CRB Ruling Is “Crushingly Bad News” for Microcasters

The author is founder of StreamLicensing LLC.

Wednesday, Dec. 16, 2015, brought good news for Pandora and other large Internet broadcasters. Unfortunately it brought crushingly bad news for smaller broadcasters.

The Internet has been one of the last level-playing fields left for small, mom and pop or “hobbyist” type webcasters. That level playing field no longer exists for these very small webcasters and I’ve watched them close their stations by the hundreds over the last two weeks.

I’m talking about watching disabled vets shut down their stations. Retirees on small pensions, those on disabilities, others visually handicapped, as well as ordinary working men and women who just want to play a few songs over the Internet for their friends, young men and women with a dream to eventually broadcast over the radio, so many of these webcasters are gone now. It happened almost overnight.

I’ve also seen the entire Internet economy affected as stream hosting providers laid off employees and shut down servers as their clientele faded away. Fairly large providers are struggling to survive while some smaller, and to this point very stable providers, may not be able to continue.

These small operators saw their dreams evaporate into nothingness the day the Copyright Royalty Board published its long awaited webcasting rates for 2016–2020 on Dec. 16. The problem arises from the expiration of various “small” or “microcaster” categories that had existed through 2015 and offered a much more manageable rate structure for a hobbyist who wasn’t generating revenue. When the various groups presented their cases to the CRB, no one represented the needs of these small or micro webcasters. As a practical matter, smaller webcasters should have participated. However, if they had the funding necessary to bring adequate representation to the table, they would very likely not need the provisions so necessary now for their continued existence.

Historically, these categories made a way for certain webcasters, from “hobbyist” to business startup hopefuls, to transmit legally. Under these expired categories, fair performance fees were paid to artists while still making webcasting affordable for the little guy.

Without going into all the math and variants available under the new ruling, let me illustrate what has happened. In the past, the small webcaster paid a reasonable percentage of the greater of profits or expenses. This ensured that payment was made, but limited it to amounts even a hobby webcaster could afford. Today, that same webcaster has fewer realistic options; it will likely have to take measures to limit listenership in some way, engage in direct licensing, operate under a legitimate 501C non-profit entity, or pay .0017 per performance (with a performance equal to one listener hearing one song).

While .0017 per performance is a big win for larger webcasters and FCC-licensed broadcasters, it is totally devastating to microcasters. For example a very small webcaster, playing 12 songs per hour, with only 20 listeners tuned in each hour, would owe over $3,500 to SoundExchange alone. This same webcaster must still take care of its obligations to ASCAP, BMI and SESAC. Obtaining advertising for smaller stations is difficult and when obtained, it very rarely covers even 10% of the numbers we are talking about here.

Thus, due to the loss of the small commercial webcaster and microcaster categories, much of the vitality of Internet Radio is gone.

StreamLicensing is one of the aggregators making licensing affordable and relatively doable for small webcasters. Our nearly 1,300 broadcasters have a real passion for the music they play. They have a lot of passion for the music but are too small to earn income sufficient to offset these rates. While these small webcasters support recording artists and want those artists (and composers) to receive recompense for their work, these same, very small online radio stations cannot pay the fees that are now required.

This means one of the last level playing fields left for the small, mom and pop webcaster is no longer available. Please join with us in seeking the restoration of the small webcaster categories as administered by SoundExchange.

StreamLicensing LLC provides blanket royalty and performance fee coverage and reporting for small webcasters who play music from the ASCAP, BMI, SESAC, SoundExchange and SOCAN catalogs. Marvin Glass worked in college and small-market radio and TV in the 1970s and came full circle years later when he purchased a 1 kW AM station in 2005. He later started All Southern Gospel Radio, an Internet-only radio station, and founded StreamLicensing LLC.
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