Keeping it Legal: Licensing and Royalties

Since there’s a good chance that you won’t make it through this entire piece, let me start with an explanation of why you should you give a damn about any of this:

  • It’s important to understand how an Internet station differs from a traditional radio station in terms of licenses and royalties. And it’s important to understand that there are obstacles to negotiate to keep The Other Side legal.
  • It’s important that musicians and composers are paid for their work. It’s debatable whether they should be paid when the Internet station isn’t making any money. But that ship has already sailed.
  • It’s important that you listen to The Other Side when newer, lesser-known artists are being played. You’re counting up TLH (total listening hours — the measure that is used to calculate royalties) and crediting those artists for them. That’s how they get paid.
  • It’s important to tell others about The Other Side. Ultimately, if a lot of people listen, there will be a potential business model to help me actually pay my share of royalties and fees. If I never get to that business model, well… you know what will probably happen.

If you haven’t listened to The Other Side lately, you’ll notice a little difference the next time you click the Listen Now button from the website.

Notice the “Powered by Live365” notation at the bottom of the player? Streaming is now being provided from That means several things:

  • The stream is coming from Live 365’s streaming server, not the HP laptop in my spare bedroom, even though our City of Fort Collins Connexion fiber broadband gives us enough bandwidth to stream to thousands of listeners.
  • You’re listening to the stream at 128K MP3 instead of 256 AAC quality. I’m anal retentive when it comes to audio quality. I notice the difference, but only when I’m listening with headphones. Most everyone else won’t.
  • Most, if not all, of our US, Canada, and UK license fees and royalties have suddenly become properly negotiated and paid.

That third bullet is kind of a big deal. And that’s what the rest of this article will focus on (yeah, I know… BOOOORRRR…ING!). The whole thing is really complicated and involves a whole lot of people reaching for a whole lot of back pockets. But it’s really important from both a legal and ethical perspective. And, at the end of the day, this issue has sent a whole lot of Internet Radio stations either into extinction or dark illegality. I’ll try to make it as simple as I can.

In the good ol’ days, musicians really wanted radio stations to play their music over the air because that’s how consumers would hear it and then head to the record store. Not only did radio stations not have to pay recording artists for the rights to play their record on their air, Congress actually had to outlaw payola (labels and artists paying stations and DJs under the table to play their music).

Then along came The Internet. As it began to advance beyond 1200 baud dial-up connectivity and this little thing called an MP3 file began to emerge, Radio became less important in spreading music. Radio still didn’t pay artists or record labels “performance royalties” for playing music on the air (more on composers later). But consumers weren’t listening to radio nearly as much and were learning about music in other ways. To this day, radio still has managed to “dodge the on-air royalty bullet” (radio station perspective) or “weasel out of their fair share” (recording artist/label perspective).

The Digital Millennium Copyright Act (DMCA) of 1998 began to change things. Internet radio was becoming viable and services, such as, were starting to make money. Recording artist organizations (the Recoding Industry Association of America, in particular) weren’t about to let webcasters get away with what traditional radio stations had gotten away with for years.

The DMCA, among other things, introduced the asinine “performance complement,” which was theoretically designed to prevent you from recording your favorite song off an Internet Radio Station. Among other things, it prohibits a webcaster from announcing specific songs that are going to be played in advance, prohibits playing multiple songs from the same artist or album more than a specific number of times in certain period (all those “artist died, here’s a retrospective” programs online have been illegal all these years), and denies playing a listener request within an hour of them requesting it.

The DMCA also introduced performance royalties for webcasters. Sound Exchange ultimately became the collector of these royalties. It determines them based on how many people are listening online when a song is played, regardless of whether or not the streaming service playing the song is making any money. This requires webcasters to report combined data to Sound Exchange consisting of every song title, artist, and recording label that was played, and the specific number of IP addresses that were streaming when the song was played.

Musical composers (those who write and publish music, regardless of who records it) are another story entirely. Performance Rights Organizations (PROs) register individual composers and pass royalties on to them for “public performance” (concerts, clubs, and music played inside a restaurant or mall — yes, that’s considered “public performance”). Notable US PROs include Broadcast Music Incorporated (BMI) , the American Society of Composer Authors and Publishers (ASCAP), and the Society of European Stage Authors and Composers (SESAC). Traditional radio stations have negotiated blanket licenses with PROs and report and pay royalties to musical composers, regardless of the artist who actually recorded the song. Internet webcasters need to pay PROs as well.

Public radio and TV stations can thank the Corporation for Public Broadcasting (CPB), which negotiates agreements with Sound Exchange and PROs for public radio and television stations and pays royalties and fees. Stations are still required to provide quarterly reports on the number of streaming consumers they had and what songs were played to those consumers (this reporting this was one of the pleasures I undertook as a volunteer for KUVO). Big commercial radio station chains (think iHeart) have negotiated with Sound Exchange and pay them directly.

So, where does that leave The Other Side, other small webcasters, and smaller independent radio stations (what few of those that are left) that stream online? We can register for a statutory license with the US Copyright Office. We can then obtain licenses from Sound Exchange and each PRO for, at minimum, $250 to $500 per year for each agreement. We can send data to each of these organizations as they all require. Or we can look for some kind of service that takes care of all of this for us. That’s where Live365 comes in.

Live365 was early to enter the streaming arena, initially going online in 1999. In its original form, it went belly up in 2016 after the Webcaster Settlement Act of 2009 (which based small webcaster royalties on revenue) wasn’t renewed by Congress. But Live365 was revived about a year later and, by all appearances, is still chugging along (it admits that it doesn’t make a lot of money, as the vast majority of its fees are paid to Sound Exchange and PROs). While Live365 limits audio to 128K MP3 and limits me to a relatively small number of listeners (it actually sells “Total Listening Hours” which is the product of how long listeners tune in and how many of them there are), it takes care of licensing and royalties for Sound Exchange, most US PROs, and Canada and UK PROs. If you try to listen from a country other than the US, UK, or Canada, you’ll probably be out of luck (if you’re dying to listen from another country, learn a little bit about a “VPN” — there also may be something for you on The Other Side’s How to Listen page, but don’t tell anyone I told you). Depending on the Total Listening Hour level I get to, Live365 costs me between $80 and $275 per month (yes, I could lower that fee by inserting ads, which I am so far refusing to do). And, for now, not one red cent is coming in to offset it.

So, you’ve made it this far. If reading it was tough, imagine how it was to write. I’m sleeping better at night, though, because The Other Side is legal. Artists and composers are being paid. That’s important.