 Webcasters won't see 50% profit margins, but Pureplay deal is no "death march" ·Jul 22, 12:34 PM The following is in response to industry expert Bob Bellin’s guest essay for Radio-Info.com titled “Webcasters – Don’t be fooled by the new deal for performance royalty,” excerpted in the July 22 issue of RAIN (here). Bellin is wrong. He is mistakenly assuming that Internet radio has to use the exact Let’s take his example of a webcaster with $10 million in revenues: Their SoundExchange royalty rate is a function of their audience size, not their revenues. If they monetize their U.S. audience at about 4 cents per listener-hour (about half as well as broadcast radio does), we can work the calculation backwards to audience size and then forwards to their royalty obligation, which would be about $3.7 million in 2011. That’s high, yes, but not, as Bellin argues, necessarily fatal: They could spend $600K on composer royalties, $1.5 million on operations, $2 million on salespeople, and $1 million on marketing, and they’d still have $1.2 million left over for “Other” expenses and profit. Clearly, webcasters need to run lean operations — and under these royalty rates will never see the kind of 50% profit margins that broadcasters used to love — but “death march”? It’s an alarmist exaggeration. share: del.icio.us.  Reddit  Digg  Yahoo  Wink  Windows  Google  Newsvine 
Comment Other blog entries Book your TUESDAY travel to Washington, DC! Want to experiment with a new approach to drive times? Kurt's iPad review: Absolutely, astonishingly game-changing! Apple iPad: No Flash, no multitasking... yet What might the Apple tablet mean to online radio? Missing the obvious: NBC did. Are you too? Conan: Classiest, smartest guy in the whole NBC/ Leno imbroglio Lesson for radio?: NBC's value today is in its cable channels Internet radio is coming to your nightstand's clock-radio Best RAIN Summit ever? Maybe! Thanks to everyone |
same business model as broadcast radio’s.
