Posted on: March 16, 2007 in Technology, Music
More on Internet Radio from SXSW
Here at SXSW, there’s much interesting discussion on the current rate increase for internet broadcasters that will see SomaFM’s rates (for example) rise from about $20,000 to over $600,000 for 2006, and will top 4 million in 2007.
So how did we get here?
The new rate increase is based on a “willing buyer/willing seller” strategy, where the royalty rate is set on what a willing buyer and seller would both hypothetically agree to in an open marketplace. There are many issues with such a scheme, but the best came up in a discussion with Rusty Hodge, founder of SomaFM.
His (tongue in cheek) point of view was since labels (rights holders) have been convicted of massive payola scandals in recent years, where the labels pay radio stations millions of dollars to hammer out a song until it’s a hit, the “willing buyer/willing seller” have in essence reached a negative price. Payola, shows that the major labels are willing to pay massive amounts of money in exchange for air time, and therefore, the rights holder should be paying internet broadcasters to *play* their music, rather then the other way around.
He was mostly joking, but I think it’s an interesting point.
More from SXSW to follow.