East Village Radio Forced to Shut Down Over Digital Performance Royalties…

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East Village Radio has been a staple of Manhattan’s East Village for the past 11 years. The online station broadcasts from an iconic window-fronted space, giving a clear view to everything going on inside.

EVR has a roster of great programming, including shows by FACT Magazine and Brooklyn Vegan’s Invisible Oranges blog.  Noteworthy guests are always rolling through the station. Connan Mockasin, Bo Ningen, Black Francis, Tove Lo, and Claude VonStroke have all stopped in recently.

But in a week and a half all of this will be over. East Village Radio is shutting down for good on Friday, May 23rd.

The reason? EVR blames the DMCA.

The station has over one million listeners a month, and they have to pay a digital performance royalty for every listener. CEO Frank Prisinzano tells EV Grieve it was going to be “very, very difficult” for them to keep breaking even. “The model is untenable. It just doesn’t work. It’s the system’s fault. There isn’t any legislation that will ever be written without someone lobbying for it. We can’t afford lobbyists.”

Peter Ferraro, General Manager / Head of Programming, says EVR pays higher royalty and licensing rates than Pandora.

“We live in a world where these behemoth music-streaming services keep going in for more capital… It’s almost like we are being penalized for our growth… It’s very difficult for an independent medium music company to survive in a world where Apple is paying $3.2 billion for Beats by Dre.”

The station’s heads have no interest in selling to a media or VC company, as keeping the station both focused on the neighborhood and globally minded was always the goal.

Prisinzano plans to raise capital and come up with a new idea.

Nina Ulloa covers breaking news, tech, and more. Follow her on Twitter: @nine_u

Photo is by Joseph Holmes and used with the Creative Commons License

15 Responses

  1. Henry Chatfield

    Can someone close to the situation please start a We Are the People petition to get the attention of our congress to create legislation to project grassroots organizations like this?

    Someone powerful tweet something to someone…come on…we live in the internet. This is ridiculous.

  2. _justen_

    Which one is the “digital music copyright act”?

  3. Paul

    While at the same time artists aren’t happy with the income they receive. Is “the market” telling us that there just isn’t sufficient value? There is so much “free” supply that individuals don’t need to pay for entertainment/distraction. There are so many ways to reach consumers that advertisers don’t need this type of medium.

    Sad, but the market is unforgiving.

  4. Greg Shatan

    Well, there is no such thing as the “Digital Music Copyright Act,” no matter how large a font you put it in. There is the Digital Millennium Copyright Act (DMCA) but that actually has nothing to do with EVR’s obligation to pay royalties. EVR’s royalty obligations are a result of the plain old U.S. Copyright Act, 17 U.S.C. Section 101, etc. Those “behemoth music-streaming services” are actually fighting to lower royalty payments, which should benefit EVR, arguably at the expense of artists, songwriters, music publishing companies, record companies, etc. It appears that EVR’s problem is that they have a non-sustainable business model.

  5. Rick Ellis

    No, the problem isn’t an unsustainable business model. The problem is that the way the current copyright act is written, it’s much more expensive to launch a digital-only radio station than a terrestrial one. If EVR was simply streaming a traditional radio signal, the costs would be much reduced and that makes no sense in a world where there are fewer and fewer individual voices in traditional radio.

    IHeartRadio would last about three months if they were paying the same digital peformance royalty as EVR.

    • David H.

      Actually iHeart Radio does pay performance royalties.

      What needs to happen is have Clear Channel (iHeart parent) and all other terrestrial broadcasters pay into the performance royalty pool. This would sweeten the pot and take the pressure off of webcasters and hopefully provide content providers with a more liveable wage.

  6. hippydog

    Quote “The reason? The Digital Music Copyright Act.
    The station has over one million listeners a month, and they have to pay a digital performance royalty for every listener. ”

    they have to pay a royalty for every listener, every time they play a song.. rate?
    probably around $ .0023 or less..

    I would be really interested to know what they were actually paying out per hour at peak times..

  7. information wants to be free

    Why don’t they sell some t-shirts and other merchandise?

