Background:
From the Inquirer: Resignation letter of Ann Gabriel
From the Register: '96 pc of Net Radio' to close after backroom deal screws grassroots 'casters
From the Register: 'RIAA-written' Net radio bill served to Senate
What's wrong with HR 5469
What do you believe? An analysis of HR 5469 (v3) and the webcasting community

> Date: Mon, 14 Oct 2002 01:26:57 -0700
> From: Rusty Hodge

> The RIAA seems to have managed to really get a rift going in the
> webcasting community.

> I'll tell you all I know.

That's a crock of bull, and you know it. There is definitely a rift between different sizes of webcasters. The reason for the rift is simple: For months, smaller webcasters supported various efforts put forth by the Voice of Webcasters' management. We supported email campaigns, faxed and visited congress, and cajoled our listeners, colleagues and musician contacts to do the same. In the end, commercial webcasters got a deal and we got nothing. When we tried to address the concerns of hobbyist webcasters on the list, we were either ignored, ridiculed, portrayed as being against the passage of HR 5469, or told just how great the original CARP rates were for us.

The RIAA is guilty of many things, but its dishonest on your part to make them the scapegoat here. Having said that, I'm sure that dividing webcasters into different lobbying groups serves their purposes. The commercial webcasters negotiating a separate deal which excluded all but the largest few percent of webcasters and then actively working against smaller webcasters making a deal of our own is what caused the rift, not Herr Hilary and her minions.

> "Somebody shine a light of truth into the nature of these
> proceedings. You have many friends on pho list. Speak up. This is
> another dirty deal." -- [ quote from The Register article ]

> This article is based on a lot of incorrect information. What appears
> to have happened was that someone on the carp@voiceofwebcasters.org
> mailing list forwarded a bunch of messages from that list to the
> author. (Nevermind that the mailing list messages have a disclaimer
> which say that they are confidential and not for publication without
> prior consent). I am annoyed that I was quoted out of context in the
> article.

> The headline is based on one message that someone who opposed HR5469
> posted, a message which is not accurate. The 96% number came from a
> person who opposed all webcasting royalties and based his
> calculations on the Shoutcast.com directory.

I was the one who originally posted the 96% figure as the percent of shoutcast stations which would not benefit under the RIAA-negotiated rates. I did not discuss that particular figure with the author of the article, nor suggest it as a headline. As I said in my original post, the number was based on the Shoutcast TTSL list, nothing more and nothing less. I used figures which YOU provided on the break even point using the RIAA-negotiated rate of 25 simultaneous listeners. You did not dispute my numbers at the time. In fact, you supplied additional statistics based on them.

Regarding my being, "a person who opposed all webcasting royalties":

1) Ultimately I think not paying royalties is the best solution. As you are aware, terrestrial radio does not pay these royalties under the understanding that record companies receive a substantial promotional benefit for airplay. In addition, by agreeing in principle to paying royalties, webcasters were split off from powerful allies like the National Association of Broadcasters (NAB), which has successfully fought off royalty payment for decades. It also set the stage for various webcasters to jockey for better rates for their own groups, which I predicted would happen months ago. FYI, I had not taken the "no royalties" position for some time on the list.

2) Around the same time as the 96% post, I did propose some specific and detailed royalty plans for hobbyist webcasters, which would give us substantial relief from the CARP rates, along a similar line as the commercial webcasters achieved with the RIAA/Congress deal. These plans were ignored or dismissed as being politically unworkable until after HR 5469 passed.

> It did not take into
> account the broadcasters who operate via Live365 (which includes
> thousands of broadcasters), the Windows Media radio directory,
> Real.com, etc.

You're right, it was not a comprehensive figure for the entire webcasting industry.

> It also assumed that all stations listed in the
> Shoutcast.com directory are actually accessible. Because of the way
> that the shoutcast automated directory works, even if you setup a
> shoutcast server to privately distribute audio in your house or
> within an office, by default it will appear in the shoutcast.com
> directory.

If you don't change the default setting to non-public and it does appear, even once, you are instantly liable for a $500 minimum royalty.

> So will stations that do not have the network bandwidth to
> reliably stream to a single listener. Anyone can run the Shoutcast
> software on a DSL line, yet can't sustain a single listener because
> of bandwidth limitations.

What is your point with this comment? Even if the connection is crappy, you still have to pay.

However you are still wrong about those figures. See the Shoutcast download page, which says, "Maximum bandwidth used for serving is equal to the bitrate you are serving at multiplied by MaxUser x 1.1." As an experienced Shoutcast user, you should know these numbers.

