SoundExchange: Is Microsoft Backing Internet Radio in Royalties Fight?

Characterizing the estimated $50 million-plus that Internet streaming music providers would not pay in royalties as "a windfall to mega-corporate webcasters," the SoundExchange performance royalties collection firm, in a statement issued late last week, argued that the Inslee-Mazullo bill currently before the US House of Representatives would force performance artists into a position where they would actually owe the services that play their music.

"If passed, the bill would also result in a windfall of more than $50 million to mega-corporate webcasters like Clear Channel and Microsoft at the expense of recording artists across the country," the SoundExchange statement reads. "Because the bill is retroactive, artists would have to write checks to cover refunds to corporations whose CEOs and top executives are paid millions of dollars per year."

Even with the pending divestiture of hundreds of US and worldwide ratio stations in advance of a proposed merger with a private equity firm, Clear Channel Communications continues to operate what ratings services believe to be the nation's #3 highest-rated block of online radio services, behind AOL Radio and Yahoo's LaunchCast.

Arguing that small webcasters are only responsible for 2% of performance royalties, SoundExchange Executive Director John Simson remarked that the bill's passage would benefit most those parties who are responsible for the most royalties. "The true beneficiaries are the mega-multiplex services like AOL, Yahoo!, Microsoft and Clear Channel, which will benefit from rates substantially lower than those set by the Librarian of Congress in 2002," writes Simson. "Because the bill is so heavily favored to enrich the big webcasters, it raises questions as to who is really behind the SaveNetRadio Coalition."

Simson's statement stops short of directly accusing any of the four listed parties of participating, financially or in any other regard. Radio and Internet Newsletter publisher Kurt Hanson reminded readers today that Microsoft is no longer in the streaming music business directly. "They now offer a white-label version of Pandora, a service that would be bankrupted by the CRB decision," Hanson writes.

SoundExchange cited $360 USD as the amount which performance artists typically received in royalties for 2006. Hanson counters that this is an average fee, though he concedes that many artists actually make less - as low as $120 USD per year. Hanson's implication is that, even with higher fees, there's no guarantee that artists would actually make more; and since the amount is so low anyway, no rational person would consider it as income anyway.

"Those working musicians, as shown by the tens of thousands who've signed up for the SaveNetRadio Coalition," Hanson writes, "would rather have a thriving world of Internet radio airplay than the potential chance of a $10/month check."

Members of that coalition were scheduled to hold a protest outside the steps of the US Capitol building today.