Radio: Safety Net Radio

Two things I hate to see wasted. Time and money.
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That brings me to Save Net Radio, the Internet radio group trying to keep the RIAA – the influence peddling wing of the four major label groups - at bay from being given a misguided tribute to the labels for the privilege of providing artists airplay.

I call it a tribute – as opposed to a performance tax or royalty payment the RIAA attempts to paint it as.

In my old neighborhood tribute is defined as “an extorted payment, which allows you to do business.”

The RIAA is the acronym of the Record Industry Association of America. It’s a disingenuous name since only one of the four major labels is American-owned and operated.

The RIAA claims the Digital Millennium Copyright Act (DMCA) gives them the right to go after streaming audio for royalty payments.

It’s based on the false assumption that all digital recordings are a perfect duplication of the master copy. Since streaming audio is digitally delivered – the RIAA wants streaming audio broadcasters to pay its collection agency, SoundExchange, for airplay.
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The reality is that most digitally delivered music and spoken word on the Internet is highly compressed audio. A perfect duplication it is not.

The real money comes in with the ephemeral recording. This is where songs are buffered to your computer before being played. Unbelievable as it may seem, the Copyright Royalty Board rates included a second fee that’s charged, because it considers this buffering as making an additional copy of the song before playing it.

From my vantage point, Save Net Radio can’t buy a clue on how to deal with SoundExchange’s hardball demands.

I’m not even sure what they’re trying to achieve other than to wallow in their own plight and feel self pity.

They are incapable of attacking a problem. Whenever a real, substantial idea or a battle plan is presented, it’s met with lethargic reasons on why it’s impracticable from other members of the group.

Save Net Radio wants to play nice to the record company goon squadron. They can’t come to grips with the fact that this group will take pleasure in cutting out your heart and feeding it to you.

The RIAA considers fairness an antiquated notion at best and corrosive naiveté at worst.

Their recent effort to legitimize their existence by pretending to be a friend to the artist on their labels is nothing more than a smokescreen for their true identity.

And in this corner is Save Net Radio, which presumed that a slogan and safe-as-milk protest would fix all of Internet radio’s woes.

Remember when they did their “Day of Silence” on June 26, 2007. This was the day when all Internet radio stations would go dark for twenty-four hours to protest the RIAA’s strong arming.

What was learned? What was accomplished?
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Absolutely nothing.
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In fact, with the exception of generating some ho-hum publicity, the “Day of Silence” was a bust. The majority of terrestrial stations did not participate - nor did the major streaming audio stations like AOL’s and Last.fm's.

One Internet radio portal, Radio Row, saw an increase of 33 percent of visitors that day. Streaming audio listeners had no problem finding other stations to listen to that day. It was no “day of silence” to them.

Stop and think about the pure brilliance of their remonstration. They tried to get their message across by going silent.

Name me one home run Save Net Radio has hit. OK, how about a single?

Just so you know, whether the end result is win, lose or draw, there’s always someone cashing checks along the way.

Save Net Radio’s Chair is Jon Potter, an attorney from Washington, DC. He’s racking up some nice billable hours.
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Interactive Week magazine called him one of the “25 unsung heroes of the Internet” and The Legal Times’ Tech Counsel magazine named him one of Washington’s “top technology lobbyists.”

What’s Potter’s tactic for Save Net Radio?

Try not to upset anyone.

Another payment goes to whateverPR firms promoted, among other things, the long-forgotten “Day of Silence?” Qorvis Communications LLC is one of the PR groups they’ve used but it’s uncertain if they handled the “Day of Silence” hype.

This lackadaisical attitude from Save Net Radio comes at a time when automobile routers and other portable Wi-Fi options become more accessible and affordable, which will allow in-car listening to streaming audio, and bring Internet radio to the masses and present real competition for Sirius-XM.

Here’s what I don’t get. What’s stopping the labels from doing their own Internet radio stations? Think of the branding. All Sony all the time, We’re all Warner Brothers, Universally yours, and My EMI.
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They could hire top-name air talent, do massive giveaways, and have total control over what is seen and heard on their sites. And, it’s all barely legal.
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The labels could buy full page ads in Rolling Stone and People and Googlize themselves across the web universe promoting their own Internet stations. So why don’t they do it?

Maybe it’s because they know that today’s music fans will see through their hype and malarkey?

