A webcaster's take on royalty rates

[Dave Farber <dave () farber net>]

Delivered-To: dfarber+ () ux13 sp cs cmu edu
Date: Wed, 11 Feb 2004 11:57:09 -0800
From: Rusty Hodge <rusty () hodge com>
Subject: A webcaster's take on royalty rates
To: dave () farber net

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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