The RIAA and its goonsquad, SoundExchange, is working very hard to destroy internet radio, by forcing webcasters to pay royalties that will run from 60%-300% of their annual revenue. For context, satellite radio pays 5%-7%, and over-the-air broadcasters pay nothing.
Why is the RIAA trying so hard to destroy Internet Radio? I wrote in a Geek in Review a while ago:
Because the RIAA (which is essentially the major labels) has spent a lot of time and a lot of money building a monopoly with a few media conglomerates, and it's been very profitable for them all for decades.
This effort to wipe out independent online radio has nothing to do with protecting artists, and everything to do with protecting a status quo that supports a very few top 40 acts at the expense of everyone else. In their effort to protect their outdated business model and insanely corrupt relationship with a few broadcasters, the RIAA is happy to prevent their artists from having a magnificent way to reach potential customers who will buy albums, merchandise, and concert tickets.
I am rather worked up about this because I believe it's about choice. The airwaves in the United States are supposedly owned by the American people, and licensed out to broadcasters for use, but in practice, that's not the way it works at all. In practice, the airwaves are owned by Clear Channel, and they work hand-in-hand with the big four record labels to limit our choice of music. It's a great scam they've got going, and it's been a very profitable system for all of them for a very long time.
For the rest of us, though, this system sucks. For guys like me who can't stand top 40 music, who can't stand the utter crap they play on KROQ these days, and who want some fucking variety in their music, we're screwed . . .
Indie webcasters like SomaFM have been working tirelessly with the Save Net Radio Coalition to educate our representatives in congress so that legislation can be passed which would make it possible for these indie broadcasters to stay in business. The RIAA doesn't like this, so they're trying to fight it, but in a surprisingly competent move, Congress is forcing RIAA and its goonsquad SoundExchange to negotiate realistic and fair royalty rates with webcasters.
That brings us more or less up to today, where we discover that the RIAA is getting desperate, and doesn't like that it can't get its way simply by threatening a lot of people and paying off a lot of congressmen.
Rusty Hodge, the GM of SomaFM, has been in DC for a couple of months, working like crazy to save his business and an entire industry. He's been blogging about his experiences, sharing the little victories and big frustrations during the fight.
The RIAA must be afraid of Rusty and everyone who is working to save internet radio, because they've now resorted to outright lying to webcasters, in their latest efforts to threaten and scare them:
RIAA has SoundExchange issue press release to try and trick congress into thinking the royalty situation has been solved. Nice work guys.
The reason many people are signing is because they fear lawsuits from the RIAA. RIAA representatives have been calling webcasters and telling them if they didn't sign by Sep 15th, they would be operating in violation of the law. That's the only reason they signed. It's like a Sporano's episode.
The only way that webcasters can escape the high royalty rates is by signing this current agreement and only playing SX affiliated label music. This means less independent music, and more big label music. Which is exactly what the RIAA wanted.
The press release Rusty is referring to is reprinted in his blog, but here's the short version: 24 webcasters signed an agreement with SoundExchange that gives them slightly-better royalty rates now, but expires in three years, putting them right back where they are today. If SoundExchange can scare enough indie webcasters into signing this horrible agreement, the RIAA will be able to go to congress and tell them that they really don't need to pass the Internet Radio Equality Act, which would permanently save internet radio by preventing the RIAA and SoundExchange from jacking up royalty rates so high, it would force indie webcasters out of business.
And this "deal" is actually a giant load of bullshit. According to Wired's Listening Post:
However, the agreement only covers artists and labels who are SoundExchange members. Webcasters who sign the agreement but still want to play music from other bands would have to pay SoundExchange the higher per-song rates originally specified by the CRB for those songs, because that music is not part of the deal. In essence, small webcasters who sign have an economic incentive to avoid lesser-known music.
So that's what this is all about: stopping lesser-known music from even having a chance at finding an audience. The RIAA's major members -- Universal, Warner, Sony BMG, and EMI -- are trying to put indie webcasters out of business. They're not working to protect artists. They're working to protect their monopoly, and now they're lying to do it.