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To answer xxxx's question....
A. What this means is that although the arbitrators have attempted to reach
a reasonable balance between the interests of the copyright holders and the
webcasters regarding the fair market value of transmission of the music,
they may have overlooked those companies that are not yet profitable or the
traditional start-up business.
The previous CARP for Digital Performance Rights used as a key benchmark the
Songwriters/Publishers royalties (BMI, ASCAP, SESAC - referred to herein as
PRO's) and determined a rate based upon a percentage of revenue. For a
start-up or a pre-profitable business, this allows growth and a sharing of
revenues as opposed to a straight licensing fee, thus encouraging new
companies to enter the market. The rate as established creates barriers to
new companies entering the market.
B. If my math is correct (please feel free to correct), the .0014 rate for
"Other Internet", means that if you run the numbers from a service for
WebcasterX, let's say 6.5 million listening hours times 18 performances
(assuming an average of 200 seconds per performance) than such company would
owe approximately $163K for January 2002 (not even adding in the ephemeral
license add-on). Only if revenues were in the range of $3.26 million would
the amount due to the RIAA be equivalent to the amount payable to the PRO's
(assuming a rough calculation of 5% of revenue for combined PRO royalty
payments). Alternatively, if revenues during the same period were $100K,
than such webcasting company would be paying approximately 32 times the
amount to the RIAA that would be due to the PRO's during the same period.
C. Further, let's create a fictional scenario for WebcasterX
2002 Projections for WebcasterX
10,000,000 listening hours /month
X 12 mos.
= 120,000,000 listening hours / 2002
X 18 song performances per hour (assuming 200 sec song average running
time)
= 2,160,000,000 song performances
X $.0014 per song performance
= $3,024,000 Webcasting Royalty or monthly Webcasting Royalty of $252K.
Don't forget for some reason if WebcasterX were a simulcast radio station
than the amount would be reduced by 50%. The reasons have not yet been
released.
Only if WebcasterX makes revenue equaling $60,480,000 would royalty payments
due to Professional Rights Organizations (BMI, ASCAP, SESAC) assuming such
payments equal 5% of revenue) be the same. Key benchmark of previous CARP
was the Songwriters and Publishers royalties.
If WebcasterX makes $1,000,000 in revenue per month during 2002
= $12,000,000 in revenue
payment to PRO’s will be in range of 5% total combined, then….
Payment to PRO’s would be $600,000 or approximately one-fifth of royalties
due to RIAA for the same period.
If WebcasterX X makes $500K in revenue per month during 2002
= $6,000,000 in revenue
payment to PRO’s would be $300,000 or approximately one-tenth of royalties
due to RIAA for the same period.
D. Another way to look at it, if
KROQ plays a song to an audience of 1,000,000 than they will pay $700
royalty to the RIAA.
IF XM or Sirius play a song to an audience of 1,000,000 than they will pay a
percentage of revenue based upon the previous CARP, let's say 6.5%. This
permits XM and Sirius to build a business.
If Live365 or Spinner or Virgin Radio play a song to an audience of
1,000,000 than they will pay $1400 royalty to the RIAA.
This does not seem like the fair balance that the CARP was attempting to
reach.
(name and adress provided)
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