ButtUgly: Main_blogentry_270407

Internet radio in the US is dead

Thanks to some new legislation, the internet radios in the US are getting their rates tripled, so that they'll end up paying something like 70-80% of their revenue as copyright fees. Ok, you say, but the artists must get money for their hard work! I agree. But this is not about paying the artists. Check out this interview with Pandora.fm's founder, Tim Westergren:

Westergren: They’re definitely misinformed. But there’s another piece of the story. Half of the money we pay to ~SoundExchange each month goes to the labels, and half goes directly to the artists. If these new rates do stick, then the only way webcasters will stay alive is to start striking direct licensing deals, at lower rates, with the major record labels. If those deals are struck, then all of that money goes directly to the label, and goes under the umbrella of traditional record deals, where only a very small percent ends up going to artists.

Sinnreich: So you believe that one of the strategic reasons the RIAA has for supporting these higher rates is so labels can offer a competitive lower rate directly to webcasters, which would mean more income overall for labels and less income for artists?

Westergren: That’s exactly right.

Sinnreich: That sounds pretty nefarious.

Westergren: It’s business. These are businesses that are struggling, and they’re trying to maximize revenue.

(Via Boing Boing.)