Wyden is one of the most intelligent politicians you'll come across.  When he makes a stand on something you better believe he's done his research.  I thought I understood this issue - being in the music biz myself - but now I wonder.

I think Wyden is right about a lot of things regarding the Internet, but I think hes wide of the mark here.  Aside from the fact that 75% of this transcript is only tangentally related to the issue, I don't know why proponents of the bill continue to phrase the issue as internet radio vs cable and satellite radio.  The issue is and always has been about what standard should apply: 801(b) or willing buyer, willing seller so as to be fair to the artists and the internet radio stations. Dragging sattilite and cable into the discussion confuses the issue. As DMN pointed out a couple days ago, it is Pandora that is cannibalizing CD and download sales, not digital radio delivered through a cable box.  

The discussion should be what is fair as between Pandora and artists, not "discrimination" amongst disparate platforms.

As it was a "Future of Music" Summit in Washington, DC I'm sure all sides of the argument were explored (Sarcasm!). As well as inviting Senator Ron Wyden, I'm sure they invited Congressman Jerrold Nadler (D-NY), the Ranking Member of the House Judiciary Subcommittee on the Constitution to discuss the "Interim Fairness in Radio Starts Today" (FIRST) Act. This proposed legislation would address inequality and unfairness faced by performing artists and Internet radio in regard to rights and royalties.

Nadler:

"The lack of a performance royalty for terrestrial radio airplay is a significant inequity and grossly unfair. We can’t start a race to the bottom when it comes to royalty rates and compensation for artists. Artists deserve to be paid a market-based rate
for their work, just like everyone else. The Interim FIRST Act would provide artists with fair compensation for the valuable creations they share with all of us.”

http://nadler.house.gov/press-release/nadler-seeks-fair-compensation-and-rate-pa\
rity-performing-artists

Paying musicians less isn't helping them.  The vast majority of musicians this affects are NOT on labels.   Spotify seems to be doign fine at the current rate.  Itunes seems to be doing fine at the current rate.  These and many others are still in existence.  Competition is fierce in this world and it's the consumers who set the prices but what they will and will not buy.  We seem to be at a fair price point.  Now it's about splitting up the pie.  The $.001 that Pandora pays isn't too much. It's too little!  If they go out of business because they don't want to sell/run more ads.  That's their choice.  If they can't figure out a way to make money selling subscriptions, that's their problem.  Legislating a rate of less than $.001 for our services is NOT the answer.  If they can't make it on that, they have no chance of being around in 5 years.  Let them go away quietly instead of pulling us down with them. 

That last paragraph was written by Tim Westergren of Pandora. Those were the very words he replied back to me in an email when I questioned him on this issue - almost verbatim. Obviously, this Senator was coached, if merely just handed the entire speech to parrot...

 The "I am a US Senator" opening of this article reeks...

This reality check from Food For Thought should be included in the article or, at least moved to the top of the comments section.

Food For Thought Wednesday, November 14, 2012

Senator Wyden's irrational hatred of record labels disturbs me.

his band never got signed...

How to calculate the statutory rate: average price of song divided average listens per song.

I think Wyden is mistaken. There is a market to determine rates with the knowledge of average listens per song largely researched behind the scenes.

http://alonetone.com/about/stats

Assuming...

average $1 per song

75 listens per song

70% royalty rate

Statutory rate = $1 / 75 X 70% = $.00933

If I can calculate this, so can Wyden and copyright royalty judges.

I'm calling bull on your 75 listens. Most people listen to a song 4 or 5 times, so streaming rates really should be 20-25 cents a song.

"Most people listen to a song 4 or 5 times, so streaming rates really should be 20-25 cents a song."

You honestly think that the royalty rate should be $2.00 an hour (assuming conservatively 10 songs played per hour)?

People leave the radio on for several hours a day.  Let's say the average listener listens to net radio 2 hours a day, and not on the weekends. That's $44 a month in royalty costs.

And for people like me who have the radio playing at least 8 hours a day; that's $176 a month in royalties.  That's a pretty unrealistic number.

Funny. $.00933 is about the rate Spotify pays for a stream by a Premium user (if you are a CD Baby customer). 

$.00933 is the expected rate for any stream, free or paid.

Join Rhapsody and you will get this rate. Not to much streams though

What would really help me the most on this issue is two things:

a) what is the current deal that Pandora has with ASCAP and what rate are they negotiating that is so outrageous - (that won't happen).

so...

b) what would be the gross/net profit of Pandora and iHeartRadio - calculated at just the current subscriber rate - if IRFA was enacted today to cover '12?  (Not artist/soundexchange payout) 

I just want the actual numbers that this would represent. One of two things will emerge, either we will see that they will be enomously profitable, or even with the new rates, they will come back asking for more concession on the pricing of the products they are reselling from artists, pubs and labels. 