The recent Senate Judiciary Committee’s hearing on “Music and Radio in the 21st Century” proved that no one in Washington politics that counts knows what Save Net Radio is trying to accomplish.

It was as if you put a group of people together, each speaking a different language not understood by any one else in the room. An argument can’t be effective if no one is listening to it.

Unless there’s a major attitudinal change at Save Net Radio, I don't think anything they do will sway this committee. Washington know a sinking ship when they see one – and when you're going down for the third time, even a garbage scow looks like the Queen Mary.

Like most legislation that was waltzed through Congress during the final years of the Bill Clinton on-auto-pilot administration, the Digital Millennium Copyright Act is poorly written and easily open for debate.

Let me stop here and remind you that the Washington definition of debate is something that is won by those with the most money and the best lawyers. Justice is often just an illusion. The real world is too gray for justice to play much of a role.

When it was signed into law in 1998, the labels hired lobbyists to work Congress to impose a new standard only with respect to charging Internet radio stations a new sound recording performance royalty system.

In reality, it cripples streaming audio sites by imposing royalties that are cost prohibitive.
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Does any of this make sense? The labels claim that allowing airplay of their product on streaming audio will hurt their music sales? Or that webcasters should be charged per listener – meaning that a streaming audio station is penalized for every new listener?
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So let me see if I’ve got this straight. What the RIAA is asking for is the reverse of free enterprise?
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Chances are Save Net Radio’s not going to be successful in arguing against royalty payments to SoundExchange. Let’s give them that. Then why aren’t royalties based on a percentage of the profits an Internet radio station generates – say six to eight percent. This allows the streaming audio industry to develop, much like the government allowing tax-free Internet commerce. If an Internet station is a love of labor and generates no revenue – they shouldn’t have to pay for play.
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And I’ll say it again – airplay sells product.
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Of course, streaming audio sites already have an option from SoundExchange to cut their own discounted deals directly with the labels rep’d by the RIAA. It’s called “direct licensing” or to be more exact, dark payola – a system that provides the labels access to what you play for a discount of what you pay. It’s a “pay-for-play” scheme that only major labels and acts can afford. And this dark payola discount is barely a discount at all, relative to the original rate.

A few Internet radio stations already bought into it. That’s like being in your own home as a guest after you’ve sold it. It may look the same but now you’ll have to ask if you want to use the bathroom.

And get this - we are to put our trust in SoundExchange to distribute these “royalty payments” to the labels, which, will distribute and provide a fair share of Internet radio royalty dollars to their artists. I’ll pause for a chuckle.

Copyright owners must allocate one-half of the statutory licensing royalties they receive to recording artists. 45 percent of the royalties are allocated to featured artists, 2 ½ percent of the royalties are distributed to the American Federation of Musicians to session musicians and another 2 ½ percent to non-featured (session) vocalists. Here it is in black and white, page ten.
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Oh, almost forgot. SoundExchange takes their “administrative costs” off the top. Among other things, these “administrative costs” include their abundant usage of lobbyists. And their lobbyists are as crazed as NRA’s whenever gun control legislation is introduced in Congress.
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If SoundExchange can’t locate an artist within three years, they keep the money. There are roughly 7,555 artists SoundExchange hasn’t been able to track down. They publish an “unpaid artist” list though it makes you wonder if their list is complete.
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Another problem with this system is that the majority of streaming audio webcasters are not paying fees and have no say in the matter since they are, for all practical purposes, pirate Internet radio stations. When you remove those stations from the total number of on line stations, you’ve cut the united-voice volume by 75 percent.

If a recording artist wants to challenge the authenticity of the royalty statement provided by the labels – they are, by law, permitted an audit. That’s an upfront cost of $25,000 to $50,000 or even more. For that reason few artists can afford to go that route.

Those that can afford to – like the Beatles and Led Zeppelin - took on their labels and found royalty discrepancies in their books – and sued to get what was owed them. But how about all those rock and rhythm and blues artists in the ‘50s and ‘60s that never received a dime in royalties because their dodgy labels knew they couldn’t afford an audit?

Just this past week the Allman Brothers sued Universal Music for $10 million in arrears of royalty payments for the sale of digital recordings. Five Allman band members are named as plaintiffs, claiming they were gypped on royalties for music recorded going back to 1969.

One of the songs owed royalties on is “Ain’t Wastin’ Time No More.” That should be Save Net Radio’s new motto.

And the RIAA should take heed from Jackson Browne: “Nobody owes you nothing.”
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