Broadcast & Satellite

On The New Copyright Royalty Board Rates [Blake Morgan]

BlakeMorgan1In this interview Blake Morgan weighs in on the the Copyright Royalty Board's announcement regarding new rates, discussing who the decision benefits and who it harms.

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Guest Post by Chris Castle on Music Technology Policy

MTP had a chance to catch up to Blake Morgan and David Lowery for an interview about the CRB rates announced yesterday. This is the first of the two posts with Blake Morgan, read David Lowery’s interview here.

MTP: How do you feel about the CRB decision in general as far as rates go?

While I’m happy the Copyright Royalty Board raised Pandora’s non-subscription royalty rate by 21%, I can’t celebrate fully. The fact that webcasting rates were cut by 25% makes this mostly a wash, and flies in the face of basic respect for music makers.

MTP:  Was this more of a victory for the Pandora/Google MIC Coalition or for artists?

Overall, Pandora is going to have to pay 15% more than they have been paying, so it’s certainly not a victory for Pandora/MIC. Artists are going to get more, so that’s a win. However, it could have been a slam-dunk victory for artists, and I feel this is more of a squeaker.

MTP: Do you feel compensated for the value lost from the last CRB when Pandora got the CRB rates cut substantially?  Do you think that the CRB had in mind restoring what was taken away the last time around?

It’s hard for me to climb inside their heads, but it does feel like the CRB decided to make a “some for them over here, and some for them over here” kind of decision. This is a significant cost increase for Pandora, but it’s still less then what we wanted––so it’s like the CRB tried to drive right down the middle. If they were trying to restore what’d been taken away last time, and that’s all, then that would be really disappointing to me.

MTP:  How about no rate increases in the out years other than indexing to the Consumer Price Index?  I saw someone online suggesting that essentially froze the 2016 royalty rate and just adjusted for inflation so that artists essentially would be paid 2016 value for the next five years.

Yeah, that’s a little how I feel. But, I hope it doesn’t matter because there’s such a strong possibility that Pandora won’t even be around in five years. At least if they continue to run their business the way they have been recently.

Pandora-buys-rdio-streamingMTP:  The press seems to always refer to the fact that Pandora “hasn’t turned a profit” yet, and tries to create this impression that Pandora is an otherwise well run company with $1.1 billion in revenue, zero debt, government mandated below market vendors, SG&A over 40% that’s going on an acquisition binge for unrelated businesses with no regard for integration costs—that also can’t manage to “turn a profit”.  Does anything bother you about that press profile?

I have yet to meet a music maker who isn’t bothered by this. Far too many people have noticed that Pandora’s founder, Mr. Westergren, has bought and is building what’s being widely reported as a “massive” mansion, with 14 bathrooms. Not turning a profit? How full of shit do you have to be to need 14 bathrooms in your house, man.

MTP:  What’s the reaction in the #irespectmusic community to this latest move by the MIC Coalition?  Do the new CRB rates make getting a royalty for terrestrial more or less important?

Securing a terrestrial radio royalty for artists remains the singular issue in this fight for music makers’ rights and respect that everyone I talk to supports. They agree it’s embarrassing that we have to even talk about it, that it’s embarrassing for us as a nation to not have it, and it’s critical in winning. Simply put: it couldn’t be more important. It’s a century overdue, and it’s time to get this done for American music makers.

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7 Comments

  1. yeah , you’ll notice that they have no care about the thousands of broadcasters that were put out of business !
    BOYCOTT PANDORA !
    All they did was to hop in bed with the copyright royalty board and screwed other broadcasters !

  2. Greed always looses. The CRB raises rates and changes rules where the small broadcaster can no longer afford to stream, thus no roalities from all the small broadcasters.
    If my math is correct:
    20% of $0 is better than 15% of $100 ???
    (percentages used for illustrative purposes only)

  3. The ending of the Webmaster Settlement Act of 2009 (WSA) is what’s prompting this.
    The CRB is effectively irrelevant. The rate difference is insignificant; The rate difference is not where the change is coming from. This focus on the CRB and rates inherently mis-frames the problem at hand. It is intrinsically dishonest distraction.
    The CRB was designed to address classic/terrestrial radio: singular physical radio-wave broadcast stations, with captive local ad markets, and survey guesses of listener bases. In stark contrast, internet radio/webcasting may have 1-5000 ‘channels’, with no captive ad market support, and exact precise counts of users. As the business environment is contextually different between these, the WSA permitted internet radio to be excluded from the CRB-physical radio designs.
    With the removal of the WSA, internet radio will now pay the way physical radio does. But it isn’t. And it can’t. Pandora, which has never turned a profit and is the largest player, will go under. It is a mathematical certainty.

  4. The CRB rate decision in question here has absolutely nothing whatsoever to do with terrestial broadcaters. Interenet radio has always paid orders of magnitude more than AM/FM radio.

  5. This decision is an unqualified disaster for American Internet radio. (As in _real_ radio, not cyber-jukeboxes like Pandora.) As of 1 January of this year, American producers are effectively banned from the entire medium, thanks to the elimination of previous rates that encouraged American development. It’s also highly likely that many overseas Net radio stations will start geoblocking Americans now, so that Americans can’t even listen to foreign statons.
    For the full scoop, see this article: http://netradioblog.blogspot.com/2015/12/rebuffering-kissing-american-dreams.html

  6. An entire industry eliminated with the stroke of a pen. But hey, we can all go back to living in 1950, eh? It’s not like the rest of world is moving forward with this new medium, taking advantage of business and cultural opportunities no longer open to Americans…

  7. I am not giving up my streaming business no matter what happens. If I have to set up my servers overseas I will. I will continue. I’m not having this greedy bunch take my business. I’ve worked 17+ years on my online radio stations. The first 10 were not profitable at all. Now, just when I’m starting to finally make a bit to grow, they want to do this. I’m not having it. I will bring counsel to this issue.
    You can’t reason with the greed. The only way to hit them hard is by taking aim at their money. That being said, boycotting Pandora isn’t the answer. To begin with, it takes too long to get the word out. Beyond that, most people just won’t do it. Take away their audience by being better and take away their ad dollars.
    What’s ironic is that these rates will scare most away. This leads to drastic reduction in what SoundEX collects over time. They are cutting off their own cash supply. A piece of something is better than a piece of nothing. SoundEX will get nothing if everyone moves their operations out of the USA. That is exactly what will happen. This country sickens me.

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