House Approves Small Webcasters Bill – What Does It Mean?

According to USA Today, on Monday the House of Representatives approved the deal hammered out between small webcasters and the music industry. The arrangement is basically unchanged, except for a last minute addition specifying that musicians will be “paid directly” for their share of royalties.

Since the bill was introduced into the House and passed (H.R.5469 ), its text is now available on-line which helps to clear up some earlier questions about how much the smallest of webcasters would have to pay. The minimum royalty fee is $2000 a year. But a non-commercial webcaster that isn’t FCC-licensed (i.e. doesn’t have a broadcast station) can elect to pay a .02 cent per song per listener rate instead. Their minimum annual fee is only $500. Apparently no changes have been made for non-commercial broadcasters with FCC licenses — I’d have to look at the text of the existing law to pick out that bit of data.

In a comment to the previous story on the webcast rates, Jake from Kill Radio wondered where that station, as a noncommercial and 501(c)(3) non-profit, would fit into the royalty structure. My guess is that they’d be considered a non-FCC noncomm, and so could elect the .02cent/song/listener rate with $500 minimum. I’m unsure if you have to elect that .02 cent rate to get the $500 minimum, or if that minimum can apply if the relevant percentage of expenses or revenue were less than that. In any event, it would seem that a non-profit webcaster like Kill Radio would be liable for some amount of royalty of at least $500 – $2000 per year.

Under the “big webcaster” rate of .07 center/song/listener, I figure that the cost for one listener, listening 24 hours a day for a year to be around $61. That’s based upon a (relatively high) average of 10 songs per hour (that’s much more music than commercial FM, but hey, there shouldn’t be commercials and annoying DJs on a webcast, right?). So $500 is equivalent to fewer than 10 listeners — like having a 10-stream server maxed out constantly. Having about 33 listeners perpetually tuned in would work out to the $2000 year rate.

Those are pretty small potatoes — about what I’d associate with a small “personal” server run off a DSL line. Even with pretty lo-fi mp3s (24 kbps) you’d need almost T1 sized up bandwidth (~800 kbps) to handle those 33 streams. So with those old rates, your royalties add up fast even with a pretty small operation (yeah, no wonder the small webcasters were pissed).

I don’t know how big of an operation Kill Radio is — how many simultaneous streams / listeners — but I’d guess the .02 rate with $500 minimum isn’t so bad. At that rate the $500 minimum covers about 32 constantly loaded streams. Of course, it sucks having to pay this money when you didn’t have to pay anything before. But it does suck less than being stuck with a $2000 minimum and a per song/listener rate more than three times higher.






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