for September 29, 2002
Taking Aim At Damocles' Sword
by Sean Carolan
An act of Congress will directly affect this website. Read about it, then read about what you can do to help.
The short form:
Recently, record companies concocted a scheme that bamboozled an ill-informed Congress into allowing them to collect money from people who want to promote their records on the Internet.
Yes, you read that correctly.
Altrok Radio, and the music hosted on most other websites, will be silenced, unless you get in touch with your elected representatives and tell them you support bill H.R. 5469. This bill would place a hold on those fees to allow for their appeal, and hopeful reduction or removal.
The long form:
Whenever you deal with music, you have to deal with the rights of the people that created it. There are two sets of rights that apply to music: the right to reproduce what the songwriter wrote, and the right to reproduce a specific recording.
However, in practice, since the people who own the recording see the sales of their records increase when their songs are played on the radio, the courts decided back in the forties and fifties that radio did not have to pay record companies to play those recordings. Strangely enough, the record companies don't seem to mind this - they even send their music to radio stations free of charge, in the hope that it will get played. (In fact, recent scandals have shown that they actually pay people to pay radio stations to play their records, so it seems the courts probably assessed the situation correctly.)
However, radio still had to compensate songwriters for their songs, and so they pay an annual fee to the organizations that administer those rights. (That would be ASCAP and BMI.)
To their credit, ASCAP and BMI actually administer a reasonable way to collect this money - it's a percentage of a radio station's annual income, with a flat rate for stations that have no income or are non-profit.
The flat rate is important. Without it, your local college radio station would likely not play any music at all.
Enter the Internet, which record companies managed to convince Congress is Completely Different. Their argument used the following tortured syllogism:
- CDs play music perfectly because they are digital.
- The Internet is digital, and a wide audience can get a perfect copy of everything on it.
- Music played over the Internet amounts to the distribution of thousand, if not millions, of perfect copies to be available without payment. This cannot stand!
Of those statements, however, only the middle one is actually true. As for the other ones, let's see:
- Digital music on CDs is not a perfect representation of music, contrary to what record companies would have had you believe back in the eighties. In fact, they are approximations of good sound, close enough for the average ear to tolerate. Of course, audiophiles have been arguing this for years, but with the introduction of the new SACD and DVD-A formats, record companies are finally admitting that it's true. A reasonably clean CD doesn't click or pop, but it just isn't a perfect reproduction.
- Webcasters generally rely on compression to get the stream of data they use to transmit their music down to a reasonable size. Generally, a 56k stereo stream is good enough to approximate the same quality as, say, a fairly distant FM station. A casual listen will demonstrate that it's far from a perfect representation of even the flawed CD format.
But Congress, when faced with the record companies' arguments (and in the absence of any information to the contrary) passed a law that allowed for a panel to study the issue, and then create a rate that would be roughly equivalent to that which would be agreed upon by a willing seller and a willing buyer.
Sounds good, except there were no small webcasters invited to the party. Even worse, they only found one deal to use as a model: the deal that Broadcast.com struck just as it was bought by Yahoo. In other words, they took the sum paid by the largest entity on the Internet and decided it should apply to everyone. At least one person close to the deal, Mark Cuban, said it was specifically engineered to be the model for the industry, to explicity lock out the possibility of small webcasters being able to afford the fee.
In fact, the fee didn't sound like much, until you realized that it was per song, per listener. Now, $.0007 per song, per listener doesn't seem like a lot, but in real terms...
Well, let's take me, for example. I have three streams running on Live365.com. That's roughly thirteen songs an hour, every hour, times three, times the number of listeners I have. That means, for one listener, the records companies expect me to cough up $79.72, and there's no volume discount - as of my 365th listener (at which point Live365 starts refusing connections) they expect $29,096.34 extracted from the pound of flesh closest to my heart. I sincerely hope Live365's ad revenues are up to the task, because if that's not the case, I either go pirate, or I go out of business. Strangely enough, going pirate - that is, putting up an illicit transmitter in my attic - costs less. Even if I get caught.
To put this in perspective, ASCAP and BMI (the folks that the courts agreed should actually collect compensation for this sort of thing) expect that $290 per year be paid on my behalf, until I actually start making money.
And the best part is, one of my Live365 channels contains content that is not licensed through ASCAP or BMI, and is wholly owned by me. "Hub City Spoke Repair", a sketch comedy show I produced in the late eighties and early nineties, occupies one of those channels. (By the way, its theme song was cleared by Mercury Records years ago. They said "Just use it, okay?" Times have changed...)
At any rate, that brings us up to today, wherein one of the folks in Congress (specifically, Rep. James Sensenbrenner [R-WI] who's chairman of the House Judiciary Committee) decided that the arrangement described above made no sense. 'Bout time.
So, on to the "What you can do to help" part. Much information is available at the RAIN and Live365 sites, but here's the particulars, ripped directly from the RAIN website:
Identify your Congressman
Look up the phone number
of the Washington, DC office of your representative in the House
of Representatives via the Congress.org website here:
(A) Type your ZIP code into the first box on the page. (B) If
necessary, use the form at the bottom of the next page to find
your nine-digit ZIP code. (C) Under the photo of your "Rep.,"
click the "info"
(2) Call and ask for
the right person
Ask to speak with "the legislative
aide in charge of Internet and copyright issues."
Learn his or her name. Explain that you're a constituent
i.e., you live or work in the Congressman's district.
(3) Ask for their support
"I'm calling to urge you to support HR
5469 next week the bill that would prevent Internet
radio from being shut down
on October 20th. (It will be up for a vote on Tuesday.) As you
probably know, the CARP process was a total failure. Both
copyright owners and webcasters are unhappy with the
decision. This bill would postpone the CARP decision for six months
so that both sides can have
time to have their appeals heard in the Court of Appeals."
(4) Add personal insight
Talk about how the CARP decision affects you
as a small businessperson and/or a listener. Mention the great
Internet radio stations we've already lost (Entercom
stations, smaller-market Clear Channel stations, SOMA FM, free
KPIG, etc.). Mention the new artists
you've discovered and the CDs
you've purchased thanks to Internet radio. And make sure they
understand the difference
between Internet radio and peer-to-peer download services like
Napster they're totally different! ("Napster bad (maybe)!
Internet radio good!")
(5) Ask for a commitment
Offer to leave your number if they have any questions.
If they're noncommittal, ask if you can call back on Monday to
see what they've decided. In the unlikely event that your Congressman's
aide is unfamiliar with the bill or needs a copy, feel free to
point them here (or simply download the Adobe Acrobat file yourself
and e-mail it to them):
If time permits, you could repeat this
process for the Congressman from the district in which
you work, from the district in
which you grew up (especially if, say, your parents live there and
are voters), from a district in which you know you have listeners,
send a fax, too!
Another way to communicate your message is to use the automated
fax system Lightningcast has
One simply needs to supply one's name, address, and nine-digit ZIP
code, and a "personalized" fax with all the relevant information
is sent to the appropriate Congressman.
Later today, if you're a webcaster or broadcaster, you can
also ask your listeners to help.
Please scroll down to find banner ads and PSAs (or links to such)
near the bottom of today's issue. And we've revised the home page
Finally, let us know how you're doing! Drop us a line to
or use the feedback form lower on this page. Thanks!
So, ultimately, that's the deal, and now you know what to do. All you've got to do is do it.
Original portions ©2002 Sean Carolan
All material ©2001-2014 Sean Carolan, except as noted.
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