Pandora deals with SoundExchange not BMI/ASCAP/SEASAC

PIPA, SOPA -- ill-advised?

Geez, how can people believe Google's BS?

apparently more than just a thousand words

Here's the latest Google news:

While the search giant make billions from providing access to other people's stolen property, they still have time to protect their own:

http://www.guardian.co.uk/world/2012/nov/14/google-warns-doogle-over-copyright

South African doogle-owner: "I haven't made any money from the site. Sometimes I have to catch fish from the river to eat. But I think God is with me."

However, the Devil is with Google...

Ha Ha Ha

Google didn't get where they are today by being Mr. Niceguy.

Nah, don't be good...

view from the uk.....

internet royalties are much lower than us, which surprises me, generally a low fixed charge. means we have a great selection of stations with a lot of freedom. but to broadcast into us is cost prohibitiv   e

At a fundamental level, Pandora business model is flawed.Relying on advertising alone is a recipe for disaster.

CNBC EXCLUSIVE interview with Sirius XM Radio CEO Mel Karmazin tonight, Thursday, March 8th on CNBC’s “Mad Money w/Jim Cramer”

JIM CRAMER: All right. Just a couple days ago Pandora reported a number. Everyone thought Pandora , Spotify, these are all these free internet models, can destroy you. I look at Pandora and I think that they actually have rising costs and that you don't have, and that the competitive threat is overstated. But I need to hear it from you, because a lot of people tell me, "Jim, you're nuts believing in Sirius at this point?'

MEL KARMAZIN: So Jim, we have a lot of competition. Right? And I believe business models matter. Now I mean some people could sit there and disagree and say it's about eye balls or it's about something else. I believe it's about the business model. We competed with our terrestrial radio for the last 11 years. Grew from zero subscribers to 22 million subscribers. We now have competition from I.P. You know?

JIM CRAMER: Right.

MEL KARMAZIN: They're-- no barrier to entry. Anybody could be an I.P. audio content company. They have a questionable business model, because it's depending upon advertising. I have believed, for the last 10 years, from before I came to Sirius XM, that the internet has created so much inventory, so much inventory in the advertising world, that a business model that is principally advertising-driven, whether it be terrestrial radio or I.P. radio, it's advertising driven, is at risk. I don't particularly like that business model. Great company, Pandora. Great product. But not-- question about the business model.

http://www.cnbc.com/id/46544183/CNBC_EXCLUSIVE_CNBC_TRANSCRIPT_SIRIUS_XM_RADIO_CEO_MEL_KARMAZIN_SPEAKS_WITH_CNBC_S_JIM_CRAMER_TONIGHT_ON_MAD_MONEY_W_JIM_CRAMER

maybe you guys will hear me this way:

DUDES! 

If I purchased the new Taylor Swift CD, and I took it to your house, or in your car, and played it for you, and we heard the CD over and over 5 times a day, everyday, for a year, and then the record label came over and said you owe them money for listening to my CD, what would you say?

I think streaming is a bad idea period! There is no win / win model that works. I like the idea of a penny per stream because if I buy a CD at $10 I'll probably listen to it 100 times. Assuming it has ten songs that’s equates to a penny per stream but that would put streaming services out of business. The solution is a simple one. Boycott streaming all together.

Noted copyright and digital music attorney Chris Castle sums up Wyden's role pretty well here: http://musictechpolicy.wordpress.com/2012/10/25/google-and-clear-channel-send-their-shills-out-for-irfa-lobby-fest/

Wyden has singularly blocked and opposed every bill that would strengthen artists' rights against the powerful and growing moreso everyday Consumer Electronics Association and its spinoff the Computer and Communications Industry Association.

Wonder why?  Here's a hint: "Wyden obtained federal funding to install the fiber-optic broadband loop that attracted Google to locate a facility in the Columbia River Gorge." (source: http://www.standtallforamerica.com/issue/jobs/innovation_economy/).

That info does more to explain Wyden's self serving position than his explanation which is filled with strawmen and political half truth

This is a bill about aligning the interests of rightsholders and service providers.  Royalties should be paid as a percentage of revenue not as a flat-rate per stream.  This way when a service provider makes money the rightsholders make money.

This is already possible.

Services can negotiate direct deals with rightsholders for a rev share exactly like you are saying.  They don't need the government to do that. 

Consolidation has happened because of streaming and loss of revenue, not the other way around.  Maybe artists should stop performing in Oregon until they get rid of this guy.

So basically his only concern is protecting techies and not musicians who create the content those techies use to make millions. Let's see if he can live on the royalty rate paid by Spotify and then get back to me.

The interests and concerns of musicians in this debate are merely rhetorical devices used by business interest groups to support their own agendas.

The individual creators of copyrightable works are the very last thing these businessmen and their politicial toadies and sycophants are concerned about.

