Is “Dark Payola” Lurking Within The New Internet-Radio Royalty Rates?
The hearing on Internet radio royalties is still going on, and while we haven’t heard many updates on it (testimony from WOXY’s Bryan Jay Miller is already up on YouTube), we did come across a piece in the SF Weekly that talks about another potentially homogenizing twist within the Copyright Royalty Board’s new rate structure:
The increased royalties set by the Copyright Royalty Board on March 2 came with a distinct catch. Webcasters are free to ink direct licensing deals with labels for a lower rate than the one set by the board. Direct licensing allows major labels to apply economic pressure to Webcasters who were formerly concerned with playing the best music.
If Net radio stations don’t win their fight, playing whatever they want will become prohibitively expensive. Playing crap, however, won’t be. Under the new rules it would be economically logical for cash-strapped Webcasters to take discounted rates to play music the labels want them to play. Instead of the labels paying the Webcasters, the Webcasters pay the labels less. Dark payola.
Evidence of this practice has already appeared with the launch of Slacker.com. The Internet radio startup has stated in the press that it made direct license deals with the majors that have saved it the hassle of paying higher royalties.
If anything, this sounds like the situation that commercial radio is currently living in–only playing “emphasis” tracks or singles, despite theoretically having access to a wider database of music. While radio analysts will claim that tighter playlists are what the public wants, that is, of course, not the case with the widely dispersed styles and audiences that Internet radio stations currently enjoy.
So is this provision’s insertion actually there to help speed the homogenization process along? It’s hard to tell–and the argument that anything on a major label is “crap” is particularly specious–but the bad-faith arguments that SoundExchange have put forth to defend the rate hike (particularly the $1 billion in “administrative costs” they want to collect from larger Webcasters) aren’t really going to make the Web radio-listening public pleased by seemingly big-business-friendly provisions like this one.
(Also: We completely forgot that Slacker was an Internet radio startup–our SXSW memory had fogged just enough that we thought it was a particularly scummy dating site, thanks to our first impressions of its stripper-filled marketing campaign, which we sadly have not been able to bleach from our brains.)
Dark Payola Emerges [SF Weekly]
