I apologize for this short and shameless plug for a worthy cause. As a classroom teacher, I use Internet radio to provide quality music in my classroom. I play all different kinds of music from all over the world. The station that I listen to is called RadioParadise. It is totally listener supported. If you check it out today, there will be no music playing, because today is a day of silent protest.

Internet radio stations that had a $2,000 annual bill will now be asked to pay an additional $80,000 to $100,000. These royalty rates are due to go into effect on July 15 (retroactive to Jan 1, 2006.) Webcasters will be asked to pay more money than they bring in and come up with a huge retroactive fee! Obviously, someone just wants to shut these stations down.

Don't believe the record industry propaganda that says that Internet radio is trying to deprive artists and labels of fair royalty payments. Internet radios already pay royalty rates that are higher than other broadcaster. Internet radio stations do support alternative legislation that would still require the stations to pay a higher royalty rate than any other class of broadcaster in the US.

You probably haven't heard a good protest song or the latest chick rocker on your rock.fm station (if you listen to FM radio.) Internet radio stations pay royalty rates to independent musicians who would not otherwise have their music broadcasted on any airwaves. If you would like to help save the future of Internet radio, call or write to your representative today. Urge them to support THE INTERNET RADIO EQUALITY ACT, S. 1353 IN THE SENATE AND H.R. 2060 IN THE HOUSE.

There's more...

If all goes well, tomorrow Adam Conner will be posting an MP3 audio interview that he put together and I participated in with Tim Westergren, the founder of the Pandora Internet radio service, on the Copyright Royalty Board's recently announced royalty rate hikes. Pandora is, in a word, awesome. And the Music Genome Project, what powers the backend of Pandora, is doubly-awesome.

As powered by the Music Genome Project, Pandora is a freakishly innovative way to (1) connect listeners to new music and (2) promote popular major-label artists in the very same way as artists recording on GarageBand from home. Tim, a musician himself, has been building the Music Genome Project since 2000. The way it works is this. Each song that comes into the project is treated blindly, meaning that it matters little whether the artist is well known or not or what musical genre label with which they're usually tagged. Fifty or so actual humans -- many of them musicians -- sit down in an office in Oakland and evaluate each song, one by one. What they're listening for is any number of some 400 or so musical "genes." Once a song's genes are mapped, it's entered into the Pandora system.

Then a music lover, me for example, hops over to Pandora.com. Say I happen at the moment to be enamored with the Beyonce song "Irreplaceable." (It might be time to admit that while I do love music, I have seriously limited tastes. This is exactly why I need Pandora!) I enter that song in the magic Pandora interface, and the system says, "Irreplaceable," hmm, what we've got here is a track that features distinctive musical genes, including: modern R&B stylings, acoustic sonority, extensive vamping, major key tonality, acoustic rhythm guitars, and vocal harmonies. Already, I'm a more educated music consumer. What's more, Pandora searches through its database, identifies a song with similar genes, and plays it for me. First up is Stacie Orrico's "Beautiful Awakening." Who is Stacie Orrico? I have no idea. And Pandora doesn't care if she's a major label artist or a singer who submitted her own CD to the Music Genome Project. If she's registered with SoundExchange, she's paid royalty fees. And if I like her music enough, with a couple clicks, I can buy it right through iTunes or Amazon.

In the interview, Tim talks about how he's been thrilled so far to pay SoundExchange fair rates for music -- it helps streamline the licensing process for digital broadcasters like Pandora. But the Copyright Royalty Board's recently announced royalty hikes will make it impossible for Pandora to continue operating, which will in turn prevent the public from reaping the benefits of the Music Genome Project. Our copyright regime is intended to encourage innovation. That's not me talking, that's the founding fathers in the United States Constitution: the goal is to "promote the Progress of Science and useful Arts."

There's legislation in the House, H.R. 2060 -- the Internet Radio Equality Act, introduced by Democrat Jay Inslee and Republican Don Manzullo, that would vacate the Copyright Royalty Board's decision and establish more reasonable royalty rates. H.R. 2060 already has 42 co-sponsors but could certainly use a lot more.

