RAIN: Radio And Internet Newsletter

BY KURT HANSON
Jumping ahead of its previously-announced plans (see RAIN article here), Arbitron released new

audience size tabulations for the month of July this morning -- with VirginRadio.co.uk reclaiming the top spot -- and at the same time announced a change in the name of its product from "InfoStream" to "Arbitron Webcast Ratings."

These are the first numbers released by Arbitron since the release of February InfoStream ratings two months ago (here).

Stations that leapt up in the "Aggregate Tuning Hours" rankings included Enigma Digital's Internet-only hard rock channel, KNAC.com, and ABC-owned talk station WABC/New York City, which had

the top-ranked webcast of any terrerstrial U.S. station that participated in Arbitron's program.

Twenty-nine of the 75 top channels that Arbitron chose to release (out of 800 channels they said were measured) belonged to Minneapolis-based Internet-only multichannel webcaster NetRadio.com. (Most of the other major multichannel operators,

including Spinner, Radio Sonicnet, and WWW.com, chose not to participate in the study.)

A new participant in the Arbitron study was Vancouver-based streaming provider Global Media; its clients include such top-ranked webcasts as Shaw Communications' alternative rock CFNY/Toronto (#9 overall) and Bonneville's classical music WGMS/Washington, DC (#20 overall).

For RAIN's list of the top 75 webcasts measured by Arbitron, click here.

For further details and analysis, check tomorrow's RAIN.

Reprinted from this morning's early edition:

BY KURT HANSON
RAIN pulled off one of its first major journalistic coups at the Digital Coast 2000 conference in Los Angeles last Friday, scoring an exclusive interview

with keynote speaker and RIAA President and CEO Hilary Rosen in which she shared new insights regarding her views about webcast music licensing and her organization's lawsuit against Napster.

Among the highlights of the interview: (1) She doesn't believe the arbitrated rate for webcasters' music licenses will be concluded this year. (2) Her organization has done more deals than have been publicly announced (e.g., WWW.com, Yahoo!, and SoundBreak), and she noted that such advance deals may set the starting point for arbitration of the "statutory" rate. (3) Her personal belief is that "skip" buttons and “What’s playing next” features may not be what

the Digital Millennium Copyright Act (DMCA) means by the term "interactive” -- and thus may be perfectly legal. (4) And her organization's strategy against file sharing programs like Napster may be based on a technical misunderstanding of how peer-to-peer alternatives like Gnutella actually work.

The Recording Industry of America is the trade orgainzation that represents the interests of U.S. record labels. The DMCA granted the labels the right to charge webcasters a license fee for the use of their product -- traditional broadcasters currently pay a license fee to songwriters but not to performers or labels -- and named the RIAA as the representative of the labels.

Prior to Rosen's appearance on the event's main stage, I was the sole press representative granted a ten-minute interview, which was videotaped on the stage of the Directors' Guild of America's secondary auditorium.

I began by assuring Rosen that most radio programmers and managers that I know are reasonably supportive of most of her organization’s efforts. (After all, most of us are music fans to some degree or another and many of us have friends who work in the record industry or are maybe even recording artists -- and most of us believe that the record industry’s health is important to the radio industry’s health.)

A transcript of the interview follows:

KH: There’s currently arbitration underway, mandated by the Digital Millennium Copyright Act, to determine the license fees that webcasters are going to have to pay to record companies for performance rights. How soon do you see that coming to a resolution?

HR (chuckling): When the cows come home.

KH: Theoretically, this fall?

HR: No, actually, I don’t think it will be resolved this fall. It will be resolved within the next few weeks, hopefully, that Internet radio broadcasters are subject to the same rules of compensation for the creative work, that webcasters are responsible for.

KH: Based on the number of listeners they have to their webcast...

HR: But the actual rates won’t be resolved.

KH: What is your or the labels’ preference: Would your ideal relationship be for everyone to wait for the arbitration, or do you like the idea of people coming to you? I know deals have been done with WWW.com, SoundBreak radio…

HR: Yeah, we are. There’s no question that this is a new frontier in webcasting, and that there's a huge opportunity for everybody. And we said from the very start, actually, from the time the statute was enacted, that the marketplace had the best opportunity to

resolve these issues. And so we have a lot of deals -- those aren’t the only deals that there are -- where companies have come and said “We’d like some business certainty, we’d like to get some working relationships with the record industry, and have the benefit of label promotions and other things that that licensing can help facilitate.” And so, there are marketplace deals. I think those deals will then become the starting point for where the arbitrators end up going looking for their rates. So the marketplace deals are really important.

