Monday, March 19, 2007

I wrote a while back about the wonders of lastfm and internet radio, and how it's breathing life into music (maybe not the music industry as currently configured). Well now it seems the RIAA's fighting it all once again. They are again proposing to grossly increase fees that allow internet radio stations and the like to stream music. If allowed to stand, the new fees will put many of my beloved stations, like somafm.com (likely pandora and lastfm also) out of business. I encourage everyone to write their members of congress. Details can be found at somafm.com.

Here's what I wrote to Congressman Mike Honda (along with Senators Feinstein and Boxer. Honda responded in less than 24 hours. I thought it would be instructive to share both what I wrote, and Congressman Honda's response. I encourage anyone reading (anyone?) to do the same. Assuming anyone reads this.

Dear Senators Feinstein, Boxer and Congressman Honda:

I am an independent musician living in the Bay Area, and I am writing in support of small, independent internet radio stations like somafm.com and others against recent changes in copyright licensing fees which, so structured, would put small mom & pop internet radio stations out of business and threaten to put music outlets back into the hands of large, corporate distribution channels only.

Internet Radio stations like Somafm and other services like Pandora and Lastfm have been a boon to getting independent artists heard by a wider audience. This phenomenon, call it Web 2.0 if you like, is the most exciting thing to happen in music in years, and it encourages innovation. But the RIAA, in its infinite wisdom (not!) would quash that innovation by dramatically raising licensing fees for such outlets.

Make no mistake, the artists would not benefit from this change. Large, corporate distribution networks that have been overcharging for music, and taking a disproportionate cut of royalties for years stand to gain the most from these changes.

In my view, independent, web-based music distribution has put much needed deflationary pressure on the costs/risk that independent artists have to make/take for a chance to be heard. The quality and variety of music that kids listen to today is much, much wider as a result of the internet than it was even ten to fifteen years ago. The RIAA needs to understand that, in the long run, it will lose based on a strategy of bringing independent internet radio to its knees.

Let me share some quick numbers for you. The new fees for Somafm.com (my favorite local, SF, based stations) face a staggering increase over their previous annual royalty rate of about $22,000 to over $600,000 for 2006. And the fees are even higher in 2007. Based on current listener ship, they'll be over $1 million dollars for 2007! This is 3-4 times what they hope to raise in 2007. This is unfair to internet radio stations that are trying to play by the rules, and all it will do is encourage "illegal" filesharing to increase once again.

Please help abolish these changes, for the sake of independent music, and for artists who innovate. Thanks for your time.

Bill Swan

Dear Bill:

Thank you for contacting me regarding the threat that new royalty payments pose to Internet radio stations. The issue is of great importance to me, and I appreciate your thoughtful comments on the matter.

As you may be aware, in 2002, the Library of Congress, under a recommendation from the Copyright Arbitration Royalty Panel (CARP), required that Internet radio stations pay prohibitively high royalty rates for the music they stream to listeners. After a failed appeal made by both webcasters and copyright owners, and a series of unsuccessful negotiations between the Recording Industry Association of America (RIAA) and Internet radio stations, Congress created the Copyright Royalty Board (CRB) under the Library of Congress to determine new royalty fees.

Under an agreement reached in 2002 made by the CRB, internet radio stations are required to pay royalties which constitute about 6 to 12 percent of the stations' revenues. However, this agreement has expired, and the CRB recently proposed raising the amount that commercial internet radio services pay to record companies by up to 30 percent.

When these negotiations took place in 2002, I advocated that the LOC take a more measured approach that would encourage the development of Internet radio stations. In addition to sending letters to the Librarian of Congress, I also cosponsored legislation that would reform the CARP process, as well as the decision to increase royalty fees in the 107th Congress.

At a hearing before the House Telecommunications and Internet Subcommittee of the Energy and Commerce Committee, Chairman Rep. Edward Markey criticized the CRB's proposal, stating that it creates a further imbalance between what different radio industries pay. Thus far, no further congressional action has been taken, but I will continue to monitor this issue closely as relevant legislation arises in the House.

Once again, thank you for taking the time and effort to share your opinions with me. Please continue to keep me apprised of issues important to you.

Sincerely,
Mike Honda
Member of Congress

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