Live365 Reply To SoundExchange Letter

From Live365.com:

SX: Dear SoundExchange Members and Friends:

I'm writing to tell you about the webcasting decision from the Copyright Royalty Board (CRB). Some people in the webcasting community have mischaracterized the decision and its potential impact on the internet and in the press, resulting in hyperbolic claims of the demise of internet radio. To combat this misinformation campaign I am asking for your active support through letter writing, contacting Congress, blogging and speaking out.

L365: It is not just "some people in the webcasting community," but rather, everybody in the entire Internet radio industry that the new CRB royalty determination threatens with demise. Internet radio services – large and small, public and private, mainstream and niche – have been alarmed by this decision, including the Digital Media Association (Yahoo, AOL, Live365, RealNetworks, Pandora), Small Webcasters (AccuRadio, Digitally Imported, Radioio), National Public Radio, Intercollegiate Broadcasting System, and other radio broadcasters with an Internet establishment (ClearChannel, Bonneville, National Religious Broadcasters).

The CRB panelists mandated a minimum fee of $500 per station per year, which was intended to cover SoundExchange's administrative costs. To the extent that this minimum fee is uncapped and indiscriminately extends to all Internet radio services, it will greatly exceed the total royalties that most services would otherwise owe. Since Live365 aggregates all of the performances streamed through our service into a single report, we would be paying millions of dollars to SoundExchange to 'administer' our four quarterly reports when we actually do all the work. On top of that, the new minimum fee would more than triple Live365's royalty obligation for 2007 and, retroactively, 2006. Yahoo!, RealNetworks and Pandora will each have minimum fees that exceed $50 million, although their combined 2007 Internet radio revenues will not approach even $100 million.

Should this $500 per station minimum stand, Live365 and other aggregators of niche content will be forced to reduce the breadth and depth of content available to listeners. Artists in niche genres will be the worst-hit victims, because Internet radio provides the only access to such music for listeners who cannot get on the homogenized AM/FM and satellite radio. These stations are the only place thousands of artists are currently getting exposure and getting paid on royalties.

SX: It is disconcerting to see some of the mischaracterizations that have been floated around the internet and the press in the wake of the decision. These initial stories, promoted by a disgruntled minority, misrepresent the nature and economics of CRB's decision. Fanning the flames of this misperception are people and organizations that participated in the hearings before the CRB. They provided witnesses and economic analyses as well as their own testimony.

L365: We can't help but to ask to please tell us who are the "gruntled majority" of webcasters that are apparently very happy with this decision. The only ones happy are the RIAA lawyers, maybe Sirius/XM who want to merge into a monopoly and limit substitute distribution technologies, and terrestrial radio who wants to maintain their dominant position by eliminating competition and forcing homogenized programming on listeners.

Read the rest here.