I received this notice today from Live365, with whom we've contracted to provide the streaming of Brokeback Mountain Radio 1. The three key points are:
1) An increased commercial load owing to the tremendous rate increase on music royalties retroactively imposed by the Copyright Tribunal. Live365 has not increased our rates (yet), but has changed their ad break policy to include ads every 12 minutes instead of every 15. This is their way to try and recoup expenses.
2) The prohibition of third party players to access their streams. You will now be required to use Live 365's own player online. You formerly could use products like Winamp, but now they want to be able to show you the ad banners incorporated into their player.
3) Basic listeners (who haven't paid for the premium Live365 membership) will now find they are prompted by the player occasionally to verify they are still listening. If they do not respond to the pop-up, the stream will disconnect. Live365 pays royalties based on the number of songs streamed. They are implementing this to avoid people running streams which play in empty rooms with nobody actively listening.
I am aware of the fact that a lot of people are irritated by the commercial load and placement on Live365. These ad insertions occur automatically by that company - we have no power to control when and where they air. We also do not receive any renumeration from these ads - Live365 pockets all of it.
My intention is to use our new Radio 2 service for longer form programming because it will be programmed without forced commercial advertising. I am considering alternative service providers for Radio 1, but there are a lot of questions to contemplate dealing with royalties, streaming costs, etc. But I wanted listeners to be aware of the changes caused by the impact of the Copyright Tribunal in the United States. The matter is under appeal, but as a going forward concern, Live365 must assume their appeal will fail, at least for now.
Dear Live365 Broadcaster,
As you may be aware, the Copyright Royalty Board recently issued alarmingly high new royalty rates for Internet radio for the period 2006-2010. The ruling increases sound recording royalties by 140% over four years and includes a $500 minimum fee per station per year. The new rates are so high that they exceed revenue generated from audio and visual advertising on our stations. See http://www.live365.com/choice/ for more information on the CRB ruling and what you can do about it.
Although we are appealing the new rates, the outcome of an appeal will take some time. In the meantime, the new rates go into effect immediately and Live365 must pay higher rates retroactively from January 2006. We will not charge our broadcasters for any of these retroactive fees, but we do need to pay the additional royalties for the past 15 months and the future.
We are taking several steps to help us recoup these fees, pay the new royalties, and keep down your broadcasting costs. In the past week, we have rolled out our "Are you still there?" campaign on a limited basis and confined most listening to our own ad-bearing Player Window. If an ad-based business model is to succeed, though, we need to find ways to generate more advertising revenues on our existing stations by serving more ads on more stations and selling ads for more money over wider stretches of time throughout the day. As one of the first such measures, beginning Thursday, March 29th, we will decrease ad block intervals from 15 minutes to 12 minutes -- so the frequency of in-stream ad blocks will increase approximately to five per hour.
While we certainly recognize that this may have a negative impact on some non-paying listeners' listening experience, the impact is expected to be minimal, because each ad block is only around 60 seconds long. Eventually, we'd like to settle back down to three or four blocks per hour with two or three ads per block, when the Internet advertising market is ready to make this change and when we roll out a more powerful ad-insertion engine to handle multiple advertisers per block.
We appreciate your understanding that without an ad-supported business model, broadcasting fees would be many times higher than it is today. Thank you for your continued support of Live365, particularly in a critical time like this.
Regards,
Live365 Broadcasting Team