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RAIN is in Washington DC today to both cover and participate
in the U.S. Copyright Office's public roundtable on the "Notice
of Recordkeeping" requirements. Please check for full coverage
on Monday. Thanks!
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 BY
KURT HANSON AND PAUL MALONEY
WASHINGTON, DC, 5/10 -- Dozens of webcasters descended
on Washington, DC yesterday to meet with various Congressional legislative
aides and particpate today in an all-day Copyright Office roundtable
on their proposed recordkeeping requirements.
Yesterday, the webcasters, including representatives of 3WK,
Beethoven.com, Radioio, RadioStorm, CyberRadio2000, Ultimate 80s,ClassicalMusicDetroit,
RAIN Radio, and Digitally Imported and the ad-insertion firm Lightningcast,
met with staffers in various Congressional offices, including those
of of  Representatives
Berman, Etheridge, Blagojevich, Merehan, and Senators Feingold,
Kennedy, Allen, Lieberman, Kohn, Feinstein, Leahy, Helms, Boxer,
Hatch, and Durbin, and others.
Webcasters also
held a press conference yesterday, with Beethoven.com's Kevin
Shively (pictured at right), 3WK's Wanda Atkinson, CyberRadio2000's
Sal Lepore, Harvard University radio station's Michael Pappish,
ClassicalMusicDetroit's Bob Ottoway, and Ultimate 80's Dave Landis
 making
the point that if the CARP royalty rates are enacted as proposed,
they would need to shut down their webcasts, as virtually no business
could survive a legislatively-enacted expense that is more than
200% of its gross revenues.
The Copyright Office rountable will run all day today. The office's
website, in explaining the purpose of the roundtable, notes, "The
Copyright Office has reviewed the comments received to this point
and is aware that the proposed notice and recordkeeping provisions
are contentious. It is our desire to adopt regulations that provide
sufficient notification and information to copyright owners of the
use of their sound recordings yet are not unduly burdensome on those
making use of the statutory licenses."
The list of invited participants is here.
The roundtable
is being webcast today by the International Webcasting Association
and TVWorldwide.com; see story below.
Webcasters tell it to Washington
By Frank Barnako, CBS.MarketWatch.com
Last Update: 10:49 AM ET May 9, 2002
WASHINGTON (CBS.MW) -- Dozens of Internet radio broadcasters are
scheduled to testify about proposed music royalty fees in Washington
on Thursday and Friday.
An industry-sponsored series of workshops is set to begin at 1
p.m., Eastern, to be followed Friday by a daylong roundtable discussion
of Webcasting issues at the United States Copyright Office. Both
events will be accessible online through a joint effort by the International
Webcasting Association and TVWorldwide.com at http://www.tvworldwide.com/event_iwa_020509.cfm.
Many Webcasters say a proposal that they pay a royalty of 14/100ths
cent per listener will force them out of business because their
revenues are so small. Kurt Hanson, publisher of an Internet broadcasting
newsletter, www.kurthanson.com, told Reuters, "If Internet
radio is to survive, it will be a 'win' for consumers but it will
also be a 'win' for artists and creators, keeping alive new venues
for their work."
Report in National Journal's TechDaily, a DC-based
website that is read by
public officials, Congressmen and staff, and the lobbying/policy
community:
Intellectual Property: Independent webcasters came to
Capitol Hill Thursday to protest the royalty rates set by the Copyright
Arbitration Royalty Panel (CARP) and argue that if approved by the
Librarian of Congress on May 22, they will cease operations. "This
is not a bluff," said Kevin Shively of Beethoven.com, a classical
music webcaster. "We will definitely go out of business if
this rates stands as is" because it is 103 percent of the site's
gross income.
The three arbitrators on the CARP set the royalty rate at
0.14 cents per webcast song or 0.07 cents per song simulcast over
the Web. Although lower than the 0.4 cents sought by the Recording
Industry Association of America, it is 10 times the 0.014 that webcasters
had proposed.
Rep. Rick Boucher, D-Va., joined the group to voice his view
that "these rates are completely unjustified."