NOT ONE of you who is against Wyden's position has explained to me why the levels paid by internet radio should be different then digital, cable and satellite radio. As a musician and songwriter I obviously are not for lower royalty rates across the board because it does not benefit me... But I also am against Satellite getting a better deal then internet radio. I don't even OWN a TV! Why should I support the status quo on this when as a consumer it benefits media I don't even use?

An obvious design to me is to bring down internet radio rates down some, and bring the satellite, digital and cable royalty rates UP, so that the collective artist doesn't lose out, and there is more fairness in the marketplace. Why do none of you loud responders address this option?

I'm not for or against this particular law act, just curious about holes in the conversation here in DMN.

The confusion and lack of focus is a natural by-product of the subject matter: politics + copyright + technology + business development = piles of manure.

Commenters here tend to add to the pile.

@what about fairness - I second that thought. The disparity between internet and satellite radio doesn't seem right, and favours the existing major label domination. So how about levelling the rates by deducting from one while raising the other? More money available for artists, while enabling more businesses to promote music.

Actually, you've hit the nail on the head.  Bringing Pandora/internet radio down some & bringing satellite up some will bring fairness, and roughly the same dollar to artists.  Bringing the internet radio rate down some will lead to more market entrants, because it's true that it's easier to enter the market on the internet.  More players in the market means more royalties, which means more for the artist.  A bigger pie for all.  Pass the performance royalty act to cover terrestrial radio as well and then you're really in business.  A level playing field with maximum returns for artists. 

You're assuming that more 'players' means more revenue.  But if the 'players' are all ad-funded, like Pandora, they are all competing for a finite amount of advertising revenue.  And if the services pay royalties simply as a proportion of revenue, with no 'floor', there is nothing to stop competition for advertising driving royalty rates down towards zero. The idea that content creation can all be funded by advertising is fundamentally flawed.  It isn't working for newspapers, and it won't work for music or films.

Thanks for pointing out the google funding connection. Don't vote for this guy. Wow was that a load of bs. 

Also he is absolutely uninformed about his bill or lying.  Here it is the section that infringes free speech. 

Nothing in this paragraph shall be construed to permit any copyright owners of sound recordings acting jointly, or any common agent or collective representing such copyright owners, to take any action that would prohibit, interfere with, or impede direct licensing by copyright owners of sound recordings in competition with licensing by any common agent or collective, and any such action that affects interstate commerce shall be deemed a contract, combination or conspiracy in restraint of trade in violation of section 1 of the Sherman Act (15 U.S.C. 1).

In the case of the sirius/xm vs american association of independent musicians "impede" includes speaking. 

"Any group of copyright holders" and   "acting jointly" could be a band, a pair of artists or two independent labels issuing a joint statement.

As a new commercial music provider, we pride ourselves on (attempting) to not full today's business model of "ad supported" services.

We also enjoy our "One Song One Deal" model, which means we enter into agreements with each content owner (not blanket licenses that support the discrepancies in today's royalty rates brought down by the Copyright Royalty Board). 

Our business model is different. It works from some and it doesn't work for others. That's fine; but at least we're fair because it works for those artists who CHOOSE to have their music generate exposure through our platform.

The problem with IRFA is that it doesn't address the terrestrial radio problem. That is, it aims to bring down royalty rates for IPs because they have an unfair rate compared to cable and satellite (which I agree), but it doesn't address the fact hat terrestrial radio doesn't pay these royalties at all!

An act that I'd support is one that sets the royalty rates for ALL MUSIC SERVICES regardless of how users access music. The bottom line is, these services now have mutliple ways of access. If I get in my car and turn on the radio to listen to a Adele song. Then turn the radio off, launch my Pandora app on my phone, connect my phone to my in-vehicle speakers and play Adele radio channel, the passengers in my vehicle will engage/experience the song "Rolling In The Deep" the same regardless of the source. But, today's policies says if I hear Rolling In The Deep on the radio, Adele doesn't get paid. But if I hear Rolling In The Deep on Pandora, she does.

The argument that "radio is promotion" is a dated way of looking at things because now Internet is promotion (our company being founded on promotion), cable is promotion, sattelite is promotion, public performances in malls and retailers is promotion!

I think (as a commercial music service owner), that ALL should pay a royalty, and the rates need to be fair, and dated substantiations that lend to these discrepancies need to be changed. (By the way, cable and sattelite were "grandfathered" into their royalty rates...not based on market competiveness or modern implications when looking at the music ecosystem as a whole).

Record Companies according to Wyden: "They are the people that made 'payola' a household word."

Politicans. They are the people that made 'lobbyist' a household word.

Also, this..."If video killed the radio star, let's hope that digital revives the American music industry." is a terrible attempt at a sound bite. Who said Wyden does his research?