BY DANIEL MCSWAIN
Negotiations between SoundExchange and DiMA, which seemed to be going productively following last Thursday's Commerce committee roundtable meeting, are apparently falling apart again, according to published reports on Wired.com and DigitalMediaWire.com.

The latest development came yesterday when DiMA officially rejected SoundExchange's offer to cap the per-channel minimum fee, citing "unworkable demands" that would be imposed on webcasters designed to prevent streamripping.

Now, both groups are taking issue with each other's public representation of talks held during last week's private roundtable.

Did SoundExchange deceive Congress again?
On its face, this seems to be a near-exact replay of other recent events. Once again, SoundExchange appears to have made an offer to DiMA in front of Congressmen subject to conditions they didn't reveal until the following week. On July 2, it was revealed that SoundExchange's offer in front of the Small Business subcommittee to cap the per-channel minimum fee was effective only through 2008 [previous RAIN coverage here].

This week, it turns out that the offer made in last week's Commerce committee roundtable — which was only conditional on "help" with the streamripping issue — is actually contingent on mandatory implementation of DRM.

A series of letters and press releases (reproduced in full below) presented by DiMA and SoundExchange focus on two contentious issues, namely the royalty reporting that webcasters are obligated to present to SoundExchange, and the heretofore minor issue of copying and deaggregation of webcast streams known as "streamripping".

There has been substantial confusion (from both webcasters and journalists) on the topic of streamripping. Anecdotal evidence from the webcasting community suggests that streamripping is a rarely practiced way of acquiring music. But due to the relatively onerous work required to successfully streamrip, in addition to several built-in aspects of Net radio (discussed below) that make streamripping less desirable than, say, P2P file trading, the issue seems forced.

Why "streamripping"? And why now?
This raises the question: why focus on streamripping, especially at this point in the game when so many other relevant and roundly disagreed-upon issues remain unresolved? In the eyes of a user seeking to build a digital music library, streamripping is a poor and complicated alternative to illegal P2P.

As long as illegal file trading persists, ripping Net radio streams will almost certainly never gain similar popularity, and should be considered a distraction and a non-issue.

Speaking to the disagreement in letters between DiMA and SoundExchange over streamripping and webcasters' newly imposed focus on the practice, Eliot Van Buskirk on Wired.com writes that the recording industry has asked webcasters to "'...work on a technologically-feasible solution' to stop people from recording internet radio."

Many observers have drawn from that statement a desire on behalf of the recording industry to research and ultimately implement a system that would wrap streams in DRM, even though the exact nature of the request is not explicitly stated.

If wrapping a stream in DRM is indeed what the recording industry expects of webcasters, the request is egregious and highly suspect. Other techniques that would prevent people from building high-quality MP3 libraries of song files already exist, and in many cases, have been employed by numerous webcasters for some time. [See analysis for more.]

Who isn't happy about reporting?
The second and similarly impenetrable point of contention deals with mandatory reporting by webcasters to SoundExchange.

In his letter dated July 18, John Simson alleges that "DiMA is really the one 'backtracking' from its commitments" to enforce reporting obligations. However, DiMA's language in the letter dated July 13 appears to clearly state that as part of a settlement on the per-channel minimum, DiMA would aim, "to improve, streamline and make more efficient the royalty reporting under the Statutory License, with the goal of census reporting by all webcasters on a uniform basis."

SoundExchange's argument that DiMA's stance would impede "comprehensive reporting" appears, then, to be unjustified.

With both sides alleging that the other is acting in bad faith and mischaracterizing the facts, and no record of the exact language employed during last week's closed-door roundtable on many of these issues, determining which party is mischaracterizing the other is a murky task at best.

Until the precise details of SoundExhange's anti-streamripping requests become known, it remains impossible for webcasters to ascertain the feasibility (or unfeasibility) of the recording industry's intentions. Perhaps this is simply the nature of the negotiation beast.

The documents below are re-printed here in the order in which they were created. RAIN will continue to cover this issue in-depth over the coming days.

...

x This is getting ludicrous! These guys are fighting over something that isn’t a genuine consumer phenomenon and never will be (at least so long as P2P file sharing exists, which means “from now on”). It’s as if the lawyers driving the SoundExchange negotiating can’t concede a single point without demanding two concessions in return. Don’t they realize that Congress is eventually going to get mad at them for making offers with unrevealed conditions? Webcasters wouldn’t like streamripping — in the sense of consumers building a digital music library of their audio files — any more than the RIAA does, if it was actually happening, but there are plenty of other approaches available to address the problem that don't require DRM: Streaming at relatively low bitrates (e.g., 64k or less) Crossfades between songs DJ talkovers Missing or intentionally misidentified metadata. If SoundExchange wanted to trade the $500-per-channel issue for mandatory DRM, they could and should have said so last week in front of the Commerce committee. They didn’t — they just asked for general “help” with the issue of streamripping. Now they need to live up to what they said in that hearing room. -- KH x

From MediaPost's Media Daily News: "Radio ad rep firms are scrambling to expand their online ad serving capabilities, with the latest deal coming from Ronning Lipset Radio, which announced it has partnered with Corstarr to use its Adcor technology for delivering Internet radio ads.

"The Lipset announcement comes a week after Katz Radio bought Net Radio Sales (renamed Katz Net Radio Sales) from Aritaur to gain control of its online ad-serving technology. [See RAIN coverage here.]

"Lipset hopes the strategic partnership with Corstarr will make Internet radio more accessible to advertisers by dealing with various issues such as scheduling, customer service and performance reporting. Its performance reporting capabilities include data describing click-through rates on banner display ads that have been synced to the audio message.

"Adcor, created by Corstarr co-founders Val Starr and Justin Corbett, allows broadcasters to set up multiple radio channels and deliver ads across one or all of them, targeting audiences by demographic characteristics and daypart. It also features an 'intelligent' ad algorithm that delivers ads appropriate for these specific targeting goals."

Read this entire MediaPost article here.

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