CRB coverage 2007:
CRB decision
SaveTheStreams
Legal options
Markey
Petitions
Copyright law
Canada?
Fred Wilhelms [2] [3]
JPMorgan analyst
SaveNetRadio
Rehearing denied
SNR.org website
B'casters interests
Day of Silence?
What is "fair"?
House IREA
SX Point/Counter
July 15th D-Day
Hill walk recap
Senate IREA
Hanson/Simson
Offer to SCW
Berman/Coble
100th co-sponsor
File for stay
Noncomm offer
$1 bil admin cost

CRB coverage 2002:
CARP decision
Industry reacts
Industry stunned
Huge RIAA win
SJO editorial
Day of Silence?
Congress support
Day of Silence on!
Press coverage
Day of Silence
Librarian decision
Cuban speaks up
Labels: Die Now!
Forbes coverage
SWSA
SCW license

"The Future of
   Radio" series
1 | 2 | 3 | 4 | 5

"Net radio frontier:
Ad sales" series
1 | 2 | 3 | 4 | 5

UPDATED:
Internet radio
royalty basics

Copyright Law
DMCA
CRB 2007
 Webcast decision

This week, the L.A. Times is featuring a series of "point/counterpoint" exchanges between RAIN publisher Kurt Hanson and

and RAC board member Jay Rosenthal regarding numerous issues underscored by the CRB ruling, including the purpose and need for copyright, fair compensation to artists, and royalty structures that would allow the booming webcast industry to continue growing apace.

What follows are excerpts from both authors' articles. The articles are being featured in this week's "Dust Up" feature in the Opinion section of the paper. You can

Use honey, not vinegar
BY KURT HANSON

"Let's start today's exchange, Jay, by going back to Monday's installment. As you may recall, when we were discussing the issue of 'hobbyist' webcasters, you said:

"...There is an even bigger philosophical question—why does a hobbyist 'deserve' a break in the first place?... I am more inclined to believe... that some listeners 'find' new music and then, more often than not, illegally download the music.

"Think about what you just said for a moment: Following that logic, the U.S. recording industry might just as well turn off the lights and go home!...

"But it doesn't have to be that way! Let me suggest six ways the music industry could take advantage of the growth in webcasting—and other related technological developments—to maximize its health...

"1. Take advantage of the Long Tail: To expand on what I wrote on Monday, Internet-delivered radio is revealing the true 'long tail' of consumer demand for different musical genres... Labels who adjust to this change in consumer behavior will have a better chance of thriving.

"2. Rethink CD pricing: A typical music CD contains about 50 minutes worth of audio and sells for about $12—and a Best Buy shopper back in 2001 might have thought that was an OK value. But in 2007, in the 'TV Series on DVD' section of the store, that same Best Buy shopper now sees that somehow the video industry has managed to pack 20 hours' worth of video, plus audio,... and somehow offer it at a price point of $30... Given the improved value your indirect competitors (DVDs, video games, etc.) are offering, I really don't think your clients can hold the $12 price point.

"3. Rethink download pricing:... Let's take a teenager as our example: Jeremy owns an MP3 player that holds 20,000 songs. At the right price point, you can get him to buy a lot of songs... Do you reasonably think that Jeremy is a prospect to pay $20,000 or $26,000 to fill his MP3 player with music? No, he isn't!...

"4. Rethink your approach to peer-to-peer file sharing:... Remember, the music industry's best year ever coincided with P2P's strongest year ever (i.e., the year Napster was at its peak). People sampled vast quantities of music via P2P and they bought the stuff they liked on CD. It's counterintuitive but it might be true.

"5. Quit being a jerk to your customers: Every month, the record industry causes an untold amount of pain for thousands of consumers by suing them for exposing song files via P2P services... You guys simply severely damage thousands of people's lives every month because you can...

"6. Embrace your friends:... Virtually all Internet radio properties today were launched by music fans... Instead of asking for a royalty rate so high that it would bankrupt webcasters and shut them down,... you'd be better off offering webcasters... a plan to work together to sell more product to consumers. If you guys do, you'll be surprised how effective working together can be!"