A 128k upload speed cable line can sustain 3 32k listeners or 4 24k listeners. It can also support a one-user 96k relay to a 3rd party bandwidth provider. I've done the latter when Comcast capped all users at 128k. It sucked up most of my upstream bandwidth, and it wasn't pretty, but it worked.

A 384k DSL line can support 6 simultaneous 56k listeners, which is easily more than enough to surpass the $500/year CARP minimum.

> And the statistic does not take into
> account that many of those Shoutcast broadcasters are not based in
> the US nor does this take into account where the listeners are.
> (Remember, the DMCA/CARP fees only apply to listeners in the US.)

How do you propose distinguishing non-US from US-based listeners? I'm serious here, a lot of money is at stake. (That's a public challenge to the /. crowd.)

> Now the current CARP rates - if you broadcast 12 songs an hour, and 7
> average concurrent listeners, you'll be paying $516.50 a year. If you
> only look at stations with more than 7 concurrent listeners on
> average, or 5040 hours for the 30 day sample period, you get about
> 320 stations, and those stations represent 98% of the shoutcast
> audience (based on listener numbers)!!! The remaining 2700 "stations"
> are fighting for about 400 listener.

I strongly disagree with this number. Its also funny how the break even point keeps going up in various people's estimates, as the attempt to convince us that the CARP rate isn't really so bad is intensified.

I think an average of 3 or 4 listeners is enough to EASILY hit the $500/year limit. Under the last thing I saw in writing, any listener connection, no matter how short, counts as user/song play. If you look at the shoutcast TTSL (total time spent listening) numbers, and the ratio of "tune-ins" to "5 minute tune-ins" (i.e. any listener connection vs. a 5 minute or greater listener connection), you'll see the ratio is quite high. In other words, a lot of people channel surf, and you have to pay as much for a 10 second connection as for a listener hearing an entire song.

> Of that 3000+ shoutcast stations listed who will be "screwed", more
> than half of them do not have any listeners. If you have sampled
> some of those near the bottom of the rating stations, you'll find
> that many of them are either broadcasting silence, or their stream is
> technically unlistenable (more dropouts than audio or you can't
> connect to the stream at all).

I won't dispute that many stations at the bottom are crap. Is that a reason to have rates which force them (along with potentially very good ones like yours) from ever getting a chance? You and I had it easy, the new guys will need a lawyer to get started.

> (http://shoutcast.com/ttsl.html - has a rolling 30 day statistic
> snapshot, which these numbers are based off)

> HR5469 grants a lot more relief to a larger body of webcasters than
> you'd think from reading that one mailing list. To the rest, HR5469
> DOESN'T CHANGE ANYTHING. If it passes or fails, nothing changes for
> the smallest webcasters.

DOESN'T CHANGE ANYTHING, eh? Do you consider that a good thing?

You, and many others have stated in the past that the CARP rates are intolerable. Take a look at your own page. [NOTE: This page was present at the time of this writing on 10.14.02. It has since been removed.]

Under, "Internet Radio dealt a crippling blow by CARP" it says:

"We had feared that the CARP proposed rates would put most Internet radio webcasters out of business. What has been adopted by the Librarian of Congress will do exactly that - put thousands of small webcasters out of business. The internet will then be dominated by the large media companies who can afford to pay these fees..."

The only thing that's changed is that you've found your way out from under the CARP rates. The rest of us are still screwed. As for those "thousands of small webcasters," as long as you're not of them its all good.

> (By the way, Live365 is neither harmed or hindered by this bill.
> Their statement is here:

> http://www.live365.com/carp/hr5469statement.html

Agreed.

> Live365 is also represented ONLY by DiMA. Additionally, Live365 covers
> the royalties for their member broadcasters, their member broadcasters
> are not directly affected by this.)

> Any webcaster with an average of more than about 25 concurrent
> listeners is better off under this deal than the previous CARP
> ruling. Beneath that limit, there is no difference.

See above re: selling us out.

> There is another quote that is very misleading in the article:

> ``And privately, even members who support HR.5469 agree that it will
> "seal the fate of this industry to be dominated by big webcasters,"
> according to correspondence seen by The Register. ``

> Actually, the quote "seal the fate of this industry to be dominated
> by big webcasters" came from Kevin Shively (also fellow pho) of
> Beethoven.com, on 9 Oct 2002. Kevin has stated many times that he
> does not support the version of 5469 that was passed.

> The Register should have attributed this quote because it completely
> changes the meaning of it. Beethoven.com, a 14-employee company, is
> owned by Marlin Broadcasting, a company that owns several FCC
> licensed over the air stations. Kevin does not support HR5469 because
> he believes that it sets the definition of small webcaster at too low
> of a level. But I'll leave it to him to tell you what he thinks about
> the bill. Kevin has been a driving force in lobbying for fairness for
> small webcasters, and ironically, HR5469 would probably not have
> passed without him, and it is very saddening that he will not benefit
> from it. Kevin will hopefully post his concerns with the bill (I
> recall it is Section 4 that he has problems with).

