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 Mark Ramsey's Hear 2.0 blog: "An interesting take on dramatically higher proposed Internet streaming rates in Inside Radio, which features the headline: 'Commercial broadcasters appear less worried about the higher streaming fees.'

"This, of course, is wrong. It's simply that commercial broadcasters don't yet understand the long-term implications of those higher fees to the radio industry at large...

"'Right now,' says Inside Radio, 'Emmis isn’t planning on appealing the CRB’s decision. Though it’s leaving the door open to joining a broader industry effort.'

"And I suspect that broader industry effort will fail to materialize because broadcasters don't understand what's coming next.

"So what is coming next? Just ask SoundExchange's John Simson...: [From a Washington Post story here.]

"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.'"

"In case you missed it, let me repeat it for emphasis: The music industry is going to mount an effort for you, the radio industry, to pay royalties you have not previously had to pay. This is one way to make the higher streaming rates 'fair' for all.

"From the music industry's perspective, this is certainly equitable and perhaps even overdue... From a licensing standpoint this makes all the sense in the world...

"So the fact that radio's lobbying arm, the NAB, is 'disappointed' with the proposed streaming rates is like your neighbor saying he's 'disappointed' his dog just dug up your flower bed. So what? The dog is coming back for more...

This is a much bigger issue than any broadcaster has thus far acknowledged. And the hearts and minds of the audience and the lawmakers will be with the labels and against the radio industry on this fundamental issue of fairness, because higher rates are fairer if they're equally distributed."

Read the entire article at Mark Ramsey's Hear 2.0 blog.

From the Wall Street Journal: "Remember when cellphones were just for calling?

"Over the past few years, cellphones have evolved from simple communication devices into multimedia powerhouses. First came cameras, then Web surfing, then music players. Now, get ready for a host of new features.

"Users will... get sophisticated software applications for surfing the mobile Web... And they'll likely see mobile devices that can roam seamlessly across Wi-Fi hot spots, cellular networks and new high-speed data networks,...

"And that's just the beginning. In the longer term, advances in battery, display and storage technology could make it possible to squeeze ever more functions onto smaller handsets...

"Mobile video is just beginning to catch on, with only about 2% of U.S. subscribers watching it... Customers of many operators can also sign up for the service offered by MobiTV Inc., of Emeryville, Calif., which provides about 40 channels of programming from major TV networks and content providers...

"So far, part of what has deterred consumers from using mobile video services is price,...  but carriers world-wide are beginning to think about lowering the cost of video content, as well as mobile Web access and other content services, by carrying ads...

"One of the mobile Web's biggest limitations has been access — consumers want a high-speed connection wherever they go, at a decent price... All of that is changing. In coming years, consumers will have multiple ways to access the Web at high speeds.

"First, there's Wi-Fi. Over 80 cellphones now come with Wi-Fi access built in, from manufacturers such as Samsung, Nokia and HTC Corp. Apple Inc.'s iPhone also includes a Wi-Fi chip...

"'It's one thing to bolt a Wi-Fi radio into a phone,' says Sky Dayton, a technology entrepreneur who founded both Helio and Boingo. 'It's another to make it a seamless experience for the user. That's where the magic is,'...

"There are other high-speed options on the way... In the U.S., Sprint Nextel has said it plans to spend up to $3 billion to roll out a higher-speed network based on a technology called WiMax, making it available to 100 million Americans by the end of 2008. The company says the service should initially offer speeds of two megabits to four megabits per second — roughly twice as fast as Wi-Fi — at prices comparable to those of cable operators, which are usually around $50 per month.

"...With mobile surfing so easy and fast, people will want to use mobile devices that are specifically built for surfing rather than making phone calls. An example: Nokia's N800 personal media tablet, which has a big screen and easy access to email, the Internet and chat services."

Subscribers can read the entire article at the Wall Street Journal Online.

admitted that copyright protection law is failing

"The Clinton-era assistant secretary of commerce and commissioner of patents and trademarks put most of the blame for the DMCA's shortcomings on the recording industry.