From Radio & Records:
Members of the International Webcasting Association
meeting in Washington, DC yesterday roundly denounced as overkill
the Copyright Arbitration Royalty Panel's proposed requirement that
webcasters record and provide to copyright holders two dozen different
data points on each performance streamed. Shaw Pittman broadcast
attorney David Oxenford said about the requirements, "You'd
think the RIAA would take the artist and title of a song and just
look it up on its existing database."
The meeting was a preliminary gathering before today's open-to-the-public
U.S. Copyright Office roundtable on the record-keeping requirements.
Webcast royalties, which are not on the table for the Copyright
Office roundtable, were also discussed by the IWA members yesterday,
with most holding that almost all webcasters will shut down if the
CARP-proposed fee structure is implemented.
Webcaster Steve Wolf, who operates highly rated Internet-only
stream WOLF-FM, said, "This will be the end of WOLF-FM. I've
poured the last three years of my life into this, and I don't want
to see it go away, but what else can I do?" Yesterday was also
a day filled of lobbying by the webcasters, as various industry
representatives met with members of Congress to discuss the CARP
proposals.
Reprinted from Wednesday's issue:
The following guest essay is in response to yesterday's Wall Street
Journal article called "Music Industry Is Finally Online, But
There Aren't Many Listeners." See RAIN coverage here.
 BY
BOB BELLIN
for RAIN: Radio And Internet Newsletter
While yesterday's article reads like a sympathetic history of
the difficulties in launching a legitimate online music service,
it masks many of the real issues. Most significantly:
(1) The music industry is opposed
to any system of online distribution, despite claims to the contrary;
(2) Antitrust issues
will force the music industry out of the distribution business and
into the licensing business;
(3) The music industry doesn't have the rights
to much of the music they are selling through MusicNet
and pressplay and
are subject to considerable damage awards as a result; and
(4) The only answer to the entire mess is a compulsory
license.
The realities are fairly easy to distill.
"The first offering was too clunky and too consumer unfriendly
to hold much hope for its success...So we are going to go back,
and we will come out with a 2.0 product which will be more consumer
friendly, easy to use...This is a business of trial and error."
This is demonstrably untrue. The problems with the launches
of MusicNet and pressplay were immediately apparent
to everyone it seemed, but the music industry. Early reviews underscored
the same issues being discussed today and market needs were easy
to discern. It didn't take a marketing genius to figure out that
what consumers wanted was Napster or KaZaa/Morpheus with a subscription
price, not a title-limited song rental service that only worked
on a PC.
The problem was that the labels didn't want to give that
to consumers and probably couldn't sidestep antitrust issues if
they did. Such a service would have to be licensed to a third party
to pass muster with the Justice Department.
"Global sales of compact-disc recordings fell 5.1% last
year from a year earlier, the first drop since the format was launched
in 1983. The industry blamed the fall largely on the proliferation
of homemade CD compilations, as well as free offerings online."
But that doesn't make it true.
What the article fails to mention is that similar drops
in music sales have occurred during recessions and periods where
blockbuster releases have been absent -- proir to the advent of
the Internet and file swapping. Even the music industry acknowledges
that this year's releases are not as compelling as those of the
previous few years.
There are studies that indicate (Jupiter just released one)
file-swapping actually increases music sales. Given the
huge number of files being swapped every month (billions of units),
as compared with the negative sales numbers (tens of millions of
units at most) it's clear that the net impact on music is marginal
at worst, and additive at best.
"But the deal was just the beginning of MusicNet's headaches.
Designing the service itself proved even stickier. Because the labels
weren't supposed to know each other's business, board members couldn't
discuss any details of MusicNet's distribution or licensing agreements,
leaving them in the dark about many of the venture's dealings. The
MusicNet board had to keep an antitrust attorney present for all
discussions."
This is why the labels can't distribute music directly to
consumers. The kind of cooperation that such a venture neccessitates
(one service featuring most/all "in print" content is
necessary for widespread adoption) amounts to collusion and the
DOJ would never allow it. A third party will have to do the distributing
and the labels will have to be satisfied with license fees.
