March 7, 2007

Why Creating A Monopoly Always Merits Caution [7:18 am]

F.C.C. Chief Questioning Radio Deal

As he sought to sell the proposed merger of Sirius Satellite Radio and XM Satellite Radio to Congress, and by extension to regulators like Mr. Martin, Mel Karmazin, the chief executive of Sirius, vowed last Wednesday that prices would not be raised and that listeners would benefit enormously by getting the best programming from both companies.

But in separate conversations with two people after Mr. Karmazin’s testimony to a House committee, Mr. Martin said that subscribers may be surprised to learn they may actually have to pay more than the current monthly rate of $12.95 if, for example, they want to receive all the games of Major League Baseball (now available only on XM) as well as all the professional football games (now only on Sirius).

Mr. Karmazin, reached on Tuesday, said his testimony was not misleading and that he meant to say two things: subscribers wanting to keep their existing service would not face a price increase, and listeners who wanted the best of both services would pay less than the combined rate of $25.90.

“Tomato, to-mah-to.”

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CaRB Attack! [7:10 am]

This has been all over Pho for the last week: Internet radio stations face fee hikepdf

Video killed the radio star, as the 1979 hit song goes, and now some fear an obscure group of federal copyright judges may be on the verge of killing Internet radio.

In a ruling made public Tuesday, the Copyright Royalty Board significantly increased the royalties paid to musicians and record labels for streaming digital songs online. The decision also ended a discounted fee for small Internet broadcasters.

Broadcast radio stations that also stream their programs online, such as KCRW in Santa Monica, said they might have to scale back on webcasting, and operators of Internet-only radio stations said the new fees would probably force them to go silent.

[...] “Unless we can find an alternative to paying the published rates, there’s no feasible way we can continue,” said Bill Goldsmith, who operates an online rock-music station called Radio Paradise in Paradise, Calif. He estimated that he would owe $650,000 in royalties under the new fee structure in 2007 — 25% more than he expected to pull in this year from listener donations.

KCRW general manager Ruth Seymour called the ruling draconian. She said the station, one of the largest National Public Radio affiliates in Southern California, could owe more than $350,000 for 2006 and 2007.

[...] Seymour said she was optimistic that National Public Radio and the Corporation for Public Broadcasting could negotiate a better deal with the recording industry. Such separate royalty agreements are possible, though difficult to negotiate. An attorney representing small Internet broadcasters said they would try to do the same.

Internet radio supporters also can appeal the board’s decision or ask Congress for help.

All broadcasters have to pay royalties to composers and publishers, but traditional radio broadcasters — arguing that airtime is free promotion — have long been exempted from paying royalties to artists and record labels whose songs they play on the air. Laws passed in the 1990s governing digital recordings, however, required Internet and satellite radio operators to pay those so-called performance fees.

Later: an LATimes editorial - Giving streamers a royalty pain - pdf

Labels and artists should be paid for their music by everyone who broadcasts it, online and off. But if the music industry simply charges small and noncommercial webcasters the maximum rate allowed, it could put them out of business. Then they wouldn’t be paying any royalties at all — and it’d be the industry’s turn to panic.

The Determination of Rates and Terms for Webcasting for the License Period 2006-2010 in [Docket No. 2005-1 CRB DTRA] Digital Performance Right in Sound Recordings and Ephemeral Recordings

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