GoSpeed Racer, Trader Whiplash, Speak on Rising Cost of Internet Radio

By Bixyl Shuftan

For Second Life Radio stations, at least the official ones which pay licensing fees or have them paid for by a sponsor, things have gotten much more expensive.

Late last month, GoSpeed Racer of KONA Radio, noted for playing for events such as those at Bay City, issued a notecard to her friend list, including personel in the SL Newser staff, "The future looks bleak for many small web casters based in the United States. The current royalty rates negotiated back in 2006 are set to expire on 1 January 2016. The rates are expected to increase drastically and the special provisions for small web casters will expire." Not long after, she sent a second notecard with another adress for her radio station in case the first one went dark.

It was about this time that Krypton Radio's blog wrote about the issue (http://kryptonradio.com/2015/12/30/internet-radio-just-got-a-lot-more-expensive/). "Krypton Radio, the world’s most popular geek culture radio station, has just been hit with an operating costs increase, and it’s a big one. It’s our music licensing – due to arbitration by the United States Copyright Royalty Board between SoundExchange and music licensing agencies like BMI, ASCAP and SESEC, and the super-giant internet radio companies like Pandora and Spotify, our own licensing fees just doubled."

Wanting to hear directly from owners of Second Life radio stations, I managed to get in touch with GoSpeed, and one other,  Trader Whiplash of T-1 Radio. GoSpeed and I met at the KONA building, and discussed the predicament her and other stations face.

Bixyl Shuftan: "So when did you hear about these regulations in question?"

GoSpeed (gospeed.racer): "Well, it's been in the background for a few years but most

webcasters assumed that we'd be taken care of by the powers that be. THe proverbial S*** hitting the fan came in mid-December. The new rates were announced and the special provisions for the little guy were not carried forward. We are being treated the same as the larger corporate webcasters."

Bixyl Shuftan: "Why do you think there were no separate rates for smaller broadcasters?"

GoSpeed (gospeed.racer): "The consensus was that there was no one to speak for us. Just to get heard requires hiring some one to advocate for us (lobbying). keep in mind most small webcasters operate at break even or at a loss financially. Some of the larger stations like Radio Paradise or SOMA FM do make a profit but just enough to make payroll and not much else."

Bixyl Shuftan: "Yes ... You mentioned that KONA would have to increase it's listenership by quite a bit to make up for the extra expenses."

GoSpeed (gospeed.racer): "Yes, and that's a bit of a dichotomy in and of itself, let me explain. ... We used to be licensed under StreamLicensing.com. Stream Licensing was like a CO-OP for smaller webcasters. They negotiated with the record labels to get an affordable rate. StreamLicensing in turn took stations as subscribers and charged them fees. (They) had 10 million listener hours annually, and about 2,500 stations. Those 2500 stations shared those hours. So under that plan KONA payed $24 a month for up to 3500 hours a month. If we exceeded that we paid a higher rate. Under the new rates for 2016, our new rates would have gone up to $60 a month, and the rates jumped astronomically above that. Another Stream Licensing station who averaged 11,000 hours a month calculated they would pay about $300 a month in fees. We simply could not have justified paying a higher amount."

Bixyl Shuftan: "Did you make the money back by broadcasting ads?"

GoSpeed (gospeed.racer): "Yes from time to time. We had one sponsor who covered most of our expenses for a while, but they recently dropped. I also DJ from time to time and that brings in a few dollars."

Bixyl Shuftan: "Sounds like between your a sponsorship drop and the rate jump, well, quite a financial pinch."

GoSpeed (gospeed.racer): "Yes it is. Many thousands of webcasters have signed off or will do so in the next few months. To be honest $24 a month wasn't a burden to pay out of our own pockets. But much more than that was too much."

Bixyl Shuftan: "Of the 2500 stations, how many do you think are in danger of going silent?"

GoSpeed (gospeed.racer): "Stream Licensing had 2500 stations, it's below 1000 now. How many Second Life based stations are there? Difficult to say but I would tag it somewhere in the 50-100 range. Most of them are 'pirates.' A few do pay royalties. England has the PRS, Canada has the SOCAN. Those are licensing bodies for collecting royalties."

GoSpeed (gospeed.racer): "So you may ask what our station is doing now about licensing?"

Bixyl Shuftan: "Yes, what is it doing now?"

GoSpeed (gospeed.racer): "As a US based station, using PRS or SOCAN isn't an option. But there is an entity in Belgium called Radionomy. They provide stream hosting and cover licensing fees for their streams. They are covered by SABAM Belgium who collects the fees from Radionomy. The catch is that I have to use their servers, and I have to run their advertising. That's how they generate revenue to pay the royalty fees. Additionally they have a requirement on listener levels to remain on their servers. By 6 months I have to have a monthly listener level of 4000 hours. I currently run about 2500-3200 a month."

Bixyl Shuftan: "So the new minimum came about as a result of the rate increase?"

GoSpeed (gospeed.racer): "The new minimum is Radionomy's stipulation. They are only interested in hosting stations that have a certain level of concurrency. More listeners equals more money for them."

Bixyl Shuftan: "So if the minimum isn't met, you're in danger of being dropped by them?"

