Looming Royalty Structure Could Be Catastrophic for Internet Broadcasters
Daniel makes a convincing case that the royalty rates would likely cost some smaller Internet broadcasters all of their income- and effectively drive them out of business:
Applied retroactively, the rates he cites are as follows:
- 2006 $.0008 per performance
- 2007 $.0011 per performance
- 2008 $.0014 per performance
- 2009 $.0018 per performance
- 2010 $.0019 per performance
Sounds cheap but here's the rub:
A 'performance' is defined as the streaming of one song to one listener; thus a station that has an average audience of 500 listeners racks up 500 'performances' for each song it plays," Daniel notes.
The minimum fee is $500 per channel per year. There is no clear definition of what a 'channel' is for services that make up individualized playlists for listeners.
Daniel notes that for noncommercial webcasters, the fee will be $500 per channel, for up to 159,140 ATH (aggregate tuning hours) per month. They would pay the commercial rate for all transmissions above that number.
Think that's scary? Now let us go to Dan's analysis:
Because a typical Internet radio station plays about 16 songs an hour, that's a royalty obligation in 2006 of about 1.28 cents per listener-hour.
In 2006, a well-run Internet radio station might have been able to sell two radio spots an hour at a $3 net CPM (cost-per-thousand), which would add up to .6 cents per listener-hour.
Even adding in ancillary revenues from occasional video gateway ads, banner ads on the website, and so forth, total revenues per listener-hour would only be in the 1.0 to 1.2 cents per listener-hour range.
That math suggests that the royalty rate decision — for the performance alone, not even including composers' royalties! — is in the in the ballpark of 100% or more of total revenues.
Sheesh, man. If I was an Internet broadcaster, I might be tempted to either just go to talk, or find another line of work.
Related Tags: performance, Daniel, daniel, Internet, royalty, internet
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