US Government Officially Denies Small Webcaster Royalty Pleas

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Live365 is already dead, thanks to the elimination of special rates for small webcasters.  Now, a surviving group of struggling internet radio stations will likely follow suit within 60 days.

On December 16th, 2015, a panel of Copyright Royalty judges issued a written determination of royalty rates and terms to apply to internet radio broadcasters, specifically from January 1st, 2016, through December 31st, 2020.  An amendment was made to the determination on December 24th, 2015, followed by a final determination on March 4th, 2016.

Now, that final determination has been issued and forwarded to the U.S. Copyright Office Register for legal review.  If the determination is granted, it will become a U.S. Federal Regulation, with the official ‘rate for commercial subscription services’ moving to $0.0022 per performance (effective 2016), and ‘commercial non-subscription services’ hitting $0.0017 per performance.

That officially nixes a desperate plea by smaller webcasters, who petitioned the US Government in late January to no avail (view the full petition here.)

Marching forward, the ruling will be reviewed within 60 days, and if the ruling is approved companies will have a maximum of 30 days to appeal.

Larger internet radio outlets like Pandora and iHeartRadio are in favor of the new rates, though the changes create an extremely tough environment for smaller webcasters.  Live365, for example, has already been pronounced dead.  Prior to going black, the smaller station hub desperately offered data to support a lowered rate, and continuation of the Small Webcaster Settlement Act:

”Live365  attempted to reach a per-performance rate by way of a revenue analysis, factoring in the webcasting services’ costs and a presumed 20% profit, and applying the remainder of revenue to royalties.”

However, judges in a ‘Web III’ proceeding quickly rejected those attempts, and Live365 subsequently endured a major financial crisis as investors quickly pulled support from the company.   The Webcaster Settlement Act of 2009, which presented below-market royalty rates, was a critical oxygen source for the company.


Update: Digital Music News has now obtained a copy of the full submission, embedded below:


(Image by khrawlings, Creative Commons, Attribution 2.0 Generic, cc by 2.0)

19 Responses

  1. rikki

    come on Charlotte….this doesn’t affect black people…the RIAA never sued anyone black for stealing music…… long as you play rap hip hop underground with lots of swearing and liberal use of the N word…you’re safe

    • Paul Resnikoff

      Rikki, let’s investigate your claims of reverse-racism by the RIAA. I really don’t think it’s backed up by data, so I’m not surprised you never post any supporting documentation. The RIAA played a critical role in both the raids and subsequent arrests of DJ Drama and Don Cannon, for example, both of at least partial African-American descent.

      from a NYT article from 2007:

      DJ Drama (whose real name is Tyree Simmons) and Mr. Cannon were each charged with a felony violation of Georgia’s Racketeering Influenced Corrupt Organization law(known as RICO) and held on $100,000 bond.

      Please do your research.

    • A Used to be USA Licensed WebCaster

      So Basically these 3 ” so called judges ” who were not OFFICIALLY elected to anything other than the Music Mafia board are saying F**K you people !!
      We will do what we want and if you dont like it too bad !
      Typical Government Bulls**T !
      The rich get richer , the poor and non wealthy get screwed !
      And people wonder why other countries hate America !
      Take a good long hard look at the morals we no longer have !
      Pathetic !
      It’s ok though ! Im happily using a source for licensing OUTSIDE the USA !
      USA cannot be fair, they dont get my business !
      I dont care who does or doesnt like it !
      Im tired of taking it up the A** by the government !
      Now its time to stick it back !

  2. Joe

    We need EVERYONE on board…webcasters, listeners, musicians, and other services which work in conjunction with internet radio to fight to have the Small Webcaster Agreement restored at

  3. Not Sorry

    Hard to feel sorry for those who don’t want to pay the people that make their only product.

    • Paul Whiteman

      Are you referring to the record labels? Because they screw artists over more than any small webcasters ever could. I was formerly with Live365 and the reason they were my provider was that they DID pay the proper royalties. But when the rates go up precipitously overnight, that’s hardly fair. I play 80-year-old music; the labels ought to be thrilled that a) I’m promoting their distant back-catalogue and b) that I’m willing to pay a certain amount to do so.

      • It's Always Someone Else's Fault

        Sorry Paul – the “it’s always someone else’s fault why artists can’t be paid” gets really old. Pay Up or Shut Up.

    • Juantumy

      You have it incorrect. We want to pay but are not being allowed to pay as they erased our category of user. Many of us (maybe 10,000 stations or so) were paying about 50 per month to stream to our small groups. Now there is no way to pay unless we are large corporations with thousands of hours of usage per day. In most cases we did not charge or play commercials but paid this money just to hear our songs. Now that is all dead and the musicians will not get a cut from us anymore.

    • Anonymous

      There is a difference between refusing to pay and refusing to pay an absurd royalty rate. Small webcasters are willing to pay. But $0.0017 is an absurd rate. Small webcasters do not have the means of raising that kind of money. The rate will well exceed 100% of any advertising revenue they manage to bring in. Not to mention having to pay other expenses like webhosting and royalties to the PROs. There is no way to win.

  4. DavidB

    There may be a case for subsidising small webcasters (though I can’t offhand think of one), but if there is, I don’t see why artists or songwriters should be providing the subsidy.

    • Uncle Bob

      There are several exemplary “cases” for having a separate classification and affordable rate for small webcasters.

      — Artists, listeners, and small business get squeezed and lose big-time if a survivable rate is not renewed.

