From today's Washington Post: "Internet radio webcasters are hoping a Senate hearing today will renew legislators' interest in their negotiations with the recording industry over royalty fees...

"Webcasters have been negotiating since July with SoundExchange, the organization that collects royalties on behalf of music copyright owners, over a new fee schedule. Webcasters say they are growing impatient with delays in the discussions.

"'We made a royalty rate proposal on Aug. 23, and we have not heard a reply back,' said Jonathan Potter, executive director of the Digital Media Association, which is negotiating on behalf of a group of 27 large Internet radio providers. 'With this hearing we're now working to gather support for the Internet Radio Equality Act.' The House version of the bill has 143 sponsors; its Senate counterpart has five.

"SoundExchange said that discussions are continuing and that the organization has been meeting with individual webcasters to better understand their finances...

"Still, webcasters say that even if there are favorable results to the negotiations, they are hoping for long-term legislation that will force all radio platforms -- including traditional AM/FM radio, which does not currently pay any royalties to SoundExchange -- to pay the same rates.

"'We are in a strange situation of offering services that compete directly with terrestrial and satellite radio but have a different rate structure,' said Tim Westergren, chief strategy officer and founder of Pandora. 'There needs to be parity if we are going to survive.'"

Read the Washington Post article online here. See RAIN Asst. Editor Dan McSwain's analysis of the hearing in today's issue here.

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BY DANIEL MCSWAIN
For an issue that has frustratingly slipped from the high public profile it occupied just months ago, the CRB decision to impose higher royalty rates on webcasters once again had the attention of the United States Congress.

In this morning's "Future of Radio" hearing held before the Senate Committee on Commerce, Science and Transportation, members heard familiar testimony from familiar voices on a variety of radio issues [View the archived video online here].

The usual suspects, such as Pandora founder Tim Westergren and representatives for NPR and broadcasters repeated their case for adopting a solution to the CRB royalty crisis that encourages growth in the webcasting industry.

So why does it feel like the Internet Radio Equality Act, with two of the bill's Senate co-sponsors present at today's hearing, is stuck in the mud?

That's a good question which appears to have no good answer.

Congress knows the facts
When Pandora founder Tim Westergren loaded a Pandora stream over a mobile phone during his testimony, the committee members were audibly wowed at the power and versatility of the medium. Each time a witness, like Withers Broadcasting CEO Russell Withers Jr., spoke in support of vacating the CRB rates, someone from the other side of the bench would voice their support for fostering the healthy growth of fledgling Internet mediums.

By now, Congress has heard the arguments. When Westergren cringed at the thought of shutting out Pandora's 9 million registered users, he wasn't telling anyone in the stands anything they didn't already hear from Pandora's listeners and the tens of thousands of other constituents who have voiced their support for the IREA.

Westergren's statistic that "Pandora listeners are 3-5 times more likely to buy music than the average American," may have provided supporting information for webcasters' arguments, but it's not a blockbuster figure that's likely to move the IREA needle. Ditto for his insistence that Pandora is "losing money hand over fist," true as it may be.

The bottom line is that webcasters and their audiences have done an exceptional job of educating Congress on the issue at hand. Congress, which often times has appeared completely uneducated about media technology matters, seem to be working with a better knowledge of this complex issue than many might expect.

Hearing also confirms Internet's "sexiness"
Take, for example, Chairman Daniel Inouye's (D-HI) acknowledgment that "radio is not as sexy as the Internet or other media before us," or his bewilderment at the fact that a piece of 1990's media tech legislation that only contained the word "Internet" a scarce three times. Sen. Byron Dorgan (D-ND) similarly defended the medium, praising the value of diversity of programming found in online radio and demanding a solution to the CRB crisis.

The only plain example of confusion on the issues came when Sen. John Sununu (R-NH) conflated the topic of performance royalties paid by online webcasters with the coming legislation to impose a similar royalty on terrestrial broadcasters. When Withers asked the Senator to clarify exactly which medium's royalties were in question, the Senator replied, "What's the difference?".

While that sort of flub is certainly discouraging, it does appear to be below par for Congress' current understanding of the webcasting business.

Hope for webcasters?
The hearing was brief, clocking in at just over an hour before committee members rushed out to a vote on the floor. But the hearing's closing statements from Sen. Claire McCaskill (D-MO) were perhaps a good sign for webcasters whose fate now lies largely in the hands of Capitol Hill.

"I find my listening habits have changed remarkably since I've gotten decent headphones for my computer," said McCaskill. "The sound is remarkable, and its so convenient, and so easy. I got this from my kids. They said, 'Mom, get a life. Quit turning on the radio at home, listen on the Internet.'"

The Senator's subsequent question, which asked how webcasters could possibly succeed when saddled with royalty obligations far higher than those faced by their competitors, went unanswered as the hearing was adjourned.

What webcasters need now is someone in Congress with a good answer.

From Radio-Info.com: "Howard Stern is #1 on Sirius -- his 'Howard Stern 100' is the only channel there to break 1 million in cume, with over 1.2 million listeners, and an average quarter hour audience of 96,700. The 'Howard Stern 101' channel is #2 in cume (502,000) and AQH (30,700)...

"Arbitron's basing these first-ever 12+ satellite radio listening estimates on the Spring 2007 book, and it shows that XM's reaching more people, overall, than Sirius. XM has a cume of 10,332,990, and Sirius is at 6,595,000...

"Just one XM channel breaks 1 million in cume, and it plays the hits -- the 'Top 20 on 20' channel. Country is also doing well on XM: 'Willie's Place' does 437,000 cume and 24,900 AQH...

"The release from Arbitron is the first time the public has seen the channel-by-channel audience for satellite radio."

Read Radio-Info's entire account here. Arbitron's public release of the satellite radio numbers is here (.pdf format).

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