GoSpeed (gospeed.racer): "If our station fails to reach that level we get de-listed. We can reapply but we'd be forced to select a new name and get a new URL. Starting over is difficult. Just getting the word out In Second Life is tedious when you change streaming URLs. We've been through a few of those this past year. It takes a while to get listeners back."

Bixyl Shuftan nods, "So your listenership has been going up in the past year?"

GoSpeed (gospeed.racer): "It's been steady. We've tried advertising on podcasts and blog feeds but the results were less than stunning. But then again as I mentioned, the station costs were not to egregious so the listeners levels were not a major problem."

Bixyl Shuftan: "So what is your next move?"

GoSpeed (gospeed.racer): "To be honest we're flummoxed. Second Life does not have a universal media industry. Getting the word out to a large audience is difficult. Searching for anything in the viewer is confusing. SL media is like the SL landscape, open, barren lands and isolated and insular islands. We're trying to get up with Draxtor and see if we can get on his podcast. He does a have a fairly decent reach. I suppose contacting you is another way to get help. Get the word out. We're desperately need not only listeners that may read your paper, but information to contact those who can we can make deals with. 'Play our station in your estate, mall, club, and we'll give you sponsor mention on our stream.' "

Bixyl Shuftan: "Any promising leads there?"

GoSpeed (gospeed.racer): "Not yet. Inertia is a definitely a thing here in Second Life. Often I will arrive at a location and discover them play a Club 977 or a 181FM stream. I contact them and let them know I am an SL based radio station and that we'd be a better fit. You know, one SL entity serving another. We either get no response, or OK, we'll try, or we like this better. When I point out how my stream is superior content wise and that they'd benefit I am met with indifference. But every now and again I meet success."

GoSpeed had to leave at this point, though did say more information could be read on Kona's Facebook page: https://www.facebook.com/KONAStream/ . She would later say Stream Licensing had posted their new rates, and they were double what she had been paying before.

Trader Whiplash and his T-1 Radio are best known for being the radio stram for Relay for Life events, such as the seasonal weekly "Relay Rap" meetings and of course the Relay Weekend. Contacting  him, he had his own perspective.

Bixyl Shuftan: "How might the new regulations about Internet radio affect your stations, and others, in Second Life?"

Trader Whiplash-Ballinger (trader1.whiplash): "It's not regulations. It's new cost. We used to pay .0017 cents per song. Now its .0022. The agreement was worked out between (the) copyright board and large streaming companies like Pandora. Our cost has nearly doubled (as well as) for most stream stations."

Bixyl Shuftan: "How will this affect nonprofit stations differently from those that are not?"

Trader Whiplash-Ballinger (trader1.whiplash): "Obviously we are non-commercial, so we fall under a different pricing scheme than big commercial stations. But regardless our costs are going to go up.  I imagine that some stations may reassess and close. Regardless, the cost per listener for royalty payments will go up ... Has gone up."

Bixyl Shuftan: "How might this affect T-1 Radio during the Relay?"

Trader Whiplash-Ballinger (trader1.whiplash): "It's gonna get REALLY expensive (chuckle)."

Bixyl Shuftan: "Ouch, so it'll be eating into the donations?"

Trader Whiplash-Ballinger (trader1.whiplash): "Donations? No...  T-1 Radio provides stream services to Relay For Life as a doantion in kind."

Bixyl Shuftan: "I recall GoSpeed Racer saying her station might survive, but with a significant jump in viewership."

Trader Whiplash-Ballinger (trader1.whiplash): "Which could be a death knell. .. the more listeners the more cost."

Bixyl Shuftan: "Kripton Radio, at least the writer speaking for them, felt while they would probably weather the storm, they felt this could keep new stations from starting up."

Trader Whiplash-Ballinger (trader1.whiplash): "It will. I (have spoke) to many independent DJs and they are worried."

Bixyl Shuftan: "Do you see the regulations causing these rate spikes being reversed anytime soon?"

Trader Whiplash-Ballinger (trader1.whiplash): "When do costs EVER come down? I think the net result though is that we may see more independent DJs say the hell with it and stop paying."

Bixyl Shuftan: "So Second Life could end up being a quieter place, as far as music streams go?"

Trader Whiplash-Ballinger (trader1.whiplash): "That remains to be seen.  What is certain is your favorite station is going to be spending more money bringing your music to you.  Hopefully our fans will be aware of this.  I hate to make it sound like its all about the tips, but the next time you tip a DJ L$50  think about how much it cost him or her to provide that music and how far your 2 cents goes toward their cost. Sorry, 20 cents. Lost a decimal there."

Bixyl Shuftan: "No problem. ... Did you have anything else to say on the matter?"

Trader Whiplash-Ballinger (trader1.whiplash): "I guess that covers it all. ... T1Radio has always been a hobby for Nuala and I, and its our honor and privilige to provide coverage for Relay For Life and the other virtual activites supporting the American Cancer Society.  It is unfortunate that the cost increases will affect so many of our colleagues, but for the time being we plan to continue to provide great classic rock and blues to our listeners."

So it seems for licensed radio stations in Second Life, at least those based in the United States, the future just got a little more expensive. Only this time, the problem isn't Linden Lab, but the US Government. How this will affect the choices of music fans in Second Life, and elsewhere on the Internet, remains to be seen. But the predictions are not good.

Bixyl Shuftan