Yahoo! Music goes radio silent

Posted June 25th, 2007 at 10:24 pm by ian c rogers, Yahoo! Music

 32 Comments / Filed in: Behind the Scenes, Trends & News

Apologies to anyone who was hoping to listen to free LAUNCHcast today. We’re shutting down the Internet’s #1 radio service for the day to draw attention to the outrageous rates recently set by the Copyright Royalty Board in Washington, D.C.

We’re doing so in alongside thousands of webcasters, including Pandora, MTV, Real/Rhapsody, WXPN.com, KCRW.com, and many many others. (For a more complete list, check Kurt Hanson’s site, RAIN). AOL and Clear Channel stand out as the only two online broadcasters too corporate to show their solidarity (sorry, Lisa :) ). Hopefully you’ll be seeing lots about today’s protest in the press and, most importantly, I hope you’ll let your representatives in Washington know how you feel. Please visit the SaveNetRadio.org site where they make this easy for you. We need your help between now and July 15th when the first payments are due under the new royalty rates.

The situation webcasters are in is simple: the new royalty rates are higher than the revenues anyone can hope to make from related advertising. In other words, we all lose money on Internet radio starting July 15th. Yahoo! has no intention of operating LAUNCHcast radio as a loss-leader. This senseless rate hike needs to be changed, or our business will have to. And unfortunately the way we’d have to change our business would end up curtailing the great diversity that makes Internet radio uniquely compelling.

I think we’d all be terribly sad to see Internet radio start to sound more like terrestrial radio with its limited number of stations playing very limited playlists. The irony that the new rates force webcasters to either go out of business or sound more like terrestrial radio, which pays no similar royalties, is rich.

Here are a few myths which the industry needs to get its head around:

Myth: Yahoo! (and other big Webcasters) can “afford” these rates. Fact: LAUNCHcast loses money under these rates. Yahoo! has no appetite to run radio as a loss-leader.

Myth: All Internet radio should be for-pay subscription.
Fact: Less than 3% of our radio listeners are subscribers. Subscription is a feature for users who would prefer no interruptions, not an interesting business for anyone.

Myth: Radio drives tons of users into Yahoo! and therefore Yahoo! will operate radio at a deficit.
Fact: Not only is this a terrible way to structure an Internet business ecosystem so that it grows, it’s just not true. We’re fortunate to be a part of Yahoo!, the most visited network on the Internet, and the traffic the network drives to us is what makes us so popular. Not vice versa.

I’m sure you’re wondering how we ended up in this situation. How is it that a board set up by Congress would ask a growing business to pay more than 100% of its revenues in royalties? We’re all asking ourselves that question and, to be honest, still scratching our heads a bit. For a rundown of the chain of events that put us where we are, check out my slightly longer post at the Yahoo! Music Blog.

I’ve had the pleasure of meeting with the folks that run Sound Exchange, the organization that represents the copyright holders and administers the payments from webcasters. They’re good people, by all accounts, and I can only imagine that they believe in the position they’ve staked out in the press, that the Copyright Royalty Board (CRB) saw the details of our business and chose a rate that we could afford.

If only. Unfortunately the CRB made a mistake, handed Sound Exchange a loaded gun and gave them the option to shoot Internet radio dead. How the CRB came from the testimony presented to this outcome is a complete mystery to everyone involved. I’m guessing Sound Exchange is nearly as puzzled as we are at this point.

I’ve also had the pleasure of meeting with our representatives in Congress and understanding their position. Congress doesn’t like to set rates, and I think we’d all agree that we’d prefer they didn’t micro-muck with the economy at this level. Instead, they set up a process and a standard, we all went through the process, and they’d like to think the outcome served the needs of the people. Our continued protest just sounds like “wah! the rates are too high! wah!”, which they’re sick of hearing and I don’t blame them. So we’ve been working hard to show them that the conversation here isn’t just “hey, we aren’t making as much money as we used to” but really “um, we are losing a lot of money on Internet radio, and we’re going to have to change our offering in such a way that it’s going to lose a lot of its great diversity of programming at the very least or that it’ll go away entirely at the very worst.” But it’s a tough slog and has taken a lot of convincing.