"He said music industry 'moguls' failed to adapt and create an attractive marketplace for music in the late 1990s. Recording industry execs had little idea about technology development and were reluctant to embrace new distribution technologies, Lehman argued.

"Lehman made his comments during a panel discussion during a conference on copyrightin Montreal last week (extended video clip here).

"During the presentation, he explained the DMCA was designed to create a framework for copyright that brought existing laws up to date, protecting intellectual property rights,...

"Copyright was a good model for compensating artists, but music thrived before modern copyright law, Lehman notes. He suggested new economic  models based more heavily on concert revenue, t-shirts sales, and other sources of revenue need to be developed. Broadcasters like XM and Sirius might 'commission' songs, he added."

Read the entire article at the Register.

Here's feedback on our coverage of Royalty Week's interview with SoundExchange executive director John Simson, in RAIN here and here...

"The quote was taken out of context..."

Kurt, I feel compelled to respond to Sound Exchange's Jon Simpson's recollection of
my testimony at the CRB ('Well we'd like a percentage, but if you set the per-play
rate really, really low we could live with the per-play rate too.') as proof that all small webcasters would be just fine with a 'per performance' royalty.

I was not speaking for all webcasters. I was asked specifically whether WE (SBR) would be willing to accept such a method of calculating the royalty. Since we, like many
broadcasters, have paid on the basis of ATH [aggregate tuning hours] instead of percentage-of-revenue, WE are/were OK with a per performance rate, provided that it is low enough to make economic sense (a view shared by many, but not all webcasters).

We, like SoundExchange and most every other party proposed BOTH ATH and percentage of revenue models, neither of which was accepted by the CRB. Nor, of course, were the per performances rates determined low enough to make economic sense.

The quote was taken out of context and cannot be used to represent the position of any other webcaster or broadcaster.

"Sounds like he's doubting the promotional value of advertising..."

Oh my God. Where do we even start with John Simson's self-serving illogic?

First, the statement you highlighted: "Certainly I've been listening to Satellite Radio and I hear some really cool things there that I learn about. Do I run out and buy them? No."

Gosh, so maybe the industry's problem is that it's run by people who don't buy
music? Would McDonald's hire a vegetarian as its CEO? In contrast, you've heard from tons of Internet radio listeners who do buy music that they've heard online.

Second, he makes this disingenuous statement: "Maybe ultimately there's a
purchasing decision, but typically is it 1 out of 100 cases? One out of 1,000 cases?"

Sounds like he's doubting not only the promotional value of Internet radio but the
promotional value of ALL advertising. After all, most people don't run out and buy a product every time they see an ad for it. Ads don't persuade everyone who encounters them to buy a new pair of jeans, a book, a brand of cereal, an iPod, that new brand of toothpaste, a new car. Is it 1 in 100? One in 1,000?

Then he says: "... no, you're not doing them a favor; you're playing it [the music] because you either love it or because you think it helps you gain an audience and it serves your purposes."

Yeah, I suppose that's why MTV plays (or used to play) videos. And we all know that
MTV had *zero* influence on music purchases back in the 1980s— it didn't break any
new artists at all. Terrestrial radio, the Ed Sullivan Show, etc., only played music
because it suited their interests. The artists never benefited in the least.

In one final bit of hand-waving, Simson calls it a "red herring" to ask why the labels historically have paid radio stations to air their songs. Why is that a red herring? I would think that as rational actors in a free market, the labels wouldn't pay if they received nothing in return.

Anyway, thanks for publishing that revealing interview. God help us if people with
this mentality are allowed to control the future of music.

"We're finding the content that people want to listen to..."

"The music created by artists is the main reason why people listen to internet radio..."

No, that's not the MAIN reason. It's the selections of music that radio programmers
CHOOSE that make people listen to  radio.