      — Millions in royalty dollars heretofore paid by small webcasters to SoundExchange, BMI, ASCAP, etc. will EVAPORATE.

      — With the new “one size fits all” rates, commercial internet radio will be left to less than a handful of billion dollar corporations. Are you old enough to recall what happened to FM radio when Clear Channel, was allowed to “buy” up the market? Suits sucked the soul out of radio as we knew it and turned FM into a cesspool of sameness. It’s happening all over again. All the hits—All the time! Oh Joy.

      — What about up and coming artists that WILL NEVER be heard on corp conglom radio? Same as Terra radio, the only ones getting heard and paid* will be the payola’d All Stars—All the time. Woohoo, 5 new sets of $7,000 spinner rims for Fetty Wap. A new crib for Bieber and posse. Oh Yeah!….?

      — Just like the free-form radio days; Small webcasters provide a diverse outlet and income for a vast back catalog of existing artists and new artists that will rarely if ever be heard on Wall Street Radio. Kiss diversity and discovery goodbye…all over again.

      –College internet radio stations get a “subsidy”. $500/yr. and they’re good to go! Yet a small webcaster with the same audience size is now on the hook for $39,000/yr.

      FWIW, that’s for only 221 listeners per hour. And last year, a direct licensed small webcaster still paid 5 times (minimum) more than a college internet station.

      –*Mega Corp. terrestrial radio stations do not and have not paid one red cent in recording royalties to artists for decades. How’s that for a subsidy?! The irony is staggering.

      –What is so egregious about a percentage of gross revenue/expenses model for small webcasters? This is exactly how SiriusXM is charged. This is also how thousands of small webcasters were charged (at higher percentage rate than SiriusXM mind you) the past 9 years putting millions into the royalty pool. As it stands…that money goes poof!

      heh…just to name a few cases offhand

      Do you hear what I hear? It’s the sound of millions of royalty dollars and free promotion due to hard working small artists being sucked down a gentrification toilet!

    • Anonymous

      How would providing a reason rate be a subsidy? There is literally no way a small webcaster can reasonably generate enough money to pay these royalties. They can’t make enough money off advertising without massive advertising teams they don’t have. They can’t make money off subscription options because no one will subscribe to a small internet station while Spotify exists. There is no way to win. It’s unclear if even medium-large webcasters will be able to make a go. Most medium webcasters have admitted that the royalties will exceed 100% of their revenues and most large webcasters are losing money.

  5. Webcaster

    Yet another sensationalist half-truth (at best) headline from DMN.

    The Copyright Royalty Board aka “US Government” DID NOT “officially deny” anything.

    1) That online petition/plea referenced in your article was bush league to begin with; flawed on so many counts it was embarrassing. Despite it’s noble effort, no one in the know and of authority, especially the CRB, would have ever given it any credence. First and foremost because, legally, they can’t.
    2) The CRB was not and is not in any position legally to approve or “deny” a side deal/consideration with any party outside of the Web IV trial. Since small webcasters were not a party in the proceedings, there was nothing to deny!
    3) If there is to be any small webcasters deal, it has to come not from the CRB but instead from a specially negotiated deal with SoundExchange on behalf of the labels, just as it has for the deals that have been in place for the last 15 years.
    4) Hence, the “deal door” is still officially wide open for small webcasters.

    Film at 11 folks!

    • Paul Resnikoff

      Sorry, but the only ‘deal door’ still open for smaller webcasters is the one into the funeral home. I hate to say this, but your answer is perfectly bureaucratic, full of special procedures, condescending statements on procedure and formats. The reality is that by refusing to even consider the ‘lowly small webcasters’ and move ahead with a document like the one in this article, any request for consideration has been denied.

      Perhaps that CRB and SoundExchange think of smaller webcasters like the homeless man begging for change; they don’t even look over to acknowledge the shaking can. They’ve in effect denied the request, even if they haven’t formally considered it.

      • Webcaster

        Thank you for officially confirming your downright ignorance on the statutory licensing and hearing process for webcasting.

        “Digital Music News is the leading authority for music insustry [sic] professionals worldwide.”
        Typo aside…that’s rich.

        Oh, and way to try and backpedal the headline. Hmm, I guess you could change “officially” to “effectively”. Even then, it would not be wholly accurate. Sorry, but it’s clear that you and staff are batting out of your league.

  6. John Michaels

    All you pocket picking politicians want to do is make sure only the rich have control over the broadcasting on the web . . . . . . .as usual !
    Small webcasters all over the USA are outraged over this increase and our government allowing small webcasters to be literally executed by the CRB ( The Music Mafia )
    It’s a crying shame that artists who are stupid enough to support this bill dont realize whether you want to admit it or not , that small webcasters are the reason your music is so popular ! Well my station for one is banning ANY artist who supports killing internet radio ! Your music will go silent on our station like that little spoiled bigmouth Taylor Swift ! BANNED ! Greed filled Corporate America ! Makes me embarassed to say I live here !
    People in congress need to wake up and get outta the fog !
    Realize you havent just killed internet radio ! Youve killed small business along with them ! Website hosts – streaming server hosts – Banner hosts – Gift shop suppliers + more !
    You have taken millions of dollars OUT of the economy ! I hope your proud of yourselves for your greed filled despicable acts !
    Fair play act PFFFFFTTTTTT Thats a load of crap! It isnt fair at all !
    Its a lopsided bill designed for the rich and only the rich !