Finally, the elephant in the room is that while they’re asking Internet radio to pay more than 100% of revenue in royalty fees, satellite radio pays about 7% of revenue and terrestrial radio pays 0%. Killing the newest, most diverse, with the most growth potential, is asinine for all involved.

I’d like to think we’re making progress, though. Please do your part and write or call your representatives in Washington and let them know what you think of the above process and outcome. With your help, we can put Humpty back together.

Tune in to KCRW.org anytime today, they will be looping an hour long radio program where Webcasters discuss the specifics of their situation.

Thanks for reading and your support.

ian c rogers
General Manager, Yahoo! Music

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32 Comments Add your own

Ryan | June 26th, 2007 at 12:58 am

Yay protest!

Duncan | June 26th, 2007 at 4:02 am

You forgot CBS, both through their streamed radio stations and with Last.fm. Not sure about AOL but Shoutcast is down and Nullsoft is owned by AOL.

Scott K | June 26th, 2007 at 4:42 am

Way to go in honoring the Day of Silence! Yahoo’s participation will hopefully make many people aware of the issue facing Internet radio.

josef | June 26th, 2007 at 6:42 am

kexp seems to be working just fine for me.

James | June 26th, 2007 at 7:14 am

Will a day without free music matter? People unwilling to pay for music are gonna go “meh” and turn on their MP3 players. They’re not going to become advocates and start calling their congressmen.

Unless you were really serious and wanted to send a point — and shut down for an entire month — then nothing will be accomplished here.

I think “Internet Radio Slowdown Day” would have been more appropriate. Play only songs from independent artists and artists who have negotiated favorable rates, interspersed with good, compelling ads that move people to action.

As for me, I’ll crank up LaunchCast Plus and listen to commercial-free uninterrupted music all the worklong day today. And if that fails, the only one getting complaints from me will be Yahoo!, not my congressman. (And while waiting for Yahoo!’s response, I’d be listening to my iPod full of legitimately paid-for music.)

FaJu | June 26th, 2007 at 7:53 am

If they kill internet radio, the people will turn to the only other way of enjoying free music – piracy. The way I see it, the industry is shooting itself in the foot. With internet radio, at least they make *some* money. What will they get when everyone who listened to LAUNCHcast starts downloading? Nothing. It’s a lose-lose situation.

HR | June 26th, 2007 at 8:14 am

I hope your stand works.

JSG | June 26th, 2007 at 11:14 am

Those who chose to stay in the USA will have to adopt the crud playlist like commercial radio, but another alternative is to start hosting the streaming server outside the USA. You could still even do programming from the USA – it’s just a data file transfer.

These licensing rules are only for US internet radio stations. Set up in Canada or Mexico and they don’t apply. The RIAA might argue that they apply to any station being listened to in the USA but that doesn’t fly either technically or legally. This is like when stations would go across the border to get around broadcast power limits and censorship in the 1950s and 1960s. In fact, it’s an excellent business opportunity for someone.

Dean Owen | June 26th, 2007 at 12:21 pm

Watched a gangster movie the other night – not only did they sell bootleg booze, they also controlled the juke box. When they saw a competitors music machine, they did the only thing they know how – they destroyed it.

Although I live in Canada…I support you all the way.

Abram Nichols | June 26th, 2007 at 1:23 pm

Hey, if the RIAA and/or the CRB want to take it to this level, I say let net radio die. Let traditional radio die. Then they can enjoy the dearth of free advertising that they had once taken for granted. Speaking of which, do they charge MTV royalties for playing music videos?

Song | June 26th, 2007 at 3:02 pm

I really enjoyed your Web radio. I hope you can continue the service without any loss in the very near future. Good luck!

Melissa B | June 27th, 2007 at 6:09 am

the funniest part (or not so , depending how you look at it) is that they are cutting their own throats by this. I personally have heard music on the net not played by my area radio stations and BOUGHT many CDs from bands I would not otherwise have even heard of. Most regional radio stations have a playlist of approximately 20 songs (it seems) and play 5 of them every 30 minutes with the others scattered between . Reguardless , the greed of music corperation executives is way out of hand (the artist gets basically squat off of royalties in most cases)

Hugo | June 27th, 2007 at 9:23 am

James: “People unwilling to pay for music are gonna go “meh” and turn on their MP3 players. They’re not going to become advocates and start calling their congressmen.”

