In light of recent news, we're re-focusing the agenda for our annual RAIN Las Vegas Summit, which will be held all day on Monday, April 16th at the Renaissance Hotel in Las Vegas. More details are coming, but in the meantime, scheduling and location information is here. Please plan on joining us if you can!

From the Washington Post: "...The Royalty Board's decision... might seem unfair to mom-and-pop Web radio operators — and to many of Web radio's 50 million listeners — but it's about time artists got their share of the money that radio rakes in, says John Simson. He is executive director of SoundExchange...

"The heyday of advertising-free Internet radio might be coming to an end. Simson says small operators who play music and don't try to sell ads 'will have a hard time paying the rate' — a change about which he's not shedding tears.

"'The attitude that really has to change is the idea that the people playing this music on the Web are somehow doing artists a favor,' Simson says. Artists want their music to be heard, of course,... but Simson rejects the popular notion that the only thing small webcasters owe artists is the exposure they get from having their work streamed over the Internet...

Would fewer Webcasts benefit artists?
"...[T]he organization that represents artists and their labels acknowledges that it sees merit in culling some of the many thousands of Web stations that sprang to life during the wide-open first years of broadband.

"Is 10,000 stations the right number?' asks Simson of SoundExchange, which sought the higher royalties. 'Does having so many Web stations disperse the market so much that it hurts the artist? What's the right number of stations?... Are artists better off having hundreds of listeners on lots of little stations, or thousands of listeners on larger stations?'

"[Kurt] Hanson (pictured) contends that AccuRadio,... helps the music industry even without the new royalty rates. His stations, like most on the Web, go out of their way to promote music sales, selling about $40,000 worth of CDs per month via links to Amazon.com, displaying the names and covers of the discs being played, and streaming at a bandwidth low enough for decent listening quality but not high enough to substitute for owning the CD.

"Simson isn't buying that. He says artists deserve to get their money straight up. 'The music is why people come to these stations,' he says. 'Web radio is growing exponentially. These little stations develop a popular URL and then flip it and sell it for big money and the artists get nothing,'...

"...Hanson believes that through an appeal, direct negotiations with the recording industry or congressional action, webcasters will win a reprieve from onerous royalties.

Broadcast radio royalties could be next
"Simson pours water on those embers of hope. 'This is the process the stations chose,' he says. 'It may  be unfortunate, but they chose to litigate with this process.'

"Where webcasters and the recording industry do agree is on the unfairness of making tiny Web stations pay for performance rights while huge radio companies pay nothing...

"Simson agrees that 'there's really no justification for broadcast radio not paying, and we're going to try to address that.'

"Making over-the-air broadcasters pay more wouldn't do much for Web stations that might be priced out of existence. 'Internet radio is one of the few bright spots for the music industry,' Hanson says. 'Artists love Internet radio. Record companies are coming up with promotions for us. It's the trade association lawyers who are playing hardball."

Read the entire article at the Washington Post.

...

... Simson: "These little stations develop a popular URL and then flip it and sell it for big money and the artists get nothing..." Huh? What's he talking about? (A) I haven't heard of any such case since the Internet bubble burst six or seven years ago. (B) Artists get royalties and airplay that helps them get new fans and sell records! Is he proposing they should also have an equity interest in the webcasters' companies? -- KH ...

From the New York Times Online: "New-media companies and record labels are feuding again. But this time, it is the digital companies that warn they may be driven out of business...

“'We would have to provide less choice and less diverse programming,'  said Robert Kimball, senior vice president for business and legal affairs at RealNetworks.

"...On Wednesday [March 7], Mr. Kimball testified to the House Commerce subcommittee on telecommunications and the Internet that online radio played a greater variety of music, but that it was unfairly limited by  restrictions that did not apply to conventional radio stations.

"As the recording industry sees the matter, though, Web-based broadcasters are simply building a business with their content, which they deserve to be compensated for...

"The $500 minimum for each channel is among the ruling’s more difficult aspects. Many Web radio sites offer thousands of channels, a strategy that would be impossible with this rate structure. AccuRadio, for example, offers one channel that consists entirely of classical oboe music.

“'Among oboe players, it’s very popular,' [CEO Kurt Hanson] remarked...

"Many involved in Internet radio contend that the Copyright Royalty Board members do not understand the technology. At one point in the proceedings, according to the transcript, one member asked if the term 'albums' could refer to CDs as well as vinyl records.

"Internet radio operators also say it would not be in the interest of labels to stifle a business that is paying them fees to use their music, especially at a time of declining CD sales.

"'That’s counterproductive to the copyright holders,' said Terry McBride,  chief executive of the Nettwerk Music Group, a label and artist-management company, adding that the ruling could be bad for performers whose music would not be played on conventional radio."

Read the entire article at the New York Times Online.

"Kudos!.."

Kurt,

Kudos on this excellent article, which I will share with my students. Your creative and pragmatic web site is terrific!

"The U.S. is a better place to live because of our Fair Use laws..."

Nice essay.

One followup point I want to bring up that came up in a panel here at SXSW last week. The panelists (mostly label-related people) were talking about how the US is the only country that doesn't make broadcasters pay a fee for the performance of a sound recording.

They also pointed out that the US is the only country that has a "Fair Use" clause in their copyright laws. They of course were saying this in the context of we need more euro-style copyright legislation here. But I think it is clear: the US is a better place to live because of our Fair Use laws. And exemptions for broadcasters under these fair use laws are something that we should be proud as Americans that we have!

Fair Use is part of the American way. It's patriotic! Things like the DMCA are something you'd expect from a more fascist regime, not America.

That's a beautiful essay, you all said it better than I could.

But we might get some good traction by waving the American flag of people's rights.

"This article should be e-mailed to every member of Congress..."

Dear Kurt,

Your explanation of our current situation is excellent! Links to this article should be e-mailed to every member of Congress ASAP!

As a former FM GM 30 years ago I recall having a far more "monopolistic" view of the rights of authors and publishers than was actually the case. Kudos on a great piece of reporting.

I'm launching a syndicated program for FM rock stations coast to coast that I had
hoped to stream on the web as well. I've written my Congressional delegation and I'm writing the House and Senate leadership this weekend! I will re-write my Congressional delegation again and include a link to this enlightening post of
yours.

I hope it's not too late for all of us!

"The insiders looked out for themselves..."

Thank you so much for such a clear explanation. I didn't know that the NAB got HD a
pass and the 3.5% deal with the (satelitte operators). The insiders looked out for themselves and let the rest of us twist in the wind. You are a blessing.

"Keep up the struggle..."

Kurt,

Very good article today about copyright law.

I do wish you the very best. Seems as though NAB and RIAA conspired to kill internet radio because of threat it posed. With their money and lobbyists they are close to success. I do wish you luck. I spent 5 years and my life's income streaming and shut down in 2003. Keep up the struggle. I would support a NAB/RIAA boycott.

"They may not know how they are benefitting from Internet radio..."

Thanks for the education.

These guys are crazy! I have discovered many new artists through AccuRadio, Boomer Radio, and others, and have purchased more product as a consequence of these discoveries. I believe that the recording industry should be leading this fight... they may not yet know how they are currently benefitting from Internet radio.

Keep up the good work.