The Music Industry has backed off it’s Royalty demands by 40 percent after killing off most small Internet streaming sites. The obscene royalties demanded by the rights organizations like ASCAP, PAMRA, and BMI, along with the 4 major recording companies took precedence with SoundExchange whose attempted royalty collection closed most small and intermediate sized Internet sites trying to make it with streaming. This leaves only the major players in control of legal streaming, like Pandora, Blip.fm and CBS owned Last.fm securing the monopolistic practices of the big 4 recording companies.
Royalty rates in 2007 were boosted from 300 percent to 1200 percent depending on the size of the streaming sites. The untenable rates, which even to the largest of the sites represented 60 percent of earnings seems to be intended to weed out the little guy and establish a foothold for the major companies who can pay without earning. The royalties are placed on each song even if only one user is listening to it making it impossible to make a profit or even pay the hosting.
Record companies made it impossible for streaming sites to base the royalties on their income rather than per song and this design made it possible for only the strong to survive. Those streaming sites with huge investors or those directly invested by major recording companies would pay through their other earnings and would not be hurt.
How can a small net broadcaster, working from his home office, make it with not support? Not one band or artist has stood up for the small guys whose days were spent trying to spread their music and name. Streaming radio will soon be the same bag of same as the royalties based on song rather than income will destroy everyone in the market except those who actually earn on those royalties. It is going to get very homogenized very quickly as only major players control the web.
