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Last week, Recording Industry Association of America (RIAA)
president Cary Sherman (pictured)
was a guest for alive chat on a new website called Blogcritics.org.
He answered presubmitted questions regarding his  organization's
stance on Internet technologies, Internet radio, and copyright issues.
We felt that much of what he had to say might be of interest
to RAIN readers. The following are excerpts from the chat,
which can be read in its entirety here.
"Record
companies want Internet radio to succeed..."
Question: (a) The impression most have been given is
that the RIAA is out to squash the technology from P2P
sharing to Internet Radio...(b)
Is the RIAA out to remove music (and video)
from the Net entirely, unless it is tightly and rigidly
controlled?
Cary Sherman: Record companies have been major beneficiaries
of new technology (from wax cylinders to vinyl to LPs to CDs), and
the current technological developments are no exception.
But let's face it, even great technology
can be abused. And that's what we're confronting right
now.  Our
companies have to figure out how to take advantage of the great
new delivery systems that the Internet offers, without being seriously
damaged by uncontrolled piracy. P2P in particular can really be
a fabulous technology -- but
right now it's doing far more harm
than good (so our surveys show).
Also contrary to your impression, record companies want
Internet radio to succeed. We need lots of outlets for
music, and webcasting is one of the most exciting new ways for new
artists and new music to gain exposure. Record companies (and artists
-- who get 50% of the royalties) also want to be paid fair
value for their music when it's used for commercial
purposes by webcasters. Just because we have a disagreement
over what fair value is for the music doesn't mean we want to "squash"
Internet radio. Right now, we're in negotiations
with small webcasters to figure out what kind of rate
works for all sides.
I understand that people read more about litigation than
about the day-to-day efforts of record companies to launch
(and license) legitimate online businesses, but the fact is that
the record companies have been working
very hard at getting music on the Internet legally.
That happens to be difficult -- because you need the permission
of the songwriters and music publishers, and in many cases the artists
as well, and those clearances aren't easy to get...
And then there are the technical infrastructures that have
to be built to account for downloads and streams and pay royalties
to rights owners, the security for the content, and so on. It's
a lot easier to do it illegally (just post it, don't worry about
security, and don't pay anybody anything) -- doing it legally takes
time. But the companies are getting there...In other words, a
real market is emerging!
(CONTINUED BELOW)
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Thanks
to all the fine companies
who agreed to be part of our recent "RAIN
Vendor Guide (Ver. 2.0)" issue. You
can see the entire Guide here.
To be part of RAIN's Vendor Guide, please call
312-527-3879. ( "Research and ratings" will
be our next featured category.)
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(FROM ABOVE)
"The Internet [could] become
nothing more than a haven for piracy..."
Question: Why does the entertainment industry in general,
and the recording industry in particular, look at technology --
MP3 and Internet radio being the two examples that come most readily
to mind -- as a threat to its
profits that must be aggressively neutralized? Instead of exerting
energy against technology in an effort to maintain the status quo,
why not work with technology, put your own creative resources behind
it, and help figure out a way to make change a positive thing for
everyone?
Cary Sherman: What's important to understand is that the
record companies are not trying to "neutralize"
MP3s or Internet radio. They're simply
trying to ensure that they operate in a manner that's consistent
with a legitimate marketplace.
If P2P systems are displacing sales, then who is going to
invest in an online delivery system that actually pays royalties
to artists, songwriters, producers, publishers and labels?..
But if third parties like KaZaA
can come into the same marketplace and offer the same music without
permission, without licenses, without paying anybody anything (other
than themselves), the Internet will become nothing more than a haven
for piracy, with no legitimate alternatives...
"It doesn't take much for people to justify not
paying..."
Question: (a) Why not embrace the technology for greater
profits? I have blank CDs and a CD burner. You, the record  company,
have content. Sell me the content and let's skip
the plastic box, the preprinted CD, and the little flaps
of paper with writing too small to read...If you make the price
reasonable, I'll buy all my music this way and you can eliminate
ALL of the middle men. The majority of people are honest and would
pay a reasonable amount for the convenience and quality you could
offer.
Cary Sherman: Of course record companies want to embrace
the technology for greater profits. That's what they've done before,
and that's what they want to do again. How to do it isn't so clear
or easy, however. All of the majors are already
offering sales via downloads...Some of the majors have recently
announced price reductions...Some are beginning to allow burning
as well. And all of them want to allow transfers to other devices
(like portable music players, car stereos, etc.). (All the companies
recognize that portability is key...
Yes, I do believe that most people
are honest and would pay a reasonable amount for convenience
and quality. What I also believe is that it doesn't take much for
people to justify not paying.
If it's a major artist, they say "they're already rich enough."
If it's an unknown artist, they say "I'm doing her a favor by promoting
her work." But in the end, convenience will count for a lot; and
security will count for even more...