Getting paid for music
BY JAY ROSENTHAL
"Am I depressed about the music industry? Who isn't?...

"The future of the music business... is in the creation of compulsory license systems providing fair value and ease of administration, and creating new and ancillary markets and promotional outlets. But I am not sure Internet radio will be a major part of that solution.

"Keep in mind, the Copyright Royalty Board rates enable you to do what you want to do—even if it hits you hard in the pocket... To a large extent, the future of the music business is being determined in Washington, D.C...

"Now to your specific points:

"Take advantage of the Long Tail:... I believe indie labels and music have a pretty good shot at surviving this depression because they are finding new ways to sell music... They want Internet radio stations to play and pay for their music... It may be tougher for the Internet radio stations, but if the artists and labels have to try harder, then the Internet radio stations must put some effort into it—life isn't easy...

"Rethink CD pricing:... You and I can totally agree on this point. The examples you raise are right on, and I believe enlightened record labels will respond...

"Rethink download pricing:... It is the height of delusion to think that the vast majority or even a majority of those downloading buy more music because they download. Kids just don't work it that way... At 16 what would you do?...

"Quit being a jerk to your customers:... Stealing intellectual property value is like stealing physical property. We should be teaching our kids to respect the intellectual property of an artist... Deterrence is an essential part of the solution... Maybe the suits have reached a saturation point, but the initial reason was absolutely valid, legal, proper, and moral.

"...[P]erhaps the deterrent has had the requisite effect. But if not, then the lawsuits should continue. And I know this is a position not shared by many in my profession at this point in time.

"Embrace your friends: Everyone wants to pretend that they are the friend of the artist. In my estimation, anyone not paying an artist a fair royalty or failing to get authority to use the music may love the art but they certainly don't love the artist. There are many good hearted music lovers and business leaders in the Internet radio community who want to make the world of the artist better. But they must meet the artist at least halfway.

"In the long run, the Internet radio community must learn to work with the rates, enter into good faith negotiations, or direct license. Some stations and services may go under. It will not be easy, but it is the only antidote. But you must recognize that many artists have lost their careers as well. I know you think your movement is righteous, but where were the same people when the artists' careers were and still are being killed—where is the SavetheArtist.net campaign?... The small webcasters may be hurting because of this turn of events, but they are a small part of a much bigger picture... The basic reality is that the harm to all artists receiving a below-market rate or perhaps nothing is much greater and more important than the problems facing the webcasters, especially the small webcasters. It is the difference between someone who has a healthy appetite and someone who is starving."

Prices and rates nobody can work with
BY KURT HANSON
"...First, it is impossible to 'work with' the CRB rates to offer advertising-supported radio in the current advertising environment—the rates per listener-hour are higher than 100% of what advertisers are willing to pay per listener hour...

"Second, we (the Small Commercial Webcasters group) have been trying for two years to enter into meetings with SoundExchange for good faith negotiations; only in the past few weeks have we actually been able to get a meeting.

"Third, a direct license will probably not 'meet the artist halfway' at all, as the legislated 50/50 split between copyright owners and artists would not apply to direct licenses...

"Which artists have lost their careers? Why have they lost them? (If it's due to lower CD sales for catalog product, don't we agree that might simply be a pricing issue?) What would have been the goals of a SavetheArtist.net campaign—to encourage labels to issue accurate recoup reports to their artists?"

Kurt

Develop a more rewarding ad base
BY JAY ROSENTHAL
"Kurt,

"1. Moving toward a more viable and economically beneficial advertising business model for you is the best goal. Right now, you and others may be losing a bit, but if you develop a more financially rewarding advertising base, then you win—i.e., there is incentive for you to move toward a better advertising model.

"2. ...[R]ight now negotiations are going on with all parties—serious negotiations... I am optimistic that settlements will be reached—so long as they don't have to answer congressional staffers' emails and press requests every day regarding the proposed legislation. This was my point about legislation not being the right way to go—fighting for that back-up position may prevent a negotiated settlement—and as I said before, it is a lot easier to stop a bill in Congress than to pass one.

"3. Almost all labels will use SoundExchange anyway because of the administrative ease, so this is not such a big deal."

Jay

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

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