Originally posted by Shirow
actually, most radio stations do have contracts to play the music they play..
Here is an analysis of webcasting costs - it was an answer to a post on another listserv that I put together. I hope if fills in some questions.
At 04:05 AM 2/25/2002, you wrote:
<< . If I offended someone, I'm sorry. I am not
listening to music or broadcasting over the net so I might fail to feel the
import of the problem;<<
As I write this their are 79 stations online playing Jazz listed on Shoutcast.com alone. The number one station Smooth Jazz feeds out of Monterey, Calif and has 1876/2050 128 - thats 1876 people listening out of 2050 potential on their system at a bandwidth usage of 128K; They also have a second feed with 325/600 32 or 324 people online out of 600 potential on a 32K stream.
In order to give you an idea what the new fees will cost Smooth Jazz try these figures:
15 selections in an hour times .14 cents = 2.1 cents
Now multiple that 2.1 cents by 1876 streams = 3939.6 cents per hour or $39.40 for the hour.
Now the second stream -
15 selections in an hour (the proposed rules make take this as a different station even though its the same feed at a lower quality its considered to be another public performance) times .14 = 2.1 cents
Now multiple that 2.1 cents by 325 streams = 682.5 cents or $6.83 cents for the hour.
So lets combine those two and we get a licensing fee of $46.23 per hour
But Wait theres more - now you have to include the Ephermal License Fee (when you put music on a hard drive its considered to be an Ephermal Recording re duplicate and hence a copy) which is 9% of the performance fee
So lets take the $46.23 and multiply that by 9% and we get an additional $4.16 for the hour.
The fee for the RIAA just for that one hour is the combined two fees of $4.16 and the $46.23 which comes out to a one hour fee of $50.39
Got that? Thats $50.39 for one hour based on 15 selections playing (the minimum count allowed) so if they actually run more in this hour add more to the fee.
Now remember they are paying BMI, ASCAP, and SESAC fees on top of this amount. Also figure their bandwidth usage - a T1 line available from your local phone company varies in rates from $400 to $1000 per month. A T1 line is equivalent to around 1.6 meg bandwidth or based on 128K streams equivalent to 12 people. So just on the 128K feed they are running the rough equivalent of 156 T1's.....but they have count limit of 2050 which is usually based on the line limitation so they have the capacity of 170 T1 lines - that is some serious bandwidth. Now its obvious there are probably using some type of fiberoptic cable for bandwidth (either that or they have one hell of connection system - based on T1s and a $400 per month rate they would have a $68000 bill) but even if we took a low amount of $10,000 per month that is equivalent to a rough hourly fee of $14 per hour. Now they have to pay for bandwidth usage on top of the basic line charges so you add considerable dollars to the amount - ah yes you thought those were the final costs - wrong thats what its costs to get the pipe in the door to the establishment. Bandwidth usage is on top of that and can easily match the basic fees of line gear (eg. if you have a DSL line you know what I'm talking about - you pay the phone company say $88 per month in WA state and then you pay a base fee to the isp - as your numbers go up like 60 users you can pay a bandwidth usages charge of $800 per month (speaking from experience). So for good measure lets thrown in a $10 per hour fee.
So lets assume they pay $50 to RIAA, $3 to BMI, ASCAP, and SESAC combined, per hour fees for pipe and bandwidth of $13 and $10 and we are now up to a costs of $76 per hour.
But wait theres more........
We haven't paid for the electricity to run the equipment
We haven't thrown in the rent
We haven't thrown in the insurance for the gear
We haven't thrown in the insurance for the liability of visitors into the facility
We haven't thrown in an amount for replacing the gear when it breaks
We haven't thrown in money to pay for the current loans, heaven forbid
We haven't thrown in money to pay salaries
And last but not least we haven't thrown in the money for the music - you know the jazz that comes out of your computer????
Oh yah the RIAA doesn't want you to keep a digital copy (you know the one you made from the cd and placed on the hard drive to play back) for more than 6 months. Since the DMCA states that only one copy can be made off of a cd that means you can't keep a library, unless you keep buying new cds of the same material - not likely going to happen so its only the music coming in the door thats new that will get paid. So tell me how is an artist going to get paid in royalties if you've got to buy the same stupid cd every six months? Oh yes you have to record all this information and make sure the RIAA has a copy - you also have to tell them what you playlist is going to be for the next month and when the music is going to play, and then at the end of the month you have to tell them that it played and when and if it didn't you have to file a report showing why and explaining the discrepancy. Oh yah I forgot they are going to have to have money for this as well.
Now heaven forbid is Smooth Jazz has more streams like a Real Audio stream, or a Windows Media stream, or another low bandwidth stream that somebody on a poor phone modem can get......you can add a whole pile of additional charges to the figures.
So what are we up to per hour now?? $200 or $300 per hour? Oh yes I forgot we haven't budgeted for any promotion money - you know that stuff you do to build up your radio audience like in the real broadcast world so you can get advertising dollars to help pay the bills? Remember now that as Smooth Jazz increase their audience the RIAA wants more and more per song, per listener, per stream plus don't forget that 9% fee for the recording.................So lets play the math one more time...lets take the low figure of $200 per hour and multiply it by 24 hours and we get $4800 per day to play jazz over the net. Now remember the RIAA fee is going to be $1200 per day or 25% of the daily operating cost of the station.
Do you know anyone who gets 25% of the take before profits??? Search hard and wide....gong! Times over - nobody.
Now lets put the RIAA demands in perspective. Smooth Jazz is a big station so lets look at this with a small station.: I'll take one of my 16 streams - specifically I'll take my bluegrass stream which has 100 listeners on it out of 150 max. And to be specific lets just do the RIAA calculations for this one hour:
15 songs times .14 = 2.1 cents per hours times 100 listeners or $2.10 per hour or $50.40 per day or in a month or $1512 for the month. Now multiple that by 16 streams and you'll get a monthly fee of $24192 or a yearly fee of $290,304. We still have to thrown in the cost of operating $30,000 per year so it cost $320304 dollars to run for a year (remember now no one gets paid). so that mean the RIAA fee is 90% of the operating budget of the station.
Now if I calculate a projected amount for the next year based on listeners of this week on the bluegrass station which shows 30,000 listeners (including one that has set on the system for 76 hours we calculate as follows: 15 songs times .14 = 2.1 cents per hour x 24 hours = 50.4 cents times 365 days = 18396 cents per year or $183.96 per person per year. Now if we take 30,000 listeners times 52 weeks this is equal to 1,560,000 listeners over the year or the equivalent of an audience in a large city at prime time. The RIAA license fee would then be 1560000 times $183.96 per person fee of $286, 977, 600 per year . But if we allow for a 300% growth rate which in fact has been the growth rate over the last year we are looking at 860,932,800 + we must add the 9% fee of $77,483,952 to get a projected fee for the RIAA of $938,416,752 or if you figure for all 16 streams a total fee of $15,014,668,032. or roughly 100% of the operating costs.
So since the RIAA thinks this is only a reasonable fee then that would mean that this total must be only a portion of the value of the company. If we use the normal licensing fees as a comparison that would mean that Inetprogramming is worth somewhere around 50 billion dollars. If anyone wants to buy the company I’ll be happy to discuss details.
There is only one purpose in these proposed rates and that is to drive independents out of business. The arbitration board has been snowballed by the RIAA.