SoundExchange Wants to Kill Internet Radio

On "lost" artists, found money and the murder of free enterprise

And because of the retroactivity of this proposal, that's just what he would have in his past-due column. Meanwhile, the rate going forward would gradually increase to $.0019 by 2010. Under those terms, three years from now, Crockett wouldn't be able to pay for the music he was broadcasting until he sold at least $200,000 in ads. And Crockett is small potatoes. “I was talking to this one guy the other day, and he told me he would owe $2.5 million,” he says.

SoundExchange's executive director John Simson has said revenue generation shouldn't be a problem. In an interview with Royalty Week magazine, he put it this way: “Webcasters have a number of opportunities to maximize revenue with...banner ads, pop-ups, video pre-rolls, audio commercials.”

“SoundExchange are a bunch of idiots,” Crockett says.

Or are they? To boldly mangle a metaphor here, maybe they are just idiotic like a fox. Sure, butchering Internet radio might seem foolish. After all, SoundExchange claims to represent the financial interests of thousands of labels and artists, and it would seem to be in the best interests of all parties if that music was played as widely as possible. Silencing it would seem to be a case of killing the golden goose.

But like the rappers say, big bank take little bank. SoundExchange might have bands like Los Skarnales and tiny little labels on their rolls, but as their past affiliation with the RIAA would lead you to believe, they are most interested in the collective well-being of the Big Four record labels. And if there's anything the Big Four hates, it's the decentralized, diffused music market that Net radio has helped create and is continuing to foster. They pine for the Good Ol' Days, when white males 18–24 all listened to corporate rock radio and “urban” females 25–37 all tuned into homogenized R&B and so on. They love it when people cease being people and transform themselves into demographics, and the bigger the demo the better. Squiring your mistress down to St. Barts for a dirty weekend isn't getting any cheaper, even if the price of music has cratered.

And now they think they can get it back. They can smell that money, and now they are as crazed as a rutting elk with a snootful of pheromones. It's probably no coincidence that the attempted murder of Internet radio follows quickly on the heels of Big Radio's rollout of HD radio, their own corporate-controlled, sanitized-for-your-protection answer to the wild Web. If they can somehow force-feed us HD, they can start calling the shots again.

And in the meantime, they may even think they can drag all 52 million American Internet radio listeners back kicking and screaming to the wonders of the traditional radio dial. Crockett is convinced that the National Association of Broadcasters is behind the lobbying on the price increase. “The N.A.B. represents terrestrial radio stations, and the last thing they need is anything to draw people away, because listenership to terrestrial radio has declined 22 percent since deregulation in 1996,” he says. “So they want to make Webcasting so unbelievably expensive that there is no way that anyone would ever do it.”

“This type of legislation really smacks the free-enterprise system in the face, simply because it discourages Webcasters from growing their business,” Crockett continues. “If I am going to be charged per listener, what's my incentive to grow my listener base?”

And if SoundExchange loses money every time it finds an artist it is supposed to pay, what is its incentive to actually do its job? Are we really supposed to trust an organization that claims it can't find Max Stalling (, Vicente Fernandez (hint: Try Mexico) or freaking Mother Maybelle Carter?

Thankfully, the SoundExchange/Copyright Review Board proposal is still just that. A much more sensible proposal has been put forth. It is federal legislation, it is called H.R. 2060 and it would supersede the C.R.B's ruling. It calls for a royalty rate of 7.5 percent of total revenue or .33 cents per listener-hour, as decided by the provider, so the artists would get paid and the Webcasters could survive.

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