Please make 1 quick phone call
As many of you probably know, Washington state representative Jay Inslee and 8 co-sponsors introduced the Internet Radio Equality Act (H.R. 2060) a week ago yesterday, a development covered well by Kurt Hanson and Rags.
The passage of this bill would save the nascent internet radio sector from an unfortunate fate as a result of the CRB decision. In fact, it would also, for the first time, allow internet radio companies to actually grow; as I’ve posted recently, the rates enacted in 2002 were already onerous and have made growth perilous for the vast majority of webcasters.
Why? Because for each track or hour streamed, the webcaster must pay a fixed fee, one which is too high relative to the advertising revenues that can reasonably be expected to be earned. If the revenues from audio or display ads cannot (or can barely) cover that fixed marginal cost, then the webcaster loses money. So more listening means the webcaster goes ever deeper into the red.
The Internet Radio Equality Act changes this notion of a fixed fee per unit to one that is variable — a percentage-of-revenue rate, a tried-and-true method of royalty determination for decades, used by ASCAP, BMI, SESAC, satellite radio, cable radio, and terrestrial radio in other countries.
The proposed rate is 7.5%, the same as what satellite radio pays today, with an annual minimum of $500 per service. While I’d argue that the annual minimum realistically needs to be a higher, or at least tiered in some way to reflect the relative level of music streamed, introduction of a percentage-of-revenue rate is a game-changer for the music and radio industries.
Not only will small and medium webcasters be saved from extinction, they will actually have a chance to thrive, enhancing choice and diversity for consumers while (I think) ultimately increasing the total revenues earned by artists and labels from the streaming royalty payment and the sale of music downloads.
But this bi-partisan bill hasn’t passed and may not. Kurt reports today that the bill has 42 co-sponsors, so that’s a start. But it’ll take more. Please, if you do care about internet radio, give your congressman a call. Conveniently, savenetradio.org has included a quick zipcode entry form to get you the number you need to call — check it out and make the call.
Filed under: valuation, ventures | Leave a Comment