Labels, webcasters argue royalty rates

RIAA proposing 15% of site's revs be charged for songs

WASHINGTON — Webcasters went at it with the record labels Tuesday, hinting that the majors are exaggerating when they describe the recording biz as financially risky.

At issue is the royalty rate for music streamed over the Internet. The two sides are pleading their cases before a three-member arbitration panel appointed by the U.S. Copyright Office, which will decide on a rate within a year.

The Recording Industry Assn. of America will split the new sound recording royalties 50-50 with artists. Of the half going to musicians, the featured artist will keep 45%, with the other 5% split evenly between backup musicians and backup vocalists.

Closed-door testimony

One of RIAA’s first witnesses, Warner Bros. Records vice chairman and general counsel David Altschul, on Tuesday gave the arbitration panel a primer on the inside workings of a label. Much of his testimony went on behind closed doors — with only counsel allowed to remain in the hearing room — since any financial information offered by a particular company is confidential.

“In the industry, generally only a small percentage of albums recover their costs,” Altschul said in the public portion of his testimony. “Thus, we must rely on the relatively few successes to compensate for the losses we incur on the vast majority of our sound recordings. To remain in business, a record label must continually discover, develop, promote and invest in a steady stream of new talent and maximize the revenues that it earns from sound recordings.”

Challenging the labels

But attorneys for webcasters questioned both Altschul and record industry economist Linda McLaughlin on whether major labels are, indeed, living from paycheck to paycheck.

Roughly speaking, webcasters want the royalty rate set at 0.014% per song, or about 1% of a webcaster’s annual revenues.

The RIAA wants the royalty rate to be calculated at 0.4¢ per song, or about 15% of a webcaster’s revenue.

Ironically, AOL Time Warner is fighting the battle on both sides of the aisle. Warner Music Group, parent of Warner Bros. Records, is a member company of the RIAA. AOL Music and one of its divisions, Spinner.com, are lined up with the webcasters.

More Digital

  • apple AR patent application

    Apple Patents Gesture, Expression Tracking for Mixed Reality Headset

    Apple’s upcoming mixed reality headset could include a number of sensors to track the eyes, gestures and even facial expressions of its users. The company applied for a patent to track these kinds of inputs, and combine them with information gathered from outward-facing sensors for mixed reality experiences. The patent application in question, simply titled [...]

  • Natalie Portman Thor Comic Con

    Comic-Con: Marvel 'Shock and Awe' Strategy Dominates Twitter Buzz

    Disney’s Marvel Studios handily won the hype trophy from this year’s Comic-Con International San Diego. Marvel Studios — which returned to the 2019 Comic-Con stage with a chock-full Phase 4 slate of announcements — dominated the discussion on Twitter out of the convention, capturing the biggest volume of buzz for nine of the top 10 [...]

  • Nigeria’s Kunle Afolayan: African Audiences Shouldn’t

    Nigeria’s Kunle Afolayan: African Audiences Shouldn’t Be ‘Second-Class’

    DURBAN–A young boy from a middle-class home gets an unconventional schooling in the ways of the world when he’s forced to apprentice at a mechanic’s workshop in a rough-and-tumble section of Lagos. “Mokalik” is the latest feature from Kunle Afolayan, a leading figure in the wave of filmmakers revitalizing the Nigerian film industry. The film [...]


    SAG-AFTRA Ends Long Strike Against Ad Agency Bartle Bogle Hegarty

    SAG-AFTRA has ended its 10-month strike against Bartle Bogle Hegarty after the advertising agency agreed to sign the union’s new commercials contract. The union instructed its 160,000 members in September not to accept any work for BBH, which had been signed to SAG-AFTRA’s commercials contracts since 1999. The strike came two weeks after BBH publicly [...]

  • FaceApp is displayed on an iPhone,

    SAG-AFTRA Warns Members About FaceApp Terms of Use

    SAG-AFTRA is warning its 160,000 members about the “overreaching and invasive” terms of use for the FaceApp mobile application. FaceApp, developed by Russian company Wireless Lab, uses neural network technology to automatically generate transformations of faces in photographs. The app can be used to make users appear older, younger, or change gender. The terms include [...]

  • J. Cole

    Apple Music Launches 'Rap Life' Playlist

    Apple Music announced the launch of “Rap Life,” a new global playlist focusing on contemporary rap artists and culture. It replaces the former “The A-List: Hip-Hop” playlist. Said Ebro Darden, Apple Music’s Global Editorial Head of Hip-Hop and R&B: “We flipped it to dig deeper into into the lifestyle [and to] keep pushing the culture [...]

More From Our Brands

Access exclusive content