From USA Today: "The new head of America Online's beleaguered Internet service outlined a turnaround plan Thursday that features soothing offended advertisers, reinventing content on the service and slowly building subscription services.

"'First, we need to put the sizzle back in the brand,' says Jimmy de Castro, a shoot-from-the-hip former radio industry mogul. 'We need to go back to a member focus.'..

"De Castro said he is toning down the mania for cutting the kind of hardball ad deals that fueled AOL growth, but also alienated some advertisers, and some members.

"Says de Castro, 'For the last several years, the company has focused on deals. It's been, "Let's do pop-up advertising, and I don't care what (members want), I've got to sell you merchandise." We've totally changed that process. We're focused on member satisfaction.'

"(AOL is) also building an audience for music, games and movies that it plans to offer by subscriptions in the next year or two.

"'This is the HBO model. You go there for "Sex and the City." "The Sopranos." I want you coming to us for something. I don't care what it is.'

"Nearly forgotten in the hand-wringing about America Online's falling subscription growth and anemic advertising sales is a 2-year-old company vow to unearth fresh revenue through premium services...

"But company executives, led by Jimmy de Castro, the new president of AOL Interactive Services, are quietly cultivating an audience for music and other premium services...

"AOL is slowly building an audience for AOL's year-old free music services...'The premise is to build a large, actively involved audience,' says Kevin Conroy [pictured], head of AOL's entertainment group. 'Over time, we can begin to convert our audience to sales.'

"The gregarious de Castro also says he's supplying sorely needed leadership. 'Morale was bad,' he says.

"This is where de Castro's knack for showmanship comes in. When he built an empire of 400 radio stations, he occasionally brought a dummy in a green suit to his advertising calls as an attention-getter.

"Now, he leads a stationary bike class at 7 a.m. each day. 'This morning, I told them we're going to kick MSN's a — - and kick Yahoo's a — - because we're going to do things better.'"

Read these articles from USA Today here and here.

Last week, USA Today featured coverage of the crisis in Internet radio with two articles, "Royalty Fees Killing Most Internet Radio Stations," (excerpted, with a direct link, in RAIN here), and "Mourning the End of Small Net Radio Sites" (in RAIN here).

Joel R. Willer is an assistant professor of Mass Communications at the University of Louisiana at Monroe, where he also serves as general manager of the student radio station KXUL-FM. He shared with RAIN this response to the editors of USA Today.



BY JOEL R. WILLER
Thank you for your reporting of the controversy surrounding new royalty fees to be paid by Webcasters and radio stations retransmitting music over the Internet. Listeners are only just beginning to be made aware of the very real probability that the overreaching Digital Millennium Copyright Act will lead to the demise of nascent Internet-based radio stations.

In your article "Royalty fees killing most Internet radio stations," the Recording Industry Association of America's Hilary Rosen [below right] continues to perpetuate the deliberately misleading tactics of the major recording labels: "Rosen contends that most college stations won't owe more than $500 a year. 'Given our problems with digital piracy on university servers, it is almost comical that they have the nerve to complain about $500,' she says."

While Rosen finds the issue comical, I find her intentional obfuscation to be pathetic. Her comment quoted in your article is a blending of two totally unrelated matters. Peer-to-peer music file sharing has absolutely nothing to do with real time audio streaming by Internet radio stations, as Rosen well knows.

She also knows that she has sympathy from Congress -- if not from the public at large -- on so-called music piracy through online file sharing, so she continues to attempt to solidify the RIAA's weak position on Internet audio streaming by inappropriately equating this use of technology with file sharing.

The major recording labels, through the RIAA, should not be allowed to extract a few pounds of flesh from college radio stations in retribution for computer users' unrelated music file sharing. Rosen obviously thinks they should.

Rosen strives to trivialize the $500 minimum annual royalty payment established by the June 20th decision by the Librarian of Congress. In the case of my institution's noncommercial educational radio station, KXUL, that fee effectively represents more than 5,500% of the royalty we already pay composers annually, on a per-listener basis, for our over-the-air transmission of the very same music.

Congress has historically held that recording owners, as represented by the RIAA member labels, receive a great promotional benefit through radio airplay, which has been long recognized as driving record sales. Although music composers do not similarly profit through radio performances, they are paid at an effective rate much lower than recently established in the Librarian's ruling for the recording owners and performers.

Additionally, your article "Mourning the end of small Net radio sites" sets up another of the incongruities originating from the recording industry camp: "Says John Simson [right], who runs the RIAA-backed SoundExchange royalty collection agency, 'The irony is that the big guys used the little Webcasters to get the rate cut, but according to them it doesn't help at all. Fact is, the rate is very low for the larger services that can afford to pay.'"

While Simson accuses the large Webcasting interests such as Yahoo! of using small commercial Webcasters to manipulate the process through the Library of Congress, the major recording labels represented by the RIAA are themselves using "little guy" recording artists to front an emotional campaign with Congress and the public. If musicians anticipate receiving significant royalties once SoundExchange deducts "reasonable costs incurred in the collection and distribution of the royalties...and a reasonable charge for administration," as the rules adopted by the Librarian of Congress allow, the artists should tally the illusory compensation they currently receive under recording contracts with these same corporate music labels.

Last week I made a second trip to Washington in an effort to communicate to the Copyright Office and to members of Congress the likely devastating impact the implementation of the DMCA will have on college and university broadcasters on the Internet. I also met with Simson and RIAA Senior Vice President Steven Marks in an effort to open a dialogue with the copyright owners.

Listeners now need to be told of the variety they will soon lose unless they act immediately to protect their choices on the Internet.

From the Wall Street Journal: "Satellite broadcaster Hughes Electronics Corp.'s DirecTV unit, looking to rev up subscriber growth for its money-losing Internet offerings, is expected to announce a venture offering a wide range of online digital music in partnership with Listen.com.

"The alliance slated to be announced Wednesday applies only to subscribers to DirecTV Broadband, a struggling and still-small niche of Hughes's overall business that provides services over digital telephone lines instead of via satellites. The joint venture will give those customers access to a broad array of streaming music on demand or Internet radio stations. If it is successful, Hughes hopes the initiative will help kick-start other Internet services, ranging from photo management to video on demand.

"Although commercial Internet music services haven't gained much of a following, Listen.com, of San Francisco, recently became the first company with a subscription music service to license songs from all five major record labels...The free services also allow users to record, or 'burn,' songs onto compact discs, a feature Listen.com doesn't offer for its most popular music."

Read this complete story in today's Wall Street Journal, or online here (subscription required).