KH: Now, are these people taking a risk? If the arbitrated deal turns out to be better than their deal, there’s a bit of a risk involved… (On the other hand, I’m not saying it’s bad to take a risk…)

HR: I would put my money on the numbers going the other way – that the people who sign deals are not going to do worse than the people who have waited for arbitration.

KH: Are any of these deals “interactive” ones, or are they all without interactive features?

HR: Well, the only ones that you’re allowed to do collectively are for what’s called “statutory” performances, so you fit into this albeit complex series of rules that constitute a performance

compliment -- the amount of music you can play at the same time, and all of that.

KH: That’s like the “four plays of an artist in three hours” rule and things like that.

HR: That’s right. But what has happened is that as companies have sought those licenses, they have then started to sort of layer on additional licensing on top of that with the record companies for interactivity for their users, which is really important.

KH: There are some unresolved issues, I think – I am having trouble getting my hands around this. For example, the DMCA says you can’t give advance information on what’s coming up next, but a lot of webcasters in fact are telling what artist is coming up next. Is that under debate, or is everyone agreeing that artist is okay but giving the title is the problem? This is to stay within the “statutory” definition.

HR: No, no, sorry, it’s that you can’t publish playlists in advance, so of course you can [do that].

KH: How about a “skip” button? A lot of Internet radio players have a “skip” button – if it’s an automated, "jukeboxy" type of thing, there’s a skip button.

HR: Yeah.

KH: Are you considering that to be legal? Do you know if that’s resolved?

HR: You know, that’s one of the problems with having Congress trying to write statutes that deal with this technology-driven marketplace. I think that what’s happened on things like skip buttons and other things that create more user personalization is that each one has to get configured into the licensing arrangement in its own unique way, so if goes too much towards allowing consumers personalization of an artist they want --

KH: -- or a specific song they want --

HR: -- or the songs that they want, then they’re going to head more into a more interactive environment.

KH: A simple skip button that still kept the radio station within the rules of the DMCA -- that you couldn’t control which artist was coming up next, you had no idea what titles were coming up, you stayed within the four plays of an artist within three hours rule -- do you think that would be considered cool and still statutory?

HR: This is a trick question! Because I’m not a lawyer and I don’t know the answer. But, you know, intuitively it doesn’t sound like there’s something wrong with that…but there’s probably fifteen things I haven’t thought of.

KH: I’m interpreting, and a lot of my friends and readers are interpreting, “Interactive” meaning “I want to hear THIS song right now.” And there are companies that are doing that -- there’s “HitMusic.com” and “IfItRocks.” That’s another deal you’ve negotiated?

HR: Let me just say overall about these guidelines: This is a nascent business, webcasting, and there are a lot of things about wanting to make this easier for the licensees -- for the webcasters themselves -- that have essentially created some of the difficulty in these rules. When we went to Congress together with the webcasters a couple of years ago and said, “This business will never happen if webcasters have to go and ask record companies on a song-by-song basis for the right to create a radio playlist,” what we got was sort of very limited antitrust exemption to work in a specific area to help us start this business.

And that allows us to have some negotiations about the parameters. And it also created the need to set some boundaries about what would be allowed to be collectively negotiated -- because Congress is very stingy with their anti-trust exemptions -- and what would actually have to then be an individual copyright owner pricing their own uses and their own activities with the licensee.

So we ended up with a very complicated set of rules, but I would just say that, generally, we have tried to do everything we can over the last year to work with individual webcasters who want to get licensed to simplify this, and the marketplace gives us some flexibility to do that.

I’m a little worried that the arbitration process won’t… They’re going to come up with a “one size fits all,” which might not be the best thing for some of the webcasters. But we’ll see how that goes. But we have endeavored to make this as easy as we can, but I understand people struggle with it...

Tomorrow in RAIN, Hilary Rosen talks about how a webcaster can sign a licensing deal with the RIAA now, and about the Napster/Gnutella controversy.

BY PAUL MALONEY
Living (and eating every meal!) at a county fair may prove to be an even more brutal test than trying to survive

on an island -- but such is the challenge in Seattle, WA-based Star 101.5's (KPLZ) "Star-vivor" contest.

Last Saturday, the cast of 12 "Star-vivors" began living, and competing for 10-thousand dollars and IKEA furniture, in the middle of Seattle's Pullyallup Fair and on the Internet.

Via a webcam in the "compound" and a streaming signal on the station's site, visitors can watch and listen in (The broadband signal quality was excellent, the 56k hookup quite satisfactory.).

Contestants compete in competitions like cow-milking, trivia contests, and raising charity money in the hopes of gaining immunity from getting voted "out" by the other contestants. Dossiers of the contestants, competition details, Star-vivor daily menus, and voting results are also available on the site.

As of Monday morning, five of the original 12 remain.

xxx

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