From the L.A. Times editorial section, by Jon Healey: "Last week, top executives from four popular online radio services sent a letter to every member of Congress, warning that new royalty rates for online radio broadcasters 'will cause immediate bankruptcy of the majority of the Internet radio industry' on July 15, the day they take effect [RAIN coverage here]...

"Opponents of the new rates have trotted out a number of horror stories and absurdities to challenge the copyright royalty judges' reasoning...

"The basic problems here include a royalty-setting process that promotes brinkmanship. Many labels and artists, particularly the independent ones not affiliated with the RIAA, see webcasters as critical alternatives to over-the-air stations,... Unlike the major-label-dominated airwaves, 30% or more of the tunes heard on Internet stations are from indies...

"In a recent interview, [SoundEx director John] Simson said SoundExchange has also offered to extend the discounts enjoyed by non-commercial webcasters [RAIN coverage here]...

Recording industry's "risk vs. reward"
"At the same time, there's a fundamental philosophical difference between some webcasters (and their listeners), who feel they are entitled to play the songs they love online, and many in the music industry, who think webcasting should be open only to those who can afford to pay a certain level of royalties...

"Clearly, with CD sales in free fall, the music industry's longstanding interest in the promotional value of radio is giving way to its hunger for new revenue streams...

"Still, the industry has to be careful here because the new webcasting royalty rates would not only raise  the barriers to entry but also rule out some business models. In particular, the new minimums are lethal to free webcasters such as Pandora... They improve radio programming by narrowcasting instead of broadcasting...

"The biggest risk for the music industry is that the higher minimums and rising rates could trigger the kind of consolidation that... would almost certainly reduce the diversity of music online, which runs contrary to the needs of most artists and labels as well as the public's interest...

"Look at Live365 as an example. According to spokesman Rod Hsiao, more than two-thirds of the songs played by the broadcasters aggregated there come from indie acts and record companies. That makes Live365 valuable to a broad swath of the music industry, even if it's not especially helpful to the major record companies whose acts dominate commercial radio."

Read the entire editorial at the L.A. Times.

From Radio World Online: "The Intercollegiate Broadcasting System has launched an Internet radio network aimed at student broadcasters, working with supplier Backbone Networks Corp. A proof-of-concept pilot project is underway.

"Operated by the IBS using the high-speed networks and servers of Backbone, the IBS SRN is a resource of shared programming for student broadcasters.

"To access it and stream their own content over the Web, 'all a student-run station needs is an ordinary Apple Mac computer and a broadband connection,' says Richard Cerny, Backbone’s president. 'We handle everything else, letting their listeners tune in using iTunes or QuickTime.'..

"'IBS members can draw on the programming of other IBS members over the network,' (IBS Chief Operating Officer Fritz Kass) said. 'This is especially valuable for national interest college sporting events (or) a national interest speaker, concert or news story... ' Similarly, each station will be able to syndicate its own programming to sister stations on the network...

"To aid student stations in creating their own online stations, the network provides each member with archive storage for up to 250 hours of songs, images and clips. One important feature: Music on these programs is covered by the IBS member’s existing copyright music licenses facilitated by IBS agreement with the copyright holders, so there’s no fear of extra copyright fees levied against SRN member stations... The IBS SRN gives each station enough bandwidth to support up to 200 streams at a time, with a monthly ceiling of 15,900 monthly listener hours...

"The network uses MPEG-4 AAC as its streaming format. 'Conforming to this standard not only ensures universal acceptance across all listening platforms, but it also enables each school to partner with the Apple iTunes store in preparing material, including artist/album annotation and cover art images that display to listeners’ free QuickTime or iTunes players,' the organizations stated."

Read the entire article at Radio World online.

Here's feedback on yesterday's top story,"Mainstream media ramps up Net radio royalty coverage," here...

"Legal downloading... has exploded during the growth of webcasting..."

"I can only shudder to think of the millions they are sitting on..."