The Librarian of Congress's decision on Internet radio royalty rates is due on Thursday, June 20th. Hopefully that decision will be a reasonable one and we can all get back to business! So on Monday, June 24th, look for a special "Back to Business" issue of RAIN, featuring a review of products and services now available to our industry.

xxx Participating vendors include... Include YOUR firm! Call Kurt at 1-312-527-3879 or e-mail us here.

The House Subcommittee on Courts, the Internet, and Intellectual Property is scheduled to hold an oversight meeting on “The CARP (Copyright Arbitration Royalty Panel) Structure and Process” at 1:30p CDT (2:30p EDT). (See RAIN coverage of the announcement of this meeting here).

Live audio will be available here. But according to the Judiciary Committee (to which this subcommittee belongs) website (here), the audio will not be archived.

Though this meeting comes just days before the anticipated announcement from the Librarian of Congress on webcasting royalty rates (June 20), the hearing will examine only the CARP process itself and how it can be reformed. In other words, the hearing is not specifically related to the recent CARP on webcasting royalties.



BY KURT HANSON with PAUL MALONEY
The largest multichannel Internet radio operation in Canada, TheIceberg.com, is in the process of being acquired by the largest privately-held radio broadcaster in Canada, Standard Radio, according to an agreement the two companies reached late last month.

In the agreement, Standard, which currently owns a 20% interest in the publicly-traded Iceberg Media, will offer to acquire all of the outstanding common shares of the webcaster at $0.05/share.

Standard Radio President and CEO Gary Slaight told RAIN that should all go as planned, the Iceberg operation and its staff of 20 would move into Standard's corporate offices in downtown Toronto.

TheIceberg.com offers over 200 channels of programming spanning more than 20 genres (including, for example, ten different channels of Metal), and unique "Music Yearbook" channels that play only the hits from a given year in a given genre (e.g., Pop/Rock from 1968).

Standard owns major-market radio stations including CFRB and Mix 99.9 in Toronto, CHOM and Mix 96 in Montreal, and Z95.3 in Vancouver.

Iceberg President and CEO Ted Boyd (pictured left) commented to RAIN yesterday, "This is a great opportunity for Iceberg to be partnered with a major Canadian broadcaster and to gain efficiencies through operational and sales consolidation."

This deal comes after last February's "stock for advertising" swap which gave Standard 714,240 common shares (RAIN coverage here). Previously, in September of last year, Standard bought 2,250,000 shares of Iceberg, at the time giving them a 15 percent ownership stake in the company.

Standard's corporate website notes, "The entrepreneurial spirit is the lifeblood of Standard Radio."

According to the company's press release, a takeover bid was to be mailed to Iceberg stockholders by May 27. With about 32 million shares outstanding, Standard's offer values Iceberg Media at about $1.5 million (Canadian).

Boyd: Internet radio operators need to work
within existing radio buying models
According to Boyd, for radio on the Internet to attract advertisers, the industry needs to be flexible. "Internet radio operators will have to find a way to make their models work with existing radio buying models," he explained.

Boyd noted that advertising buyers use traditional "reach-and-frequency"and "cost-per-point" criteria when distributing ad dollars and evaluating purchases. Boyd says he makes sure that Iceberg's proposed portion of a radio buy fits the buyer's criteria on those metrics.

"The radio and advertising industries aren't going to change to buy Internet radio," he said.

Slaight (pictured below) noted, "We're hoping that by moving it in here, we can use it as a brand extension, something more to offer our clients, and obviously there are cost efficiencies in doing that," Slaight explained. "And having them in our environment, we'll be more likely to closely with them in terms of sales."

According to its unaudited interim financial results for the first quarter ending March 31, 2002 (here), service and advertising revenue for the first quarter ended March 31, 2002 was $149,000 (Canadian), compared to $57,000 for the same period in 2001. However, expenses were running over $1 million per quarter during both periods.

Slaight (right) notes there's an upside: "Sales are starting to come -- we've had some good success on the revenue side recently," he told RAIN.

"It's the best possible resolution for Iceberg at this point in time. I'm very pleased," Boyd noted.

As we've noted here before, Canadian broadcasters have been significantly more aggressive in their Internet radio efforts than U.S. broadcast groups have been (which have largely left Internet-only radio opportunities to AOL, Microsoft, Live365, Yahoo!, and other non-radio players). Note that with a little bit more attention from Standard's sales staff, The Iceberg should be a $1 million (Canadian)/year webcaster shortly.

From the LA Times: "Acknowledging that online piracy is forcing dramatic changes in the music industry, the world's two largest record companies are poised to make it easy and cheap for fans to buy — rather than steal — songs off the Internet.

"The moves by Universal Music Group and Sony Music Entertainment accelerate the industry's transition to an era in which music is distributed electronically. Other major labels are likely to follow as the record business grapples with the rise of online music copying through unauthorized services such as Napster, Kazaa and Morpheus and potentially billions of dollars in lost sales.

"Rather than trying to force consumers to buy music on the labels' terms, the services signal that record companies are slowly adapting to Internet-fueled changes in the marketplace.

"This summer, Universal plans to sell tens of thousands of high-quality digital singles for 99 cents or less and albums for $9.99 through online retailers such as Amazon, Best Buy and Sam Goody, according to sources and company executives. Universal plans to make new releases available for downloading as well as older ones, and possibly offer downloads before the music is available on CD.

"Significantly, the company plans to let consumers download songs and record them freely onto CDs — a major shift from the company's practice of limiting what users could do with downloaded music...

"Sony also has quietly changed its policy on downloads to allow CD burning — a change that should go into effect any day, according to company executives. That is expected to increase the number of downloadable songs dramatically this summer, and a spokeswoman said prices would drop to $1.49 a song as soon as Sony's vendors could make the change."

Read this story in the LA Times online here.