There is so much access to music now, for free and near free. The public's access to music will not be drastically changed if internet radio was to go away.

It's long been said that there is no longer a problem with access to content. The problem is finding the content that you like, the content that you're interested in. This is where net radio shines — we're finding the content for people that they
want to listen to.

There is a HUGE amount of value added there, and this is something that SoundExchange has to recognize.

It is an insulting implication that the main value from internet radio is the material that other artists created. While that is important, no one would listen to internet radio if stations just threw on random records.

"This isn't a 'marketplace.' It's a state-mandated monopoly..."

In his recent "pocket history" of music royalties [in RAIN here], Kurt pointed out the essential false premise of the "willing buyer-willing seller" method of determining fair
rates, namely that the law, as it's being enforced, makes the "statutory license" the only viable alternative to most Webcasters.

Simson tries to dance a little verbal jig, speaking of "willing sellers" in the plural, but in reality the law, as it's being applied, makes SoundExchange the only "willing seller". He in fact confirms this by speaking of the "depth of our catalog" in which he uses the (probably overinflated) value of the offerings of the major labels' mass-marketed acts to justify overcharging the small Webcaster, who's using only the product that fits his
particular niche.

This isn't a "marketplace". It's a state-mandated monopoly.

"Shot themselves in the foot at every turn..."

Just read the interview with Simson... I predict that someone will set up a giant streaming, hosting, and billing service outside the continental USA to host hundreds, maybe thousands, of streamers who will not only not have to pay (SoundExchange), but not have to conform to the suffocating requirements of the DMCA. Just watch.

The recorded music monopolies have shot themselves in the foot at every turn. Why should this suddenly change now?

"A detriment to webcasters, copyright holders, artists, and music lovers..."

It's too bad copyright owners originally took an adversarial position with webcasters, and not a co-operative one.

As music consumers venture away from purchasing physical CDs, the opportunity for
copyright holders to have had partners who could make the online purchasing of
digital music files easier was available.

Webcasters who have profitable businesses will have money for this type of R&D. But, webcasters who are cutting costs in order to pay bandwidth, electrical bills, and
increased royalty rates will probably not.

A decrease in their R&D will be to the detriment of all of us; webcasters, copyright
holders, artists, and music-lovers.

"Maybe we should remove payola and let (radio) charge YOU..."

$20CPM! On banner ads? On audio ads? Where, sir?

Mr. Simson, your clients seem to not mind paying for airplay, in fact they have been
found, time and time again, to be guilty of NOT PAYING their own artists. In fact, they've been caught, time and time again, in PAYOLA scams. Maybe we need to remove PAYOLA and let the stations charge you.

Shall we march every PD and GM who's been PAID in one way or another to play your clients' music, so their clients could SELL their music? Shall we show the real world of airfare-paid-to-conventions, artists who are told to play stations' "Summer Bashes" and concerts for "payback"? Should we get into just how far your clients have gone in the past to get an "add" on this worthless promotional tool called Radio/Internet Radio? If it's not worth much to you, then your business is being run by the men and women far less intelligent than you, because they do this daily.

Just you wait, Clear Channels of the world, your "airplay" is not of any promotional value and soon you'll be paying to play it on the air. He's not being intellectually honest, he's simply disingenuous and ignores all proof that exists.

As a former Producer, a card-carrying Union member, label A&R man, PD and coming from a family in the entertainment business for over 50 years, this will cost us all dearly.

"He wants us out of business..."

The facts are simple: we have been paying royalties, but that is not enough. He wants us out of business, so why should I show my support when I have the copies
of my checks sent to SoundExchange under the Small Webcaster Settlement Act?

"What about THIS 'misinformation'?.."

WHAT? John Simson: "Unfortunately, some in the webcasting industry have been engaged in a campaign of misinformation about the process"

What about THIS misinformation?!

Simson: "These little stations develop a popular URL and then flip it and sell it for big money and the artists get nothing..."