Monday, July 16, 2007
Royalty Rate Hike Bites the Hands That Feed
The new royalty payment scheme for webcasters goes into effect today, but the SoundExchange group that collects fees offered a compromise olive branch on Friday. The group proposes a maximum $50,000 licensing fee, and lower fees for webcasters who encode their music with digital rights management software (DRM).Many webcasters are expected to shut down or scale back because of the higher royalties, and these compromises may not be enough to get them back. This will have the ripple effect of decreasing exposure to new music online, which is how many people listen to music today.
Wired outlines the compromise agreement, while DigitalTrends discusses the DRM software and how it shuts iTunes out of the equation. I doubt that the DRM requirement will also be imposed upon broadcasters who are transitioning to the higher quality digital transmissions, so Internet users are unfairly being targeted. CDs, Satellite Radio, and soon digital radio are all easy ways to pirate music, but webcasters are being held to a higher standard because of peer to peer network file sharing online.
This is slamming the door in the face of the younger audience that buys most of the music, and will only further agitate those who break the law by pirating music. Webcasters pay for music through advertising or subscription fees, and a percentage of people looking for new music who can no longer access these services will likely get their music illegally from peer networks.
Just like baseball has turned off its audience by blocking out access from cable and satellite carriers, the music industry is putting short term profits ahead of a long term strategy of embracing its audience. And fighting the tide rather than surfing on top of it is bad marketing.
Posted By John Gartner at 01:11 PM
Permanent Link: Royalty Rate Hike Bites the Hands That Feed
| Comments (0)
Subscribe to The MarketingShift Feed