That is absolutely not true: I tried all day long yesterday to contact my senator at her offices in Washington without success. Only today , this morning, a day after the request to call the senators was called for, I was able to communicate and give them my opinion to this ridiculous increase on rates.

David Dalka | June 27th, 2007 at 2:33 pm

Any reports / quantification on the results of yesterday?

Stanley Hood | July 2nd, 2007 at 7:17 pm

I am not sure but I believe what congress has done might be illegal. How can they determine what the going rate for royalties is.

What if the artists give them permission to play the tunes?

By the way, didn’t artist used to beg radio stations to play their music so people would buy the disks at the stores?

What makes the senators think they are doing free interprise a favor?

I thought about putting up a free radio station and letting young artist expose their music, videos on the net for free. Then people could order a full version from the station or the artists website.

I wonder if these senators and reps are getting bribes. There is something not right here.

David | July 11th, 2007 at 11:15 pm

Viva La Revolucion!

Dave | July 15th, 2007 at 1:36 pm

Come on yahoo, get your act together. America is not the only place you can run launchcast, get things sorted out and and set up a server in the eurozone. There are more of us here than there are yanks anyway and the population of america vs the rest of the planet is pretty insignificant really.

Don’t let it bother the rest of us because Uncle Sam got the hump and spat his dummy out

Dave
Essex

ian c rogers | July 16th, 2007 at 9:39 am

A big “thank you” to all concerned music lovers and Launchcast Radio fans who supported the Internet Radio Day of Silence, contacted their Congressional representatives and rallied to save internet radio.

On Friday at a House Energy and Commerce Committee roundtable hosted by Chairman Ed Markey (D-MA) and attended by seven additional Members of Congress, SoundExchange announced an offer to cap the $500 per channel minimum fee exacted on Webcasters at $50,000 annually through 2010, for the full length of the term. DiMA, the trade organization that represents Yahoo! Music and other webcasters, has accepted the offer. With the minimum fee issue off the table, we are hopeful that we can negotiate a fair royalty rate with SoundExchange that will support a sustainable business environment for Internet radio.

We hope there will be more good news to come shortly. Check the Yahoo! Music blog for updates.

ian c rogers
GM, Yahoo! Music

IndieLass | October 28th, 2007 at 12:12 am

I know this is long after the post & day of silence. Things have quieted down but not resolved, if I am to understand. I would like to see another industry wide day of silence,and one where we are encouraged to run info/educate listeners, to refresh an outcry before decisions come down. Let the voices of listeners continue to be heard louder than ever.

Frank D Tank | December 15th, 2007 at 11:43 am

I wrote to and called my representative in Washington. The typical reply was received. Suddenly when one person voices out their opinion they seem to be on your side.

daaan | March 23rd, 2008 at 6:38 am

Nice Post!!

thfan | July 9th, 2008 at 7:57 pm

nice

HR Recruitment Sydney | November 7th, 2008 at 4:47 am

Any further developments in the case?

ismail yk | December 12th, 2008 at 11:25 am

good sharing, thank you.

Jacques Snyman | Website Design | June 7th, 2009 at 5:30 am

If the business model is not profitable, it is not profitable. There is no point in flogging a dead horse, and the cutting of losses is standard corporate practise. I do foresee that as the cost of bandwidth comes down the margins might be better, but what we also have to contend with here is the increasing popularity of video, almost like television killed radio when it first became mainstream.

Rap | June 10th, 2009 at 12:37 pm

thankkkkk youuuuuuu

Hip-hop | June 12th, 2009 at 12:17 pm

good …

Aşk mesajları | June 25th, 2009 at 4:04 pm

Viva La Revolucion!

Aşk sözleri | July 17th, 2009 at 3:18 am

Any reports / quantification on the results of yesterday?

Radyo Dinle | August 8th, 2009 at 5:18 pm

Any reports / quantification on the results of yesterday?

gottensikis | August 19th, 2009 at 4:54 am

good.. nice on admins

Susan | November 17th, 2009 at 4:55 am

Sounds awesome! Thanks!