Don’t panic! I’m not being sued 🙂
A small station operator in Virginia has decided it is going to “bell the cat” over the issue of streaming royalties. First a little background is in order for those not familiar with the topic. If you are, you can skip the next boring section
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“Public Performances” of music are protected by copyright law – that includes the composer, the lyric writer, the performer and probably the janitor. When anyone uses music that provides an economic benefit, they are required to pay all of the above money. If you walk into a restaurant and they’re playing music, they either are paying a percentage of their sales to a performance rights licensing organization (BMI, ASCAP, SESAC, etc…) or they will shortly have one of their agents visit and document that music was playing and send a demand letter for payment.
In Radio, things are a little special – because the music business needed radio (at least in the past) to promote its records on the air to get teenagers to run out and but pieces of plastic, the “record labels” agreed that radio could play the performances for free. The stations still have to pay ASCAP however for the composer and lyrics. In addition, much of the non-music content on radio is performed by members of the AFTRA (American Federation of Television and Radio Artists) who also get paid royalties when their work is used (like radio commercials)
When radio stations started streaming, it wasn’t clear what the rules are for payment of royalties. For the first time, a radio station’s signal could be heard anywhere in the world. About the same time, SiriusXM was starting up and they are not a “radio station”. The Record Labels demanded to be paid for the performances, since SiriusXM is not a “radio station” and hence not a party to the NAB’s deal to play music for free. That’s a settled issue now – a big chunk your SiriusXM monthly fee is going to an entitiy called “SoundExchange” which handles payment of royalties to the performance artists.
The NAB urged the government to set the fees for SiriusXM as high as possible – in the hope that doing that would kill SiriusXM before it got started. It didn’t occur to them that if radio stations streamed music, they might not longer get the “free ride” for “over the air” radio. The courts have ruled that streaming radio is allowed the exemption from paying performance royalties, and the radio business has been squealing like a stuffed pig ever since – because of their own anti-competitive greed. Establishement Radio is very concerned that with everyone else paying (SiriusXM, Pandora, Spotify), the record labels will get Congress to withdraw the exemption from paying for the airplay of music on the basis of leveling the playing field (the “Performance Tax”)
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So the new wrinkle is a small radio owner has decided to sue SoundExchange saying that he deserves the same “over the air” exemption when streaming its radio stations on the internet.
VerStandig Broadcasting is owned by a lawyer, and he is hell bent on not paying them record records for their damn music – phonograph records wouldn’t exist if it wasn’t for radio, after all! That’s a perverse view of history. Edison’s version of a sound recording player was invented in 1877. If you’re old enough, you might remember “RCA Victor” on record labels with a dog listening to an odd looking speaker. There was a very successful company called Victrola. The company died in 1929 when radio became widely available and people could listen to radio for free and even make recordings of what they could hear on the radio – and they sold what remained of the company to RCA. Radio destroyed the original record selling business.
The owner of VerStandig takes that position that he doesn’t owe performance royalties if the internet streaming listeners are within 150 miles of his station (FM signals go nowhere near that far!). His theory is if you can “geo-fence” streaming so that only the same over-the-air listeners are listening, then the “over the air” exemption applies.
If he is right and other station owners follow suit, the only stations you would be able to hear on the internet are those that are the ones that are currently local to you.
Clear Channel is taking a different approach – they are cutting deals with people who agree to give them a better rate. So if Clear Channel gets their way, a musician will have a choice – you can sign with BMI/ASCAP/SESAC and not get played by Clear Channel or you can sign with someone else with a deal with Clear Channel and get tons of air play. BMI itself was created when the radio business tried to “break” ASCAP back in the 1940s and for a year or two would only play artists if they signed with BMI and its lower royalty rates.
The increasing appearance of georestriction on players was one of main considerations of why I removed the player links. I can’t confirm what I’m blocked from accessing.
BMI/ASCAP/SESAC is an interesting arrangement. The collect the money and dole it out but last time I looked decades ago, their payout formula had nothing to do with what was played on the air, or how many people listened to it – it was a means of sending extra checks artists that were already popular – so if you played all new music from new artists – you pay a check and much of the money goes to the Beatles, Michael Jackson, Elvis Presley etc.
Many artists signed over their royalty rights to the “record labels” for many of the same reasons. If you want to “be a star!”, you had to let the record labels keep the money. If you wanted to actually be paid royalties in perpetuity, the record labels would not sign you, you would get no airplay, and good luck on becoming a star. Frank Sinatra refused to sign a deal. Grateful Dead is another significant exception.
But even if you played music that is not licensed, just the threat that you might accidentally play (or perform) a covered work is enough to get people to cave to them
http://www.csmonitor.com/The-Culture/Music/2009/0109/p14s01-almp.html
The Grateful Dead actually encouraged fans to come to concerts and record the audio. They took pride in performing songs differently each time to further inspire fans. Most bands wanted search engines to be prohibited from simply displaying a list of links to songs on the internet.
The result? The Grateful Dead continues to sell a lot a music while the music industry is a skeleton of its former self.
And as in every aspect of our lives:
“The lawyers clean up all details.”
Appreciate the posts and hope you can hang in there, Art.
You have been a friend for years.