Webcaster comments on CRB rates, Live 365 letter


As the 7/15 deadlines nears for the new CRB royalty rate increase (see related story), an email letter was sent to all Live365.com stations this week, promising to not shut down their streams and news on how they'll continue to fight the battle against the new rates. One webcaster, Scott Lockwood, forwarded it over to us with a bit of commentary:

"I personally own a small Rock station (xxxrock.fm) and was previously a client of Live365.  Several months ago I decided to leave Live365 and continue webcasting independently.  I left to save costs on bandwidth.  I still get their automatic E-Mails and propaganda.

I am an opponent of the CRB's rate increase because there's little if any justification to charge the small webcaster more in fees.  Internet radio, on the whole, is still a fledging business and no one is making money.  The average webcaster entertains a few hundred listeners a day without any income or revenue.  Paid advertising to support these programs is just beginning and profit is years off.  In my opinion it's better left as is for everyone involved.

With that said, however, the letter I received from Mr. Lam (CEO of Live365) is a big disappointment in facts.    He speaks of "billions in per channel minimums".  This infers that new royalty fees would add up to something equal to or more than the gross national product.  Further, he states that "terrestrial radio pays NO royalties", which is more than just a wild stretch.  He may be "technically" correct that terrestrial radio pays nothing to Sound Exchange, but the inference to his audience is that terrestrial radio is getting a free ride off the backs of webcasters.  We all know that terrestrial radio pays a small fortune out in royalties every year in order to continue broadcasting.

So why the disappointment?  Statements and questions such as these just play into the hands of SoundExchange.  Far better it would be that everyone involved sit back, relax, take a deep breath and look at the situation honestly.  Perhaps SoundExchange needs to adjust their business model.  The same holds true for Live365 whose pricing structure could use an overhaul.  Individual webcasters need to assess whether they're in it for hobby or profit and make their decisions accordingly.  Above all, honest and true facts from both sides will go a long way towards a successful resolution to this issue.

(Scott Lockwood is a 32 year veteran of the radio broadcasting industry.  He is the owner of Scott Lockwood Media, a worldwide programming consultation firm.  Lockwood owns xxxrock.fm).

The Live 365 letter

Subject: What Happens to Live365 on July 15th?
From: "Live365 CEO" <[email protected]>
Date: Wed, July 11, 2007 12:58 pm

July 11, 2007 
Hi Live365 Broadcasters,

As the clock winds down during this final week before the July 15th deadline, I wanted to update you on Live365's service plans and our continued activities to oppose the unsupportable new sound recording royalty rates set by the CRB.

In answer to the top question on broadcasters' minds: we have no plans to shut down on July 15th when the billions in per channel minimums and significantly higher rates come due, unless forced to by SoundExchange.
We believe Congress and the public share our outrage over the fundamental inequity in performance royalty rates. Why is it that terrestrial radio pays NO royalties and satellite and cable radio pay much lower royalties than Internet radio to SoundExchange? Many artists have also contacted us to voice opposition to new CRB rates that will decimate Internet radio and eliminate their chance to be heard. The momentum of public opinion and business sense is on our side and we plan to continue to fight for artists, webcasters and their audiences until a resolution is found.

In the meantime, let us assure you: webcasters covered under the Live365 SoundExchange license will not be responsible for any retroactive fees. Upon resolution of the new rates, Live365 will honor its obligation to provide advance notice of any change in pricing with the option for you to continue services or not, prior to imposition of any increases.

Here's what's going on this week on the negotiation, legal and legislative fronts.

First, negotiation has been proceeding slowly even though SoundExchange has been requested by Congress to negotiate with webcasters. I am in Washington D.C. this week with other SaveNetRadio Coalition partners to make myself available for face-to-face negotiations with SoundExchange. We'll keep you posted.

Second, we are continuing with litigation. Although the D.C. Circuit Court just denied our Petition for Emergency Stay of Payments under the new rates, as was expected, we will vigorously proceed with our appeal.

Third, we are still actively pursuing Congressional cosponsors and support of the Internet Radio Equality Act. The bill would throw out the unrealistic CRB internet radio rates and replace them with those paid by satellite radio.

All of us have worked hard to protect the medium that we love. Broadcasters have spent amazing amounts of time and money on PSAs, website updates, interviews, testimonials, letters and calls to Congress. Thank you all for your valiant efforts. In turn, Live365 has invested countless hours of staff time and cash from testifying in the initial hearings over a year ago to our current presence in D.C. As the largest supporter of independent artists through their primary fans-our webcasters, Live365 will continue the battle until there is a resolution. We will continue to fight for parity and fairness as well as be the voice of reason! We firmly believe that we are on the right side of history.

Please stay tuned!

All the best,

Mark Lam
CEO, Live365

P.S. It helps tremendously to have you in front of the media telling your story. Remember that SaveNetRadio.org has a great tool to help you contact your local media. Please check it out!
Also, be sure to visit www.live365.com/broadcasterchoice for more up-to-date info on Live365's continued activities to oppose the unfair CRB royalty rates (broadcaster log-in required).