    They should adapt, not be dinosaurs.

  8. Bubba

    What royalty are we talking about? Digital performances for sound recordings?

    I thought most webcasters paid SoundExchange per stream, not per listener. Can someone clear this up for me?

  9. Ms. Poon

    Tragic news! EVR is a highly respected station that actively promotes the best music.

    Can someone explain why is it that EVR pays a larger royalty than Pandora?

  10. seriously

    We definitely need an explanation about them claiming to pay higher rates than Pandora. It just can’t be. That needs to be answered first. Second, we can criticize their lack of ingenuity and innovation. Because when you have built a brand into one like EVR, have a million people within reach, plenty of money can be made.

  11. arthurjowens

    I am the attorney for EVR. EVR pays royalties to ASCAP, BMI, and SESAC, just like terrestrial radio. Since they broadcast over the internet, they also pay Sound Exchange. EVR pays the standard commercial rate, which is .0023 per “performance.” A “performance,” is defined as a literal performance of a song, multiplied by the number of listeners that are tuned in at that moment. So if you play a song once, and have 100 listeners at the time that song is played, that’s 100 performances, or $.23 for that song.

    Pandora pays less than $.0023 per performance, because Pandora agreed to pay rates under a negotiated settlement with Sound Exchange in 2009 that gives Pandora more favorable rates than offered to typical commercial webcasters. Pandora’s more favorable rates run through 2015.

    EVR is not the first internet radio station to be forced to close due to the high statutory royalty rates for digital streaming. One of the more famous stations that closed in recent years approached us several years ago to inquire as to whether EVR would consider acquiring that property, which they felt compelled to sell because they could no longer manage their royalty payments. (I am limited with respect to the information I can provide here regarding that negotiation due to confidentiality obligations).

    I am a musician myself, I have about a half dozen records out on various labels. I can relate to any musician who is frustrated by the pittance that comes in from performance royalties. But the nature of performance royalties has always been that a small amount comes from here, a small amount from there, and together they start to add up to something over time. My concern is that by fighting to maximize performance royalties, we musicians will inevitably reduce the number of independent music outlets that will be able to survive. We could have fostered a cottage industry in internet radio by having lower rates. What we will see instead over the next few years is fewer independent internet radio stations. Soon only the heavily funded outlets will survive, and those outlets enjoy cozy relationships with the majors. Which means the majors, just as they did before the internet existed, will be better positioned to determine what everyone hears. And when majors are in bed with broadcasters, they don’t care about your indie band, or indie label, and you’re going to see fewer performances everywhere. Which means that those higher royalties that you fought so hard for will actually amount to a lower total dollar amount, and less exposure.

    Be careful what you wish for.

    • David H.

      While I’m not doubting expenses are driving EVR offline…..let’s clear some air here. While EVR may indeed be subject to the .0023 per song/per listener rate…that is only for performance hours in excess of 5 million tuning hours per month.

      I’m not sure what plan they signed on for, but as their licensing attorney you should have them on the 2009 small webcasters settlement rate. That provides a 10-12 % of gross revenue rate (2 – 5K annual min. fee) and includes 5 million listening hours per month. That’s roughly 15,000 people listening non-stop for 12 hours a day. Impressive. Only the excess of that is subject to the “rate higher than Pandora”. For the record Pandora is paying a settlement .0014 rate. But unlike the percent of revenue model–they pay that on every tuning hour. Ouch. Conversely, the percent of revenue model has been and is quite manageable for most stations.

      No doubt there needs to be a sustainable rate going forward. (rates for 2015-2020 are in hearing process now) If they do away with the percent of revenue deal small webcasters ( less than 1.25 million annual revenue) have now…look out for more doors closing.

    • hippydog

      I just found out Canada is now asking for
      .000102 per listen or .0102 per 100 listens.
      VS in the USA
      of 0.23 per 100 listens

  12. Manager

    “The model is untenable. It just doesn’t work.”

    So why should artists and content owners subsidise a model that they admit doesn’t work?