I scan a number of newspapers daily. Sometimes I print a story that catches my attention, intending to follow up on it later. I keep a small stack of such articles beside my desk. Then, when I'm looking for a blog subject, I dip into the pile of paper and pull out something that interests me.
Quite frequently, before I get around to pulling an article, I'll see something else on the subject, which reminds me to find the first story and do the necessary research for a post.
I saw a short article titled "Webcasters Are Denied Rehearing on Royalties" in the Los Angeles Times last Tuesday. It didn't tell me much so I just printed it off and put it in the "pending" stack.
On Friday evening, just before bedtime, I was listening to the news and scanning the blogs I routinely read. To my surprise, the HarperCollins UK blog, Fifth Estate, had an article about the Copyright Royalty Board (CRB) hearing in Washington, D.C. This sharpened my attention on the subject and led to this post today.
First things first: According to Wikipedia, the "Copyright Royalty Board is a U.S. system of three Copyright Royalty Judges . . . appointed by the Librarian of Congress." According to the CRB's own website, the three judges "oversee the copyright law’s statutory licenses, which permit qualified parties to use multiple copyrighted works without obtaining separate licenses from each copyright owner."
On March 2, the CRB hiked the royalty rates that Internet radio broadcasters must pay to record companies and artists. A coalition of Internet webcasters, including National Public Radio (NPR), Yahoo and AOL, joined together to request a re-hearing on the rate increase. That LA Times article I saw on Tuesday was reporting that the three judges threw out their request.
Here are the new per-play rates that have been approved to stream one song to one listener over the next three years:
While the amounts seem miniscule, by 2009, the rates will have doubled over last year's rates. In addition, every webcaster will need to pay an upfront $500 "per channel" minimum fee. It's unclear whether that minimum fee applies to each stream.
Interactive services, which essentially permit users to create their own personalized radio stations, will be severely hurt by this decision.
Why do we care? According to Mark Johnson of Fifth Estate, the decision "raises some fascinating questions for the book business, for whom the new digital music world is an uncomfortable sign of challenges still to come."
Johnson makes this claim because among the group challenging the rate hike was a London-based website, Last.fm, which is a music recommendation engine. Last.fm is a social networking site like MySpace or FaceBook. However, it is devoted to music. Listeners indicate who their favorite recording artists are and Last.fm recommends new artists, offering them sample tracks. The site makes its money off the advertisements it carries. A doubling of the royalties it must pay threatens its future.
Johnson points out that there are parallels in the book world--those social networking sites like Library Thing and Shelfari, which allow members to list their favorite books, review books and recommend books. He says:
The sites generate revenue by a range of models: by advertising; by subscription; or by affiliate schemes with online retailers. For the first time, companies that are neither producers, publishers or retailers are making cash from readers online--and the most incredible thing is that, for now, they're doing it with bibliographic data alone.
This simple fact--that new companies are now carving leisure activities out of content as simple as covers and ISBNs--proves that in the new digital economy everything has value. And these new kinds of businesses force the book industry to consider what other assets, currently made freely available, ought to be monetised. In short, what about the sample chapter?
To read Johnson's entire blog, please go here and scroll down to the post titled "The New Text Radio."