I'd like to see that too.

> For the record, SomaFM feels that 5469 is far from a perfect bill.
> However, we think it is a good starting point. Kevin has expressed
> concerns in this bill setting precedents that will harm many
> mid-sized webcasters. I believe that NAB is not supporting the bill
> for the same reason.

As I outlined above, the NAB is not supporting it because they have successfully opposed RIAA royalties in the past.

> ``But the compromised Bill has some surprising backers. SomaFM and
> KPIG are urging listeners to support the revised, RIAA-negotiated
> venture.``

> I was quoted somewhat out of context talking about advertising. I was
> talking about a variety of options available for small webcasters,
> one of which was advertising. However HR5469 extends the definition
> of non-commercial webcasters to any non-profit organization, not just
> FCC licensed non-commercial broadcast stations. That rate is less
> than a third of the rate that commercial webcasters pay under the
> current CARP fees ($0.0002 vs $0.0007). This I believe is a big win
> for non-commercial internet only webcasters.

Your quote about advertising came from last Friday's RAIN. It looked on the mark to me.

> I was also pointing out that $500 a year minimum, vs the small
> webcasters demand for $250 a year minimum, was negligible. I was also

Yes, the difference between $250 and $500 is not much. That ignores the fact that the $250 rate was proposed as part of a plan which substantially lowered the CARP rates, and not just minimum fee, as well as simplified record keeping for smaller stations.

> pointing out that as they grew, and hit the $2000 minimum under the
> new plan, that they would have an audience of over 25 average
> concurrent listeners and at that point should have not trouble
> obtaining advertising. They could bill up to $20k a year and have an
> unlimited audience size.

As you know, most stations don't hit "unlimited license size". Many genres are only so large, and a good station in a very small genre may never achieve a size large enough to turn a profit. Providing CARP rate relief for all stations, regardless of size should be the goal here. I can appreciate why the RIAA wants to consolidate the number of internet radio stations. After all, its easier to control the publics access to music if there are a few large stations. As one of the pioneering Shoutcast broadcasters, I would except you to be an advocate for lower rates for stations which play obscure music, and not an apologist for higher rates and RIAA-backed market consolidation.

> SomaFM is listener supported and commercial free. We are not a
> 501(c)3 non-profit. Under the CARP rates, we would have to pay $500 a
> DAY - over $180,000 a year in royalties. We generate about $20,000 a
> year in donations now, which has covered about 85% of our costs
> EXCLUDING the CARP FEES, and was on its way to covering all our
> costs. (The cost that isn't covered is the cost of all the CDs I have
> to buy!) SomaFM operates bare bones, our studios are in my garage.
> We believe that we can generate enough additional donations to keep
> us on the air with the rate proposed in HR5469. For us, it's
> $2000-5000 a year instead of more than 10 times that under the old
> CARP rates. So it's a no brainer for us to support this.

I understand why you'd want to support it, but don't expect those of us who aren't helped by it to be cheerleaders for the commercial webcasters' agenda any longer.

> Another inaccurate quote:

> "Many webcasters have already resigned in protest from the body
> that's supposed to represent them: the Internet Webcasters'
> Association. "

> One person, Ann Gabriel, resigned. And Ann Gabriel was not a
> webcaster, she produces live web events. She is not liable for past
> CARP fees. In her open letter (which I've included below) she seems
> to imply that IWA and VOW are the same.

> Voice of Webcasters and the International Webcasting Association are
> two separate entities.

Yes, IWA and VOW are different entities. It was VOW which had several members leave in disgust.

> The International Webcasting Association or IWA (which SomaFM is a
> member), is not a lobby group on behalf of small webcasters. However,
> since the IWA dues are far less than the other webcasting-related
> trade group, DiMA, it has many more small webcasters than does DiMA.
> As I recall, DiMA dues are $20k a year, IWA dues $300 a year. DiMA
> represents bigger companies like Microsoft, AOL, Yahoo and smaller
> guys like Live365. Jon Potter can tell you more about DiMA's goals.

So what is the point of IWA then, and why is it raising money to pay off legal fees?

Its hard to come up with a punchy conclusion after having spent the last 30+ hours reading, writing, thinking and talking about the legal issues of internet radio...

Has anyone else noticed RAIN's total lack of coverage of the Register articles? So much for credibility.

Brian Hurley
Detroit Industrial Underground
www.detroitindustrial.org