Muxtape Takes Fire from the RIAA

By on August 19, 2008 at 5:47 PM.

Muxtape Takes Fire from the RIAA

It looks like the big guys aren’t the only ones feeling the wrath of the RIAA these days, and it’s only bound to get worse. Muxtape, a service that allows users to upload music from their personal libraries to create an online mixtape, currently services less than 90,000 unique visitors per month according to Compete. That won’t keep it under the RIAA’s radar it would appear, as the service went down yesterday with the note “Muxtape will be unavailable for a brief period while we sort out a problem with the RIAA” on its homepage. A post on the Muxtape blog provides the following message:

No artists or labels have complained. The site is not closed indefinitely. Stay tuned.

It’s funny; rather than embrace this newer wave of online music providers, it appears that labels and the RIAA are intent on destroying these emerging technologies and completely eliminating new revenue streams that have the potential to become massive. By putting a fair royalty scheme in place, the RIAA stands to pull in hundreds of millions of dollars in the short-term and this figure would only increase as internet radio stations and other online music sites continue to gain momentum. Instead, the RIAA is trying to run these sites into the ground in order to maintain the current power structure – even if that means losing out on all of this new money. Users of sites like Muxtape aren’t going to replace their “free” listening habits with purchases, they’re going to find other off-shore sites with similar functionality. Apparently for the RIAA,  “nothing” is better than “something” when that “something” helps illustrate just how useless the current record label model is these days.

Read

31 Comments

Pandora’s Woes: RIAA Would Rather Artists Make Nothing

By on August 17, 2008 at 11:14 AM.

Pandora’s Woes: RIAA Would Rather Artists Make Nothing

As traffic to Pandora continues to climb at an impressive rate, far more steep than that of competitor Last.fm as seen in the chart above, the popular custom internet radio provider may be a breath away from closing its doors. Why, you might ask? The answer is not very far from being obvious these days. Wherever there is an emerging revolution in the realm of music consumption, loved by many yet still on the brink of defeat; the RIAA is never far from the scene. Pandora’s current woes fit the mold precisely. Pandora usage is at all all-time high and usage increased by almost two million visits per month from June to July alone, yet elevated royalty rates are making it nearly impossible for the company to stay afloat. After last year’s decision that internet radio provider per-song royalty rates would double there has been an ongoing battle between providers and SoundExchange, an unincorporated division of the RIAA tasked with collecting royalties from digital providers such as satellite and internet radio. The decision determined that the rate would increase incrementally from .08¢ per song per listener in 2006 to .19¢ per song per listener by 2010. While tiny fractions of a penny seem insignificant, they add up quickly. Pandora projects that it will pay out about $17 million this year, or a staggering 70% of its revenue, in royalties. Long story short, it is losing money. The problem is even worse for smaller internet radio providers, where increased royalty rates are expected to amount to between 100% and 300% of annual revenues. Translation: By way of SoundExchange and lawmaker support, the RIAA would rather wipe internet radio off the map with outrageous royalty rates than find a fair way to make some money for its clients (labels and, theoretically, musicians). Why is that? There is no way for us to say but as per-song performance royalties are positioned to wipe internet radio off the map, it should be noted that terrestrial radio pays no such fees.

Tim Westergren, Founder of Pandora, had this to say to the Washington Post:

We’re funded by venture capital. They’re not going to chase a company whose business model has been broken. So if it doesn’t feel like its headed towards a solution, we’re done.

Read

19 Comments