"It's a problem not just for the music business, but for
the entire entertainment industry, which is trying to figure out
online business models for movies and TV shows at a time when these
things, too, are increasingly being swapped on the Internet."
It's the same model for movies and TV as it is for music
and they know it (except that
consumers would probably be willing to accept the rental model for
video that won't fly for music, as they are used to it and
don't usually re-view movies/TV shows). Everything from one source
(like a "brick and mortar" video store), except online.
The content owners can't get into the distribution business
for the same reasons -- consumers want one stop shopping -- and
for the studios to arrange that on their own amounts to collusion,
given the consolidated nature of the entertainment business. Once
again, they'll have to settle for license fees.
Talk of trying to figure out the online business model from
the entertainment industry is just another stalling tactic. It's
widely known what the model is and that the entertainment industry
just doesn't want to embrace it.
They didn't control the rights to digitally distribute songs
by prominent artists...
The Napster team figured that out, and as a result the RIAA's
lawsuit against them may well come back to bite them in a monumental
way. It's likely that the major labels sold music online (via MusicNet
and pressplay) without the rights to do so. The damages (up to $150,000
per infraction according to the law) could run into the billions.
"Nobody thought you would put out a service MusicNet 1.0 and
it would not need to be debugged.."
The problem with MusicNet and pressplay isn't coding flaws
-- it's that they were designed in direct opposition to known consumer
preferences. The debugging pretext is just another stall.
Meanwhile, consumers who would be willing to pay are swapping
what they want, because they would rather get a superior product
for free than pay for a limited, inferior one. They don't have an
acceptable "legitimate" option and the entertainment industry seems
intent on not giving them one.
The answer is a compulsory license. A federally determined
and mandated "per download" fee that anyone who wants
to license content can pay. No negotiation, no preferred vendors,
just "pay and play." And from there, let the market decide
the winners, losers and models.
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From Silicon Valley Business Ink: "On May 21, U.S. Librarian
of Congress James Billington will make a decision that
may determine the fate of Web-based radio stations. Billington must
decide on a royalty payment system for Web stations that stream
copyrighted material, but many Webcasters believe the terms of a
proposed payment system are unfair...
"'This makes our business completely impossible to scale,'
says Val Starr, founder and
president of Choice Radio
in
San Bruno, a property of Internet Radio Inc. If the CARP recommendations
become policy, she fears, her station will be forced to shut down
because the cost of the royalties will outstrip revenue...
"Ann Chaitovitz, national director
of sound recordings for the American
Federation of Television and Radio Artists, offers another
perspective. 'I think a lot of the math you read is done wrong,'
Chaitovitz  says.
'A lot of it is misinformation spun on behalf of the large Webcasters.'
"'I don't think these rates will drive [small Webcasters]
under,' she says. 'And now the independent artists will get paid
for their efforts.'
"But other insiders -- including Jonathan
Potter, executive director of the Digital
Media Association, a trade organization that represents
Webcasters -- say helping artists is precisely what Web radio is
all about. 'There are a lot of artists on major labels who would
love to have their music promoted on the Web, since their own labels
aren't promoting them,' Potter says.
"'I don't want to promote conspiracy theories, but [the
proposed royalty system] certainly does smack of the record
companies trying to control the entire music broadcasting industry,'
Starr says.
"Rusty Hodge, general manager and program director
for San Francisco-based non-profit Webcaster Soma
FM, shares this hunch. 'It seems like [the major music labels]
are trying to control the music from the source all the way down
to the listener,' says Hodge, who is hesitant to use the word conspiracy,
but wonders what the recording industry's real motive is: to collect
royalties or to clear the small, Web-based broadcasters from the
game board."
Read this entire article here.
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we have here in Tallahassee. On the Internet, there were thousands
of radio stations that didn't endlessly broadcast Creed and Britney
Spears, but offered an infinite variety of genres and artists from
all over the world...
