Charging for the Library

The recent ruling on Web radio fees is like turning the corner library over to Crown Books.

Although the argument that America is run by a bunch of “old white men” might be belabored, it’s hard to avoid pointing that out when you look at our current Librarian of Congress, James H. Billington. The septuagenarian is only the thirteenth person to take the office since the year 1800. Thirteenth. Since 1800. Goddamn. The surprising thing is that the guy is actually an academic instead of a businessman or politician, having traipsed through the liberal arts sectors of Princeton, Oxford, and Harvard. He’s the leading Russian scholar of the universe, apparently. So naturally when this learned gent had to rule on the future of Web radio, he applied his extensive Internet expertise and swallowed hook, line, and sinker the nonsense spewed by the Recording Industry Association of America.

Internet radio went to the chopping block last May, the deadline for Billington to accept or reject terms agreed upon between a panel of arbitrators and those infamous Napster-haters at the RIAA. As usual the record labels hid behind their artists, who they claim are being raped, jacked, and generally exploited by DJs who — get this! — play their music online and don’t want to pay fees any greater than those paid by conventional radio stations. What the RIAA wants, and what Billington ruled upon, was payment not just for songwriters — the customary fees that ASCAP and BMI already collect from radio stations — but also for performers. And what do you know, the record labels want a fifty-fifty share of this new revenue.

“Okay,” most Web radio stations said. “No problem.” Many had anticipated such payments, and agreed that they were fair. In fact, most expected to pay twice what conventional radio stations pay — three percent of total revenues for songwriters, and another three percent to the performers and their labels.

But that is not what Billington agreed to. Initially he rejected the panel’s recommendations of .02 cents per listener for college and nonprofit stations, .07 cents per listener for conventional radio stations that also stream online, and .14 cents per listener for hobbyists. The per-listener rate was astoundingly costly for most Web outfits, and would force most off the air. “The problem isn’t paying the performers,” says Sandra Wasson, general manager at KALX. “It’s the actual rates.”

Although hopes were high after Billington rejected that first proposal, when he came back with his final ruling in June it spelled doom for nonmainstream music on the Web. He kept the .02 cents for nonprofits and settled on .07 cents for both hobbyists and commercial radio stations. In short, instead of going with a payment structure based on a percentage of station revenues, which most Web radio broadcasters might be able to accommodate, he went with the RIAA’s per-listener rate.

But don’t think the recording industry is happy with his decision. Remember, the RIAA wanted double that amount. Now it is bitching about the librarian’s decision in print, calling it a subsidy of the AOLs, Viacoms, and Yahoos of the world on the backs of poor, oppressed artists. Yet again the RIAA is hiding behind the little guy, pitting its artists against the big bad Internet behemoths to hide its true goal of actually destroying all small-scale Webcasts.

“The RIAA is talking out of both sides of its mouth,” says George Bundy, CEO of the radio consultancy BRS Media. “They have made mention in various press releases that the consolidation of traditional radio has impacted their ability to get sales and airplay for different artists. Yet at the same time they don’t see Internet radio as promotional, even though it’s a vehicle to get airplay for whatever Clear Channel doesn’t play.”

The RIAA chooses to pretend there is no promotional value in Web radio, because terrestrial radio has been exempted from paying performers precisely because of its promotional value. But the real rub is this: The RIAA sees all the money the large radio conglomerates have and it wants some of it.

Their greed has destroyed smaller Webcasts and further narrowed the choices for listeners not enthused about Jimmy Buffett or Destiny’s Child. Not only are Webcasts being shut down daily, but everyone who has ever had a streaming radio station has to pay retroactive dues back to ’98. KALX estimates that it will have to pay between $1,000 and $1,500 by the October deadline. But KALX has it easy. Larger stations such as Foster City’s, which has hosted more than 47,000 streams, are looking at payments of more than $1 million, due in full by October. Webcasters that don’t pay may be sued.

This is a particularly sad development for an industry that wasn’t making diddly-squat anyway. Now it is being exterminated for having brought radio to a new medium, but failing to sell enough advertising to cover the exorbitant fees that the Librarian of Congress unleashed in its direction.

The argument that performers should get paid is a good one. Few people disagree that it is unfair for only songwriters to get paid for radio airplay. But driving Webcasters out of business hardly serves the interests of performers, particularly when playlists on conventional radio stations are so narrow.

James H. Billington’s ruling is particularly heinous, coming from the nation’s chief librarian. To put it in publishing terms that even a scholar of Russian might understand, the Librarian of Congress has essentially ensured that there will be no musical libraries online — only for-profit bookstores. “The Librarian’s decision basically sets up a government-sanctioned Internet radio monopoly,” says Bundy. “It will shut out all small Webcasters.” Library-lovers everywhere should register their displeasure.

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