From the press release: "Thousands of webcasters stand firm by rejecting the most recent Copyright Royalty Rate proposal made by SoundExchange. The latest take-it-or-leave-it 'offer' made by SoundExchange on behalf of the recording industry has done nothing to further negotiations with webcasters, and a mere 24 small webcasters have felt they had no choice but to give in to the record labels demands.

"'The latest proposal made by SoundExchange [the terms of which are here] is extremely disappointing, at a time where we need real progress, not hollow tricks,' SaveNetRadio spokesperson Jake Ward said. 'While the clock continues to tick for webcasters, SoundExchange continues to play games with their good faith. The resounding rejection of this offer should serve as a reminder to SoundExchange, and to Congress, that the webcasting community is intent on a lasting and fair resolution to this issue, and willing to fight for it.'

"We, the undersigned have made it very clear to the Sound Exchange exactly why this latest offer is unrealistic and unacceptable. Its terms are not viable for webcasters seeking to run profitable businesses. One such term is the newly added ATH (Aggregate Tuning Hour) cap which immediately makes many mid-level webcasters
ineligible for the recently presented agreement. For stations with revenues far below the $1.25 million cap, but with healthy listener bases, this ATH cap forces payments at the CRB rates.

"This deal is not feasible for anyone who wants to grow their business. It contains the aforementioned $1.25 million revenue cap, which limits growth and puts in place a dangerously low hard ceiling for revenue generation. The Small Business Administration revenue cap for over-the-air broadcasters to be considered a small business is $6.5 million -- this would seem a fair cap, with precedent.

"Also, the offer only covers copyright holders that are SoundExchange members, of which there are approximately 20,000. Between us, the undersigned webcasters played far more artists than that in the last year. Under the SoundExchange offer for artists not on that limited roster, webcasters would have to pay at the bankruptcy-level rates, which were set in the fatally flawed Copyright Royalty Board (CRB) ruling in March. Those CRB rates were condemned by webcasters, the press, and members of Congress and deemed as wildly out of line and detrimental to all parties concerned -- including the RIAA.

"We have asked for a reasonable, long term solution, not one that is subject to increase at the whim of the record industry every five years. 2010 is little more than 2 years away, and it would be difficult for any business owner to accurately forecast profits and build a successful business model with a huge expense variable looming in the future.

"Although several of the webcasters listed below are currently involved in direct negotiations with Sound Exchange, the process remains exceedingly slow and increasingly unpromising. In the continuing absence of a genuine offer that would allow internet radio to continue to be the vital medium for new music discovery, we implore our listeners and fans of Internet radio to continue to urge your legislative representatives to pass the Internet Radio Equality Act (HR 2060, S.1353).

"For information on how you can contact your representative, please visit: http://www.savenetradio.org."

Signed:

Jeff Bachmeier, .977
Val Starr, GotRadio.com, 100hitz.com
Rusty Hodge, Somafm.com
Rick White, Big R Radio, 1faith.fm
Donnie Mowbray, 181.fm
Kurt Hanson, AccuRadio
Dave Landis, Ultimate 80's
Bill Goldsmith, Radio Paradise
Ted Leibowitz, BagelRadio
Sal Amato, Dot1media
Brandon Casci, Loud City
Jim & Wanda Atkinson, 3WK
Ari Shohat, Digitally Imported
Mike Roe, Radio IO

...

... Much as I like the SoundExchange executives I've worked with on a personal basis, the quotes in Monday's press release (RAIN coverage here) crossed the line, I believe, into disingenuousness-bordering-on-dishonesty. SoundExchange's press release stated, "Some opted not to sign the agreements because their business models benefit more from the regular commercial rates (due to their size and the difference in minimum payments). Others did not sign because they operate via webcast aggregators who handle payments on their behalf." The truth is that most small webcasters didn't take the deal because there are supposed to be active negotiations going on at this moment between SoundExchange and the Small Commercial Webcasters (as represented by David Oxenford)! In this entire escapade, SoundExchange is trying to confuse Congress and the press by conflating the Small Commercial Webcasters (upper case) group that participated in the CRB with "small webcasters" (which could be tiny, one-person, part-time hobbyists). It's a disappointing and dirty trick. Hopefully it didn't work. -- KH ...

RAIN is brought to you today by:

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From two Slacker press releases: "Slacker, Inc. today announced agreements with the major labels EMI Music, Universal Music Group and Warner Music Group to make the labels' content available to listeners on the Slacker Personal Radio service. Slacker, which previously announced a similar agreement with Sony BMG Music Entertainment, now has agreements with all four major labels that enable listeners to choose from a vast catalog of artists to play on their personal radio stations wherever they are...

"Slacker today [also] announced deals with leading independent music labels and distributors, including IODA, The Orchard, Beggars Group and Matador Records, IRIS, Ubiquity Records and Sanctuary Group PLC. The agreements give Slacker the content rights to enable Personal Radio that can be played everywhere...

"As part of the agreement(s), Slacker listeners can transfer their personalized stations to Slacker Portable Players with a single click and automatically refresh them via Wi-Fi or over USB... Slacker Personal Radio enables listeners to create, edit and share their own stations or personalize over 100 professionally programmed stations. Slacker customers also have easy access to artist profiles, album reviews and cover art within the Slacker Web Player, Desktop Radio and on the Slacker Portable."

Born Again Radio owner Vytas Safroncikas revealed in a press release yesterday that he is one of the 24 small webcasters who agreed to the SoundExchange small webcaster offer.

Safroncikas said, "I held my nose as I signed, having the document delivered on the final day of the Friday, September 14, 2007 deadline. I was offered a deal with a hard deadline and a devastating, one-and-a-half-year-old, retroactive fee, financial gun to my head."

On Tuesday SoundExchange trumpeted what it called a "significant number" of small webcasters had agreed to the offer (the terms of which are here). However, the vast majority of small business webcasters soundly rejected the deal (see RAIN coverage here and here), saying the limits on listening and revenue aren't viable for healthy business growth.

SoundExchange characterized the deal as a "subsidy" for webcasters, made possible through financial "sacrifice" on the part of its members. Most critics, however, see the move as an effort to create the impression for Congress that the royalty-collection body is willing to negotiate deals.

"The 'sacrifice' made by SoundExchange is a public relations stunt and something some members of Congress can point to for cover if they refuse to act to correct a problem Congress originally created," said Safroncikas. "Few will be fooled."

Michael Clark of ChristmasMusic247 came forward yesterday as another of the 24 signers of the deal. In a blog comment, he admitted the prospect of retroactive fees and royalties many times his small revenue would otherwise crush his webcast, which he described as "a hobby/very small business."

Safroncikas agreed the deal only makes sense for very small operations. "This a very short-term band-aid for the smallest of small commercial webcasters who are now forced to live with not one, but two artificial caps on business growth. We will still face the Copyright Royalty Board executioner in 2011."

Like Clark, Safroncikas continues to support legislation (The Internet Radio Equality Act, HR 2060 in the House, S 1353 in the Senate) which would vacate the Copyright Royalty Board-determined rates and create a new standard for how webcast royalties are determined.

"A willing-buyer, willing-seller theoretical standard cannot work when one entity holds all of the music cards. The rate-setting standard must be amended," he said.

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