Read the chat transcript in its entirety on Blogcritics.org
here.
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BY PAUL MALONEY
Proponents of the notion that webcasting encourages
CD sales now have more ammo for their fight: a study
which
indicates that heavy users of streaming media buy over
50% more CDs than average consumers.
The study from Arbitron
and Edison Media Research,
called "Internet 9: The Media and Entertainment World of Online
Consumers," found that "Streamies," defined as people
who have "watched or listened to streaming media online in
the past week,".jpg)
bought an average of 21 CDs in the past year, compared to 13 for
the average American.
The major recording labels' industry group, the RIAA,
while acknowledging that radio airplay is a crucial benefactor to
CD sales, has insisted that specialized Internet radio would cut
into their members' sales. In a press statement, Arbitron Webcast
Services vice president and general manager Bill
Rose (pictured left) said, "While some in the record
industry have viewed streaming as a threat, this research indicates
that Streamies are a very lucrative group of record buyers."
The study results are based on a survey of 2,511 telephone
interviews conducted in  July
2002 of randomly selected Spring 2002 radio diary keepers.
Arbitron is scheduled to present all the findings of this
study in a live webcast Thursday, September 5. Other topics will
include: Consumer perceptions of radio,
TV, newspapers
and the Internet; Internet access
and online buying trends; streaming (audio and video) usage trends;
streaming subscription and advertising;
usage and perceptions of local media Web
sites; and awareness and interest in satellite
radio.
Those interested in viewing the free webcast can register
at the Arbitron or Edison websites — here
and here respectively.
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From the Online Publishers Association press release: "Fourteen
top quality online content sites reported that Q2 ad sales
were up by an average of 34.2% compared to the same quarter
last year, according to poll conducted by
the Online Publishers
Association (OPA) of its member companies. Year-to-date
ad revenue grew an average of 33.5% compared to the same period
last year.
"In addition, total revenue among this group increased
an average of 36.1% in the second quarter of this year compared
to the same quarter last year, with year-to-date revenue growing
an average of 33.7%...
"The sites that participated in the poll include Bankrate.com,
Boston.com, CondeNet, ESPN.com, FoodTV.com, Forbes.com, HGTV.com,
NYTimes.com, Slate.com, SportingNews.com, Tribune Interactive, USAToday.com,
Wall Street Journal Online, and Washingtonpost.Newsweek Interactive."
Read the entire press release here.
From Internet.com's CyberAtlas: "Overall advertising
spending for the first half of 2002 rose 2.3 percent over the same
period last year, according to researcher Nielsen Monitor-Plus,
but the online part of the business declined more than 8 percent.
"Six of the nine media categories studied by Nielsen
Monitor-Plus, a service of Nielsen
Media Research, saw increases in advertising activity. Local
newspapers showed the greatest growth, at 9 percent. Hispanic TV
climbed almost 7 percent, a gain partially attributed to this year's
World Cup soccer tournament. Network, Cable, and Spot TV increased
2 to 3 percent, and Spot Radio grew by 1 percent.
"Internet advertising, which showed an 8 percent decline
over 2001, wasn't alone in the doldrums. Syndicated TV
advertising fell a commensurate amount, while National Magazines
declined slightly.
"The numbers don't exactly jibe with the latest figures
from the Interactive Advertising
Bureau, PricewaterhouseCoopers, and CMR -- although these
studies only considered the first quarter of 2002. An IAB/PWC study
released last week showed Internet advertising down an estimated
18 percent from the same period last year."
Read this entire story here.
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...
How can the two seemingly-contradictory news stories
above possibly coexist?
One possibility is this: The total number of dollars
going to all online content
sites may be shrinking. Nonetheless, advertising dollars may
be consolidating toward the high-profile sites that attract
the most traffic (and away from those which may have been "undervisited"
and overpriced), which could allow revenues of the 14 "high
quality sites" described above to increase . -- KH
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Public stations
now off line
This is from the SOS:
Save Our Streams website, which focuses the struggle
against thewebcasting royalty rates as they pertain to independent
educational and noncommercial stations. |
| KTAI-TX; KNHC-WA; KAPU-CA; WMUA-MA; WEBR-VA; WDCE-VA; KWJC-MO;
WERS-MA; KTSW-TX; WSUM-WI; WSTB-OH; WONB-OH; WXOU-MI; WZIP-OH;
WUTK-TN; KETR-TX; WRMC-VT; KSDS-CA; WNYU-NY; WSUW-WI; WEVL-TN;
KRCL-UT; WSRN-PA; KXCI-AZ; WUVT-VA; KDHX-MI; WPTS-PA; KBCS-WA;
WMHW-MI; KBVR-OR; KXRJ-AR; WDWN-NY |
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