Where the Internet Radio Ruling Comes From

More about the threat to internet radio from our friends at Kurt Hanson’s shop:

First, the SoundExchange guys say, “don’t blame us.” And they’re right. Any time I’ve dealt with the folks there, they’ve always been kind, gracious, and really passionate about their ideals. And that’s awesome. I don’t think they’re part of any conspiracy, and I really believe that their jaws dropped farther than anyone else’s when the new webcasting royalty rates were announced. If anything, SoundExchange has done a lot to educate folks about how little non-songwriting performers actually earn from recordings. (i.e., nothing.)

Second, Kurt’s got an interesting quote from the general manager at my old station to back up the idea I presented in an earlier post. While some folks gripe that stations like XPN should be playing more independent music, Bruce Warren has dedicated his career to figuring out just the right formula to get new music into the ears of folks with pretty routine listening habits. That often means “sandwiching” something unfamiliar between a few very well known tracks.

While most of us who have worked with Bruce believe him to have some kind of psychic connection to the collective subconscious that allows him to pick so many hits, he’ll tell you that “chatter” on blogs and charts from streaming services like Pandora are some of the tools he uses daily to program the station. Taking those tools away means that those heavy influencers are less likely to bump into good, new music.

As Kurt points out, the whole thing really comes from the bad decision that was made during the dot-com bubble to base these rates on what a “willing buyer” would pay. At the time, a flush-with-cash company like Yahoo that wanted to dominate the market was willing to pay a very high rate to flush smaller competitors out of the market. The proactive licensing agreement they made was the template used for future decisions, despite the fact that no willing buyer would do such a thing today.

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