Thanks to all the fine companies (including those listed below) who agreed to be part of last Wednesday's "RAIN Vendor Guide (Ver. 2.0)" issue. If you didn't have a chance to spend time with it yet, you can access the issue here.

San Diego-based MusicMatch immediately assumed a position of prominence in its MeasureCast debut this week.

The company's "Artist Match" channel took the top position in "Internet-only stations," the service was the second most-listened-to radio network, and placed third in the overall MeasureCast Weekly Top 25 (for the week ending June 23).

The "Artist Match" channel (where users choose one or more favorite artists, and the service "builds" a channel around those and similar artists) streamed 171,788 hours of music last week -- behind only Virgin Radio (426,692 TTSL) and Jazz FM (310,368 TTSL), both British broadcasters that simulcast on the 'Net. MusicMatch "Top Hits" and "Soft Hits" stations ranked third and tenth respectively in MeasureCast's Internet-only chart.

All of MusicMatch's channels combined (779,561 TTSL) -- behind only Clear Channel Worldwide (1,878,617 TTSL) -- debuted above the likes of Radio Free Virgin and WarpRadio.

MusicMatch offers free and subscription Internet radio channels in addition to its jukebox and music management software.

RAIN readers can see Internet radio's most recent ratings from both the MeasureCast and Arbitron companies by following the links at left under RAIN Metrics.

...	... MusicMatch is a well-programmed service, and we've long believed that it was among the most listened to webcasters. For that reason, we're still very interested in seeing how services like Launch, Spinner, MSN Radio, the MTV streams, and Radio@AOL would rank. -- PM ...

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BY BOB BELLIN
Why has no clear solution presented itself to the streaming royalty rate? There are too many questions...questions about agendas, motivations, and the basic competence of the people with questionable agendas and motivations.

I asked the Kurt Hanson (whom I consider to be the reigning authority on such matters) for his estimate on the total number of streams being listened to in peak hours. His estimate was 100,000. The average over a 24 hour day is probably 1/3 of that, but lets say 1/2, or 50,000 to be safe.

At the current proposed rate, that computes to an aggregate royalty total of roughly $4.4 million per year. If that sounds like a paltry sum for five record companies to worry about, just wait -- it gets worse.

Factor in the fact that half of the money is supposed to go to the artists and now the labels are looking at a combined total of $2.2 million per year. Now lets presume that if the rate isn't adjusted downward, half of the webcasters currently streaming will stop (and presumably not be replaced for the same reason) and you're down to $1.1 million a year.

While the major labels account for 85-90% of the recorded music sold each year, they produce a smaller percentage of the webcasted music, given the "niched" nature of webcasting and its fan base. That number is surely no more than 70% of $1.1 million/year ($770,000), or about $150,000 per label.

Keep in mind that the American music industry brings in $15-20 billion per year in and the likely sum total of all webcasting royalties (at the current proposed rate) is less than one-hundredth of one percent of that.

How much does it cost to operate SoundExchange (the company the RIAA formed to collect and distribute webcasting royalties)? I'll bet the cost of accounting for and distributing these royalties is greater than the total of the royalties themselves, making it a money LOSER for the labels.

There are no long term issues here either, as this rate only applies for two years and then the process starts all over. And if my numbers are off by say, 500%, then the key point still applies (less than five hundredths of one percent of revenues instead of one) -- that there isn't any real money at play here for the labels or the artists.

And now the questions:

(1) How could anyone involved who crunched the numbers (the CARP committee, the RIAA, James Billington) have concluded that the amount of money involved in webcasting royalties is worth any bother or trouble? More money has been spent to determine the rate than will ever be paid out during its two year reign. James Billington said he wanted the artists to get paid now, but there isn't enough money there to have any practical impact on anyone.

(2) What's in this for the RIAA? It's not money and it's not futures, so why are they being so self-destructively intractable? Implementing the reporting system they (the RIAA) wanted might have cost each webcaster more than the royalty fees a major label could collect in a year! Their consistent hard line on the issue makes a compromise much more difficult.

(3) Are the people running the music industry Capitalists or Pugilists? It's now clear to me that this is all about testosterone, territory, emotions, procedure, and control, not money.

(4) Why was information like Mark Cuban provided to RAIN earlier this week held back until now? True, the process doesn't technically allow for such information to be factored into the rate, but having that information out there could have made it easier for the CARP panel and/or Librarian of Congress to conclude that no "willing buyer/seller" arrangement to base a rate on existed. It certainly could have been a tie breaker.

So what's the answer? Don't charge anything for this round (2002-2003). It's clear that no matter what formula is ultimately used to determine the streaming royalty rate, no one is going to collect anything meaningful from it. Moreover, the cost of collecting the data and distributing the money will likely be greater than the amount of money distributed. So why bother?

Most of the mistakes that I regret in business and life have occurred when I let emotions like control, anger, and concern for procedure over outcome rule the day. This scenario is playing itself out over webcasting royalty rates. I can't say when or how, but my guess is that if the parties involved don't face facts and resolve this matter quickly and equitably, they will someday regret it.

From the Wall Street Journal in MSNBC: "Major music companies are preparing to mount a broad new attack on unauthorized online song-swapping. The campaign would include suits against individuals who are offering the largest troves of songs on peer-to-peer services.

"The big recording companies, working through their trade association, the Recording Industry Association of America, are moving toward filing copyright lawsuits that would target the highest volume song providers within the services, which allow people to grab songs without paying artists or labels, according to people with knowledge of the matter. The suits would be part of a broader effort, including a public campaign that may feature prominent artists urging music fans to respect copyright rules.

"The new legal tack would be a departure from the entertainment industry’s strategy so far. Companies have been reluctant to take legal action against individual Internet users, in part because they have feared the possible backlash that could result from big corporate interests dragging individuals into court...

"According to people with knowledge of the matter, two of the strongest backers of the tough tactics have been the biggest music companies, the recording units of Vivendi Universal SA and Sony Corp...

Some officials, particularly from AOL Time Warner Inc. and its Warner Music Group, have raised concerns about the problems that could be caused by such suits and the complexity of proceeding with them. The suits could set the company against many users of its own America Online Internet service..."

Read this entire story in today's Wall Street Journal, or online here.