To get a compulsory license for the songs, you pay ASCAP, BMI, and
SESAC. They each have sliding scales to determine how much they are
going to charge you. They want to know how many people will be
listening to the music, and how much money you will be making off of
that music, in subscription fees, advertising, etc.
If you're not making any money off of it, this turns out to be a
few hundred dollars per year, to each agency, depending on how many
visitors you get.
You really want to qualify for a ``compulsory'' license. If you
don't, then you'll need to negotiate with each record label for each
song you play, and that would be a huge hassle. And when I say ``huge
hassle,'' I really mean ``practical impossibility.''
To qualify for a compulsory license, you have to follow certain
rules that make them consider your webcast to be an ``Eligible
Non-subscription Transmission'' (an ``ENT''). Don't ask me where they
get these stupid names. The rules to qualify as an ENT are as follows.
(And note that these rules are for webcasts only:
RF radio stations have a different, less strict, set of rules.)
- The webcast is not limited to particular users who pay for it
(that's the ``non-subscription'' part.)
- The user must not be able to choose and receive a particular
recording: that is, no playing songs on demand.
- In a three hour period, you can't play more than three tracks
from a given album, and no more than two consecutively.
- In a three hour period, you can't play more than four tracks
by a given artist, and no more than three consecutively.
- If the webcast is archived, the archive must be at least five
hours long, and must not be made available for more than two weeks.
The idea here is to make it hard for users to scan through the
webcast to pick out and save individual songs.
- If the webcast repeats itself (plays in a loop) then the loop
must be at least three hours long.
- The webcast must not publish prior announcements of the
songs: you can't let the users know what songs are coming up next,
and you can't publish your playlists ahead of time.
- You must identify the song title, album title, and the
featured artist in text during the performance of the song.
- You must not ``encourage'' users to copy or record the music
that you are playing, and you must ``disable copying by users if in
possession of technology capable of doing so.''
So, if you qualify for a compulsory ENT license, you can just pay
ASCAP, BMI, and SESAC some fixed rate. Which leads us to...
To get a license for the recordings is a little trickier, because
they only just finished making up the rules in 2002. The way it is
supposed to work is, you pay RIAA in the same sort of way that you pay
ASCAP (with a compulsory license), and RIAA will distribute the money
to the copyright holders of the recordings (the record labels.)
Remember, you have to pay these guys as well because they have decided
that broadcasting over the web is more like printing CDs than it is
like broadcasting over the radio waves.
You have to pay them even if you only play music by non-RIAA
artists. This because SoundExchange (the non-incorporated subsidiary
of the RIAA who collect the fees) is authorized to collect on behalf of
all copyright holders, even non-RIAA members. If you want to
avoid these fees, you'll need a waiver from every artist/publisher you
play (in other words, it's impossible.)
In February 2002, the U.S. Copyright Office (Copyright Arbitration
Royalty Panel, or ``CARP'') released its proposal for how webcasters
should be charged by the music industry. Neither side liked the
proposal very much: the webcasters (that's us) said the rates were
insanely high, and would put pretty much all small webcasters out of
business over night; the RIAA says the rates were still way too low.
The proposal was rejected by the Copyright Office in May 2002,
and in June 2002, the Librarian of Congress issued a ``compromise''
ruling, which you can read on the
Copyright Office web site.
The 2002 ruling mandated that webcasters must pay 1/14th of a cent
($0.0007) per song, per listener.
But it gets worse: in 2007, they
rules again and upped that rate to 1/9th of a cent
($0.0011), with it scheduled to regularly increase until it
reaches one fifth of a cent ($0.0019) in 2010.
(However, in counting the number of songs heard by listeners, any
connection, no matter how short, is counted: you pay for a whole song
even if someone only listens for five seconds before changing the
channel. If you look at the numbers of connections that last longer
than five minutes, and the number that last less than five minutes, it
turns out that the ratio is 3:1 or 4:1. This has the potential to make
the CARP rates far more expensive than most webcasters are estimating.)
Then on top of all that, you owe another 8.8% for what they refer
to as the ``Ephemeral License Fee.'' This charge is purportedly the
license you pay for having the music files on disk or in memory
buffers: you have to pay this unless you're using a computer that
doesn't have disks, memory, or an IP stack. Yes, it's as crack-addled
as it sounds: basically it's the ``paying the taxman tax.''
That all adds up to a rate of roughly $12 per listener per
month! No radio station in the world makes that much money. If a
station has an average of 1000 listeners, that's $157,000 per year in
2007, rising to $272,000 three years later.
And that's above and beyond the ASCAP/BMI fees, and bandwidth
Under these rules, if a webcast had only a single
listener -- the webcaster -- they would be
expected to pay RIAA $160/year for streaming music to themselves!
(Except that there's also a minimum fee of $500 per "channel" per year.)
If these new rules are not overturned, expect all
college-radio-station-based webcasts to disappear: no college
broadcasting program has the kind of budget needed to pay for this.
Neither does National Public Radio,
who are fighting this.
The new rules also included some egregious reporting requirements
that will be impossible for anyone to actually comply with: for
example, not only do they want a ``unique user identifier'' for each
listener, they also want the UPC code from the CD the song came from!
The complete list of information that they demand be reported:
- The name of the service;
- The channel of the program (AM/FM stations use station ID);
- The type of program (archived/looped/live);
- Date of transmission;
- Time of transmission;
- Time zone of origination of transmission;
- Numeric designation of the place of the sound recording within the
- Duration of transmission (to nearest second);
- Sound recording title;
- The ISRC code of the recording;
- The release year of the album per copyright notice and in the case of
compilation albums, the release year of the album and copyright date
of the track;
- Featured recording artist;
- Retail album title;
- The recording label;
- The UPC code of the retail album;
- The catalog number;
- The copyright owner information;
- The musical genre of the channel or program (station format);
In addition, webcasters must report information on the
audience as well:
- The name of the service or entity;
- The channel or program;
- The date and time that the user logged in (the user's timezone);
- The date and time that the user logged out (the user's timezone);
- The time zone where the signal was received (user);
- Unique user identifier;
- The country in which the user received the transmissions.
While everyone agrees that reporting the songs that are played is a
good idea, so that the money can be alotted to the proper artists,
those requirements go far beyond that: they would make it impossible to
have a free, anonymous webcast. To comply with these rules, all
webcasters, even those who do not charge money, would have to force
their users to register before tuning in.
Someone said to me, ``how do they expect the little guys to
survive?'' I replied, ``No Mister Bond, I expect you to die.''
They're trying to legislate webcasting out of existence, because it
stands in the way of their progress toward a completely pay-per-view
economy. Remember: these are the kind of people who once tried to
outlaw the VCR. (That was MPAA, not RIAA, but they're the same snake
with different scales.)