2007, the Copyright Royalty Board announced new royalty rates for Internet Radio stations in response to heavy petitioning by the Recording Industry Association of America. These rates are retroactive to January of 2006, thus the future of internet radio is seriously threatened. Internet radio stations will be subject to much higher licensing fees, and these fees are proportional to the amount of listeners. One average, every station will have to pay 1.75 cents per listener per hour. In other words, a station that has an audience of 500 listeners will pay roughly $210 per day, or $76,000 per year, which is about 10 times more than what stations are paying now. This will force most internet stations off the air. It will have a negative impact on Bands, Indie labels and Campus Radio Stations as well. This of course, raises many questions. First off, why is it that in the U.S. the body that governs the recording industry is allowed to govern or at least influence the rules of internet broadcasting. This is direct conflict of interest since in most countries, the task of governing broadcasting lies with one organization, while the process of collecting royalties on behalf of the artists fall to another. (In Canada’s case, the CRTC governs broadcasting while Socan represents publishers and artists). One has to ask why the RIAA is allowed to have so much power over the legislation of the broadcast medium, while at the same time they are able to protect their own interests. The argument most often given is that with declining CD sales and illegal downloading, other means of collecting revenues must be explored. This sort of action however, punishes those who are widening the exposure of new artists to potentially new fans and prevents it artists from promoting themselves through Internet Radio. Many Internet radio stations have become instrumental in promoting new artists and independent record labels by helping them establish a fan base. Artists and labels need to be aware that this avenue of exposure is about to become a thing of the past. By imposing these high fees, only the high profile broadcasters such as AOL will prevail, and only the most mainstream programming will remain available. By making these fees retroactive to January 1st of 2006 every broadcaster will be left owing an unreasonable and unforeseen about of money to the Copyright Royalty Board, which will force most broadcasters into bankruptcy. To put things into perspective, popular stations with an average of 1,000 listeners currently pay about $1,500 to $2,500 per month to stay on the air. Now they will owe an additional $12,000 for each for each month they were on the air from January 1st of 2006, which is an amount that not even the best business plan in world could cover, and as a result, most will simply close down. Imagine what would happen your local cable company informed you that your rate has retroactively increased from $50 per month to $500 and you are left owing $5400. How would that even be constitutional? This whole scheme does raise some questions. Why is the RIAA so motivated to shut down Internet broadcasting? Could it be due to complaints from commercial radio and satellite broadcasters that are losing listeners to internet stations that are being run by hobby DJs? Could it be due to pressure from record labels worried that it is easy to record music onto your computer while listening to an online radio station? Either way it seems like the RIAA has deliberately targeted internet radio stations in order to force them off the air. From a personal point of view I can only draw the conclusion that the RIAA is trying to downsize the industry as a whole. Since the Alternative Revolution in the early 90’s the independent record labels have been able to do fairly well. The inception of www.myspace.com has enabled artists to promote themselves with ease. All they have to do is make a few tracks available for download, and if a music director of any station likes what they hear, they can simply include it into their stations programming. Where does that leave the RIAA under the old rules? They don’t get a cent because they didn’t do any work for it. And that is what the RIAA hope to change in my opinion. They want to change the rules by taking away any avenue of promotion that does not include the major labels, and once again keep the entire industry to themselves. One of my biggest questions regarding this issue is: What will happen to terrestrial radio broadcasters who also stream their normal broadcasts on the internet? At the moment the amount of money a terrestrial broadcaster pays does not depend on the amount of listeners they have. They pay a monthly fee. They are not being punished for being successful. So why should the rules be different for Internet Broadcasters? At the very least, to make things fair, commercial broadcasters should be required to be paying the same rate as Internet broadcasters are, if they are streaming their programming on the Internet as well. But if that becomes the law, then that would put many campus radio stations in jeopardy as well. Their transmitters tend to be of low power and they especially benefit from using the Internet to reach more listeners. By being forced to pay for streaming Internet broadcasts on a “per listener” basis, most campus radio stations will have to give up that practice. And since the royalties owing are retroactive to January 2006, that would bankrupt most campus radio stations as well. So who knows why the RIAA is going after the very institutions that are giving artists a wider audience. Why not go after big businesses that are not paying royalties the music that their customers are listening to while they are “On Hold”? In that case why not charge larger corporations more money as they have more customers on hold at any given time? Why not go after illegal Russian download sites that pose as legitimate? Why not go after night clubs that aren’t paying they play or don’t bother submitting playlists? The argument of providing a fairer way of sharing royalties for artists is a completely invalid one. Artists are not getting their fare share of royalties anyway. Random samples of major radio station playlists are taken, and payments are calculated on that basis. Club playlists are rarely requested and campus radio playlists don’t seem to account for much of a difference. Internet broadcasters do submit their playlists like terrestrial broadcasters, but the manner in which they affect the way that royalties are paid out is minimal, due to their “insignificant market share”. Charting artists get the money first. While Internet broadcasters tend to exist by filling a void that regular broadcasters aren’t filling, the revenue they create for the RIAA is being primarily given to those who haven’t earned it in the first place. Given these facts the days of Internet Radio seem numbered. There are of course things that can be done to attempt to revoke these new regulations. Regardless of whether you live in the U.S. or not, these rulings do affect you. So write as many letters to congress as you can in order to force an appeal. http://www.visi.com/juan/congress/cgi-bin/newcommittee.cgi?site=ctc&lang=&commcode=hcommerce_telecom Congress: http://www.house.gov/writerep/ Senate: http://www.senate.gov/general/contact_information/senators_cfm.cfm Also check out www.savenetradio.org for more information. Anyhow, my plea goes out to you all, not only as an internet DJ, but also as an artist, to do what you can to keep internet radio on the air in the future. It is after all the true Spirit of Radio. Yours truly, Andreas Gregor (!Bang Elektronika) A.k.a. DJ Formaldehyde, www.flashbackalternatives.com

Posted by Andreas Gregor on March 07, 2007 at 08:25 AM EST #