FOR IMMEDIATE RELEASE
July 10, 2007
Soma FM Calls On Listeners to Phone Congress
SomaFM is calling on internet radio listeners to call their
congressional representatives and ask them to tell the RIAA to make a
reasonable public settlement with webcasters before July 15th, and
proposes a fair settlement offer.
The Copyright Royalty
Board recently issued massive royalty rate hikes for internet radio
services which are set to take effect July 15. These increases are
retroactive to January of 2006. The rate increase for SomaFM amounts
to a 3000% increase, with royalties going from $20,000 to $600,000
for 2006.
“Our costs for music are set to go up 30 times what they used to be.
Even if we’re playing the same songs. That doesn’t make any sense at
all,” says Rusty Hodge, Founder and General Manager of SomaFM.com.
“The RIAA’s refusal to make a reasonable settlement with small
commercial webcasters is an insult,” says Hodge. “The RIAA keeps
saying that most webcasters are billion dollar companies, but with
the exception of AOL, Yahoo and Real, most of the top-20 music
webcasters are privately-held, independent operations. The RIAA is
willing to let independent webcasters be the collateral damage in
their battle to extract more control over the large webcasters.”
While the RIAA is negotiating on SoundExchange’s behalf with several
different groups, these negotiations are being kept secret in a
traditional divide-and-conquer plan of attack.
SomaFM is calling on internet radio listeners to call their
congressional representatives and ask them to tell the RIAA to make a
reasonable public settlement with webcasters before July 15th. Terms
of that settlement would include:
1. A reasonable rate. The previous rate of 10% of the first $250,000
of revenue and 12% of revenues in excess of $250,000 is regressive
and designed to hinder growth. As revenues increase, royalties should
decrease, just like any other quantity discount. We think the rate
should start at 10% for revenues under $2 million, 9% for revenues
between $2-5 million, and 8% for revenues over $5 million. These
rates are in line with the rates currently paid by satellite radio.
2. A sensible term. A settlement that last for just 2 years is
completely unacceptable. A suggested term would be through the end of
2010, with a right by either party to extend for another 3 years
after that.
3. Increased revenue caps. The RIAA defines small commercial
webcasters as entities with less than $1.25 million in annual
revenues. Exceeding this amount in a calendar year would disquality a
webcaster for paying based on a percentage of revenues, and force
them to pay on a per song, per listener basis which would be multiple
times their annual revenue. This cap needs to be raised if the
webcasting industry is to be allowed to grow. Revenue caps this low
will force small webcasters to constrain their growth or else face
debilitating royalty liabilities. We think this cap should be raised
to $10 million. The US Small Business Administration “Table of Small
Business Size Standards” defines a small traditional radio
broadcasting network as a company with less than $6.5 million in
annual revenue (and no limit to the number of employees). An internet
broadcasting service is considered a small business if they have less
than 500 employees and no revenue limits.
4. Common-sense reporting requirements. Broadcasters would be
required to report either the ISRC, or if not known, the Artist,
Track Title and Album Name.
5. Congressional “codification” of the settlement. Congress will need
to endorse this settlement and put it into law.
These are extremely reasonable requests, and the RIAA should instruct
SoundExchange to finalize this settlement this week.
Time is of the essence. The RIAA is stalling negotiations since
webcasters are facing a July 15th payment due date. This payment will
cripple many if not all independent webcasters as it is multiple
times their annual revenues.