Yesterday Free Press launched a Rescue Internet Radio Campaign to protest the new royalty rates being imposed on digital audio broadcasters. I think it makes a lot of sense in this case to take some time to understand what's going on here, and in particular why those rates are greater than those rates paid by traditional broadcasters -- those AM/FM guys who broadcast on some part of the wireless spectrum.

So what happened here was that the U.S. Copyright Office's Copyright Royalty Board endorsed a proposal (pdf) put together by the RIAA-associated SoundExchange royalty organization. SoundExchange's license fees are set by law and have in the past been pegged at $.0003 to stream one song to one listener -- what's known as a listener hour. With this decision, CRB set those rates to $0.0008 retroactively for 2006. They climb from there, starting at $.0011 this year and increasing each subsequent year until they plateau at $.0019 in 2010. Under the plan, every digital audio channel would have to make a minimum $500 royalty payment to SoundExchange, including non-commercial stations. In the past, small webcasters were able to pay royalties based on revenue, with a small minimum fee per year -- something around $2000, I think. No more. What happens to them now? One estimate is that while traditional radio stations paid about $1.50 per listener in 2006, digital broadcasters will pay about $9 now and about $15 in 2008. The argument goes that for some digital broadcasters, their royalty obligations would come in at more than they money they take in. Many will quit broadcasting, most likely.

What's important here is that these are royalties for performance. The royalties collected by SoundExchange are based on the actual performance of the song. Half of what SoundExchange collects goes to the song's copyright holder, who is usually the recording company, while 45% goes to the featured artist(s) and 5% to backing musicians and vocalists. There was no performance rights for sound recordings before the 1990's and especially the Digital Millennium Copyright Act. and when the DMCA established one, it applied it only to digital performances. Of late, SoundExchange et al have been pushing for the application of a performance right to terrestrial radio, including Sirius, XM, and the like. As it stands, however, traditional broadcasters are right now exempt from the performance rates that digital stations have to pay. But both digital and traditional broadcasters do have to pay a fee to the composer of the song recorded. Those generally go to one of three composers' organizations -- ASCAP, BMI, or SESAC.

So the way it stands now is this. If you live in New York and hear Melissa Etheridge sing her version of Tom Petty's "Refugee" on say, Z100 at 100.3 FM, then the songwriters (Petty and guitarist Mike Campbell) are the ones to whom royalties are directed -- via ASCAP. But if you hear the same song on Pandora.com, then the work of both Etheridge via SoundExchange and Petty & Campbell are being licensed. (Fun fact: Petty says that the inspiration for "Refugee" and the whole "Damn the Torpedoes" album was his anger with the whole ferkockteh recording industry.)

Crystal clear, no? All this is fun (and profitable) mental exercise for lawyers, sure. If you think all this makes it extremely challenging to take on Internet radio as an entrepreneurial project, you're of course right. How did we get to this point? Consider that in 2004, the RIAA described digital radio as "the perfect storm" -- and they meant that in a bad way. The threat from digital radio is "real and imminent," (pdf) they said, and they argued that the greater potential for copying and the like had to be accounted for. Thus the establishment of SoundExchange. And in theory, the SoundExchange system was a way of making formal the webcaster model and streamlining the process by making clear what the costs of doing business are up front. And it also rewards performing artists. It's a good thing for performers to get paid, no doubt.

One reading of this situation is that the Copyright Royalty Board set rates at something shockingly high as a way of opening the discussion. And in fact, the CRB will hold further hearings on the royalty rate hike. The Free Press Rescue Internet Radio campaign is a way to let the CRB know that any royalty scheme that makes digital radio impossible is bad policy for all of us.

MakeThemAccountable proudly announces the rebirth of

Unconservative Listening

I've reformatted the page for the new MakeThemAccountable format, and brought it up to date with all the changes at Air America Radio and catching up with some shows I hadn't listed before, such as:

Fans of Enid Goldstein will be happy to know she's back on the air and streaming. And the Head-On Radio Network is playing The Best of Mike Malloy in the evenings!

Carolyn Kay
MakeThemAccountable.com

There's more...