A Royal(ty) Screwing

Kurt Hanson in his March 9th edition of RAIN quotes Beta News as saying that ""CRB rates would make SoundExchange a '$2.3 billion per year business'" and "based on the CRB's royalty rates for 2006, AOL Radio is expected to receive a royalty bill for last year for about $23.7 million...".

It gets worse:
"On a per-listener scale, broadcast radio stations paid $1.56 per listener on average during 2006; and in 2010, that figure rises to $1.94 per listener. BetaNews estimates that Internet radio sites, by contrast, will pay $8.91 per listener for 2006, rising to $15.59 per listener in 2008 and staying flat beyond that time.

"Thus an Internet radio music provider is likely to pay in royalties almost ten times the amount for each of its listeners throughout the year, than the terrestrial broadcaster."
This is pure insanity.

It's murder to the streaming audio business and it's suicide for the record industry which finds new ways all the time to give the partners who help them sell music a royal(ty) screwing.

And what's about to happen next should be the final nail in the coffin for radio, the sales engine of the record business as well as Internet radio, their future sales engine. The labels are pushing for a public performance license for radio in the US.

That's flat fees!

These labels are playing a high stakes game. They are going after everyone who can help them.

Radio stations.

Internet radio stations.

Their customers.

ISPs-- look for a get tough approach to get them to actively police their networks for illegal downloading.

So far everyone is taking it.

Internet music streamers are praying that they can get the CRB to revise their mistake or else they will not be able to afford to be in the Internet radio business.

Terrestrial radio should be helping their Internet radio brethren fight these ridiculous rate hikes. Not because radio consolidators are nice guys. But for one self-serving reason.

Radio is next.

I have a unique scenario for you to consider if the radio industry and Internet radio decided once and for all to turn the tables and get tough with the record labels. I'll have that for you tomorrow.

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