Small Change

SoundExchange, the organization that collects music royalties from online radio stations, has offered reduced rates to what it considers small Webcasters, but some aren’t exactly eager to take the music industry group up on its offer.

When the Copyright Royalty Board issued new rates last spring, Webcasters big and small claimed the increase would put them out of business. The online radio biz has since clamored for a reduction in rates, resulting in SoundExchange offering a somewhat different rate than what it charges companies like Yahoo and AOL.

Previously, copyright fees for online broadcastesrs were based on station revenue, but the increase, which is retroactive to last year, charges online stations .08 of a cent for each song played during 2006, .11 of a cent for this year, and tops out at .19 of a cent in 2010.

Because the new rates not only apply to the number of times a song is played but also to the number of those listening to each song, smaller Webcasters claimed the new fees represented a 300 percent increase and said such an increase would bankrupt them.

So, after much haggling, not to mention media spin, SoundExchange offered smaller Webcasters a rate based on income rather than the number of times a song is played. However, smaller companies are objecting to how the organization defines "small."

SoundExchange offered stations with specific audience sizes earning $1.25 million or less in annual gross revenue a rate based on 10 or 12 percent annual revenue.

But Webcasters say the organization’s offer is unrealistic and impedes business growth.

For example, Rusty Hodge, operator of SomaFM in San Francisco, says SoundExchange’s revenue and audience criteria for small stations would be a "huge step backward" for his industry and that the organization should go along with the U.S. Small Business Administration’s definition of a small broadcasting company as those that make $6 million or less in revenue.

Another unhappy Webcaster – Bill Goldsmith, who operates – says SoundExchange’s latest offer is an attempt to "divide and conquer" the industry by thinning out the ranks.

Meanwhile, SoundExchange Executive Director John Simson said the proposal "takes the uncertainty out of the air as to most of their programming and lets them continue streaming."

The smaller stations have until September 14th to accept the offer.


MTV Plays New Rhapsody

Call it the "URGE Merge."

MTV Networks has partnered with RealNetworks and Verizon Wireless to create a new company called Rhapsody America, a single system encompassing all digital platforms including music downloads, portable devices and cell phones.

If this sounds somewhat familiar, it was only 18 months ago when MTV partnered with Microsoft to create URGE.

But by the end of last year Microsoft was busy pushing its new Zune player / online store, thus leaving MTV to urge users to use URGE.

Now the plan is to merge URGE into RealNetwork’s Rhapsody to form Rhapsody America. The goal? To compete against iTunes / iPod digital music dominance.

Rhapsody America isn’t just offering a download store or a music streaming portal. Instead, it is meant to cover all digital bases, including music downloads, portable devices and cell phones, and will combine the Rhapsody music service with the best of URGE.

Broken down into its components, RealNetworks’ Rhapsody will handle the music downloading and streaming, and special features and other music content will originate from MTV while the cell phone hookup comes from Verizon Wireless’ V Cast Music service. Michael Bloom, previously general manager of URGE, will run the new Rhapsody America.

Other than the alliance and the new name, details are sketchy when it comes to the particulars of Rhapsody America. Prices have yet to be announced. However, URGE offered different pricing plans including subscription and à la carte download rates. Currently, Rhapsody charges $12.99 per month for unlimited streaming and sells single tracks for 99 cents with a discount for subscribers.


DRM Slowly Exits The Building

It was only a couple of weeks ago when Universal Music Group announced the label’s "MP3 test" of selling tracks online free of copy protection. Since then, individual online stores have issued their own announcements declaring they too are going DRM-free.

Retail giant Wal-Mart recently climbed aboard the protection-free wagon, saying it will sell unprotected songs for 94 cents per track and allow customers to choose between MP3s and protected Microsoft Media files.

Rhapsody is also sharpening its digital No. 2 pencil for Universal’s MP3 test, saying it will offer unprotected UMG tracks during a six-month trial period.

Through the end of January, Rhapsody will make a wide selection of Universal’s catalog available in the open MP3 format at the same price it charges for protected files – 89 cents for subscribers and 99 cents for non-subscribers.

Universal’s MP3 test is an attempt to achieve what current market conditions have failed to provide – a robust alternative to iTunes / iPod dominance. Although several companies manufacture personal music players compatible with the Microsoft DRM technology used by several online stores, the only copy-protected files playable on iPods are those using Apple’s FairPlay DRM technology. By offering unprotected music, online music stores hope to break the iPod stranglehold on downloadable music as well as promote other, non-Apple music players in the marketplace.

So far, two major labels have started offering DRM-free files – Universal and EMI, leaving the other two majors – Sony BMG and Warner Music Group – hanging on to copy protection. Copy-free advocates could look at this as the proverbial, partially filled glass being half full, with only two labels holding out.

Of course, pessimists might look at the same DRM glass as being half empty. Especially if those doing the looking work for DRM companies.


Piracy And You

While music piracy is often cited as one of the biggest crises ever faced by the recording industry, a new study indicates that unfettered copying and distribution of music tracks is hurting more people than just recording artists and record company execs.

The Institute For Policy Innovation (IPI) recently issued a report claiming global piracy has cost the U.S. $12.5 billion in economic output and 71,060 jobs annually.

The report also says U.S. workers lose $2.7 billion in earnings, including $1.1 billion in earnings from "sound recording industry" workers and $1.6 million in earnings by workers in other industries.

Piracy is hurting Uncle Sam too. According to the IPI, the U.S. government is losing at least $422 million in tax revenue, including $291 million in personal income tax and $131 million in lost corporate income and production taxes.

But what exactly is the Institute For Policy Innovation?

Founded in 1987 by Republican Congressman Dick Armey, the IPI describes itself as a non-profit, non-partisan public policy think tank.

"Piracy harms not only the owners of intellectual property but also U.S. consumers and taxpayers," says the report’s author, Stephen Siwek. "Moreover, the impact of music piracy appears to be intensifying."


Bumping & Grinding

There’s hope for iPod users who don’t want to reach into their bags, purses or pockets to start their players. Researchers in Japan have come up with a way for people to control their iPods by simply clenching their teeth.

Visible iPod usage has become a problem for train commuters in Japan who don’t want to be conspicuous while operating their players. So researchers came up with headgear that includes infrared sensors and a microchip designed to receive commands whenever the user clenches his or her teeth, according to Agence France Presse.

But all that teeth clenching isn’t just for iPods. The researchers say the same technology could benefit the handicapped or even control a Power Point presentation.

"You are able to operate the devices without using your hands," said project head Fumio Miyazaki. "You would be able to listen to music hands-free or operate your cell phone in a crowded train. Handicapped people would also be able to move wheelchairs."

While there are several advantages to being able to operate iPods, wheelchairs or other devices without having to use one’s hands, one can’t help but wonder if scientists will explore other body parts that are known for their clenching capabilities. Like those parts located south of the gums.