U.S. Representative Jay Inslee's "Internet Radio Equality Act" sounds righteous—and it's got the support of cool-sounding groups like SaveNetRadio.
Inslee and his supporters think he's doing a little Robin Hooding on behalf of upstart webcasters. In reality, though, he's hurting indie musicians like Kill Rock Stars roster faves Deerhoof and Gossip.
Here's the deal: Since 1998, web-based radio sites—including giants like Clear Channel and digital upstarts like the UW's Rainy Dawg Radio—have paid musicians only minimal fees for the right to webcast their music. The idea was to give the nascent internet-radio industry a running start.
Earlier this year, satisfied that web radio is now a viable business, the federal Copyright Royalty Board (CRB) decided to increase the rate that webcasters pay musicians and labels for music. The increase was dramatic—between 300 and 1200 percent, according to Inslee's office.
SoundExchange, the group that collects the CRB fee and distributes it to performers (SoundExchange represents 2,500 indie labels), supports a fee increase. However, they realized that such a dramatic increase for independent webcasters would crash the industry. So they offered a compromise: Let the big companies—companies, like AOL, that make more than $1.25 million in revenues— pay the increase and let the independent webcasters, such as Rainy Dawg, pay the 1998 rate: 10 percent of revenues. This would give the indie webcasters breathing room while also ensuring that performers get paid.
Jonathan Lawson, executive director of Seattle's Reclaim the Media—part of a left-leaning coalition that has supported Inslee's bill—said he was "excited about the new development." Lawson credits Inslee for initially calling attention to the harsh rate increase for the small guys, but acknowledges that SoundExchange's new equation is a good compromise.
The problem is that Inslee's bill is still in play. And, with more than 134 cosponsors, Inslee's proposal may derail the plan to get musicians their fair share.
Here's why: Inslee is offering a lower rate for indie webcasters—7.5 percent of revenues.While it sounds cool to get the indies a better deal, Inslee's scheme contains a big flaw: It gives a break to the big guys. Why? Because in order to pass his legislation, Inslee has to appeal to the Digital Media Association (DiMA), the lobbying group for digital broadcasters that is representing both the little guys and the big guys. (DiMA also represents local heavies like Microsoft and Amazon.) As a result, Inslee's legislation would let webcasting titans like Clear Channel pay 80 percent less than they would under the CRB proposal. Enticing the indies and the big webcasters with lower rates jeopardizes the musician-friendly compromise.
Indeed, the losers if the compromise fails: musicians—and mostly independent musicians who depend on web broadcasts in a world where fans increasingly get music online.
Obviously, this is a complex issue. One place to start would be to separate the indies from the big players. Unfortunately, Inslee is encouraging them to stick together. 
