[IP] A webcaster's take on royalty rates
Delivered-To: dfarber+@xxxxxxxxxxxxxxxxxx
Date: Wed, 11 Feb 2004 11:57:09 -0800
From: Rusty Hodge <rusty@xxxxxxxxx>
Subject: A webcaster's take on royalty rates
To: dave@xxxxxxxxxx
Dave,
These rates have hardly changed for the big webcasters since the 2nd round
of CARP talks, where the rate was set at $0.0075 per song per listener. The
big change now is the fact that you can now base it on ATH (aggregate
tuning hours) so that many short tune-ins don't cost you as if they were
listeners listening to the whole song.
Still these rates are prohibitive to small broadcasters. Lucky for us, the
Small Webcasters Act was passed and allows small stations doing less than
$500,000 in annual sales to pay a percentage of their revenues (aprox
11%). However, this forces internet broadcasters to stay small - do more
than $500,000 in revenues for the year and suddenly your royalties increase
more than tenfold.
The new ruling does set the rate for subscription services, at a reasonable
10-11% (sorry, don't have the exact numbers handy) will mean that
subscription service is the only reasonable business case if you're doing
over $500,000 in revenue a year.
This current rate was pushed by the big guys: AOL (Netscape Radio), Yahoo
(Launch), MTV and others who didn't want any kind of royalty based on
company revenues. (This appears to be because they saw their radio services
as loss leaders promoting their other services and not a revenue source on
its own).
Of course, most of the big guys are making their radio services
"subscription" based now. The RIAA appears to have been successful at
starting the move away from free internet radio.
Sincerely,
Rusty Hodge
General Manager
SomaFM.com (broadcasting since 2000)
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