No Six-Month Reprieve For Webcasters

Kurt Hanson says AFL-CIO/AFTRA are willing to kill off most Internet radio for little or no pay out:

If webcasting is killed because artists want their royalty checks (“Artists are suffering! They deserve their royalties!”), it’s going to be sad example of a combination of greed, shortsightedness, and bad math hurting everyone involved.

Apparently, the biggest potential block to HR 5469 – the bill that would have created a six-month delay and cooling off period – is the AFL-CIO objecting on behalf of recording artists.

And the L.A. Times reported yesterday, “Artists’ representatives say that even though they appreciate the exposure Webcasters give them at a time of shrinking playlists on over-the-air stations, they are resisting cuts in royalties because these are direct payments that can’t be confiscated by the labels.”

But what the artists’ representatives don’t realize is that the checks involved are minuscule — and maybe even turn out to be nonexistent!

As described here in RAIN last week, our estimate of the total potential revenue pool to be distributed to artists for the four-year retroactive period is $3.5 million dollars. Divided among all of the recording artists that get Internet radio airplay in all its dozens of genres of music, that works out to checks of about $2,000 for a platinum-selling artist and about $200 for the typical SoundExchange member artist.

But wait! The six-month delay they’re objecting to would have little effect on the distribution of such royalty checks, because SoundExchange has no idea yet who to distribute the money to! The Copyright Office has yet to even announce the reporting requirements that webcasters will need to follow to tell SoundExchange which songs they’ve played. With or without a six-month delay, it will necessarily be months before the requirements are set, the reports
are delivered, the tabulations are made, and the checks are cut.

But wait, there’s even more! It is probable that the expenses of setting up and running SoundExchange (and possibly even half of all the music industry’s legal costs in the entire CARP process) may be deducted from royalty pool. That seems actually logical and appropriate.

It’s rumored that those costs may add up to as much as $18 million. For our purposes, let’s say it’s half of that, or $9 million. Say that half of that is assumed to be for the benefits of labels, and half for the benefit of artists. Subtract $4.5 million from the artists’ royalty pool, and there is no money to distribute to artists at all!

In other words, the AFL-CIO (of which AFTRA, representing background musicians, is a member) is fighting to prevent a six-month delay in issuing checks when it will probably take six months before they could be issued anyway, and when the typical check might be $200 — or more likely might be zero!

And for this they would decimate the best promotional venue that developing artists and niche musical genres have ever had in the history of music.

I’m not sure about the “best promotional venue” “in the history of music” bit, and even assuming that the figures are flexible, this is still clearly a case of institutioanl retardation.

For more on the destruction of webcasting see here , here, and here.