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Web Royalties Appealed, Forrester's Research,
The Internet Debacle

Commentary by David Nevue - The Music Biz Academy - 08/17/2002

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On June 20th, as most of you probably know, the final decision over webcasting royalty rates was issued by Federal copyright regulators. That decision, issued by the U.S. Copyright Office set the royalty rate at 0.07 cent (about 1/14th of a cent) per song stream. While that doesn't sound like much, it does adds up very quickly. As we reported in our July 26th edition, sources report that more than two hundred Internet radio stations have already announced their intent to close shop as a result of the new webcasting royalty rates.

This week both the RIAA (Recording Industry Association of America) and webcasters (including
Listen.com and Live365.com) notified the court of their intent to appeal this ruling. The RIAA because they believe the rates are too low, stating that the new rates 'underpay artists', and webcasters will appeal because the rates are unreasonably high, and 'will drive small businesses and hobbyists off the digital air.'

So, back to court we go again. Court dates to hear the appeals however, are still months away (perhaps starting by the end of 2002). In the mean time, webcasters will have to pay the rates as already issued. The first payment is due October 20th.

In other interesting news, a new study released by
Forrester Research states emphatically that Internet piracy has nothing to do at all with the poor financial condition of the music business. To quote Josh Bernoff, principal analyst at Forrester, "There is no denying that times are tough for the music business, but not because of downloading."

Fellow musician Janis Ian agrees. In fact, her excellent article, '
The Internet Debacle' continues to make waves within the industry. Janis is a big proponent of offering free music downloads to visitors, and in fact, has stated that since doing so, her album sales have gone up 300%. She completely rejects the industries notion that free online downloading has a negative impact on sales. In fact, she says, 'most of the hard evidence is to the contrary.' As if to prove her point, Forrester Research projects that by 2007, digital music revenues will reach more than $2 billion dollars (It's currently at $3 million) for the music industry, accounting for 17% of all music sales.

Do not miss Janis Ian's excellent article and the follow up article entitled

Finally, on August 12th, yours truly was featured in an article by Business Week entitled '
So You Want to be a Rock 'N' Roll Star.' The article, a generalized composite from interviews of myself, music consultant Chris Knab, entertainment attorney Bart Day and others, discusses how the Internet is changing the way musicians market and distribute their music.






Until next time,

David Nevue
Editor, The Music Biz Academy


David Nevue is the founder of The Music Biz Academy. He is also a professional pianist, recording artist, full-time Internet musician, and author of the book, "How to Promote Your Music Successfully on the Internet."

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