Senate Subcommittee Approves Music Royalty Bill

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Yes, they approved it, but that is not the whole story.

Via Fawn Johnson on CNN Money:

The bill passed on voice vote in the House Judiciary Committee’s Subcommittee on Courts, the Internet, and Intellectual Property.

Opponents say the apparent unanimity of the subcommittee masks opposition in the full committee and the House.

The National Association of Broadcasters, which is fighting the measure, has secured support from a majority of House members to block it.

The recording industry, which has suffered in recent years due to a decline in CD sales, is championing the bill.

So the initial round and attendant headlines seems to bode ill, but the overall picture is far from bleak. We will have to keep an eye on things as this issue reaches the full House, and also on its counterpart bill currently being examined in the Senate. This issue is a landmark for our industry, a decision that will profoundly affect the state of radio and its profitability as a medium in a drastic fashion.

Radio was the first place that the “give it away to make money” model debuted in modern society, a model that has been gaining ground steadily in this age of open source applications and social networks. It was a groundbreaking idea a hundred years ago and today is becoming the foundation for an entirely new business model for many industries.

Since the majority of revenue generated from this tax would profit the recording industry and not necessarily the artists themselves (unless they happen to be very big artists) the arguments presented hold little water, at least to my perspective. The fact that the recording industry is having problems on multiple fronts as they combat online piracy, iTunes, and other factors that are reducing their profitability does not automatically make this a good move. In fact, over the long term, it could well prove disasterous to the very artists they claim to be defending. (I refer you to my prior posting about the recent report on profit generated by free airplay.)

For established artists, this may not be a big issue, but for emerging talent it could make the difference between success and failure.

Picture courtesy of jrossol, used under its Creative commons license

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2 Responses to “Senate Subcommittee Approves Music Royalty Bill”

  1. Neil Hepburn Says:

    This gets more confusing by the day.
    I’m curious how this bill relates to the CRB decision from last year.

    Generally speaking, the whole royalty thing seems to be in such disarray. First we hear that SoundExchange is auditing Last.FM and then we find out that ASCAP has sent AOL, Yahoo!, and RealNetworks a bill for $100 million (which was negotiated differently).

    I follow the various industry newsletters, and read the legistlative copy, but I get the feeling that there isn’t a single person out there who understands what’s going on in the US, let alone wrt international copyright law. The lack of clarity has stifled investment and by extension has limited innovation. Personally, I believe that Internet radio can survive and even thrive with the higher royalty rates (although it won’t be easy), but we need clarity before taking this giant leap to rejigging business models.

  2. George Williams Says:

    In my opinion it is al based in the confusion over intellectual property that has arisen since the dawn of the easily accessible web. With major discussions going on nation wide about the nature of copyright, the rise of copyleft and Creative Commons, and a music industry royalty model based on 17th century British sheet music laws we have a serious gumbo of confusion occurring.

    There are many smaller, local stations that will be unable to continue or compete if this royalty model goes into effect.

    The re-engineering of business models is always a serious concern in the modern day. Oft times the legislators making the rules have little to no understanding of the technology, much less its ramification.

    This is not the old world anymore.

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