Internet Radio Goes Black June 26. Thoughts.

By Richard Menta 6/24/07

1999 seems so long ago and then again not so long ago. That was the year that I had my first taste as an internet DJ with a now gone, but brilliant application called MyCaster, which I reviewed.

The beauty of MyCaster was a simplicity that allowed even the least technical Net surfers to broadcast their own internet radio station to the world. MyCaster was essentially an audio player exactly like Winamp, but with one simple addition. As the user listened to tracks on the player, it sent a simultaneous stream to the MyCaster server. The server then amplified the feed and posted it on the MyCaster Website where others could click onto the stream to listen to it. Instant Internet Radio!

SanDisk View is available on Amazon

It took me less than 10 minutes to post my own Net radio station, a station that unlike terrestrial radio has a worldwide reach. Hobby webcasting was born and I still find it to be one of the most illustrative examples of how the internet lowered the costs of distribution to the point where a pre-teen can build a sizeable audience of listeners for less that the cost of their weekly allowance.

And that was the problem for the media conglomerates. They did not want potentially millions of non-profit webcasters becoming the tastemakers of the world. They wanted a few large corporations to dominate it all, because then the flow of content could be far more reasonably funneled in a way that ensured robust revenue streams could be layered in, prices could be controlled and pushed as high as possible, profits were maximized, and the competitive advantage would be weighed in favor of major label artists to prevent independents artists and labels from using the new technology to gain market share a their expense.

The major labels had the foresight to push the passage of a law that required new fees for Internet radio, fees beyond those already collected by publishers and which are not required for terrestrial radio stations. The goal of the conglomerates - both the record labels receiving the money as well as the terrestrial radio networks and even cash-rich Internet portals who have to pay it - was to push high fees as high fees would have a side effect of serving as a barrier of entry into the budding webcast game. Ideally, they wanted a barrier so high that only those entities with deep pockets could continue to participate. Everyone else from college radio stations to small Net startups would be knocked out. Non-profit home or hobby webcasting in the US would be destroyed altogether.

The law required the Library of Congress (LoC) to set these fees. In June of 2002, music historian Dave Marsh wrote in CounterPunch:

The LoC actually played into the hands of both the RIAA's five member label cartel and the big webcast powers. It did this by using as its royalty model the agreement struck between Yahoo! and the RIAA. This meant rejecting a rate based on percentage of webcasts, like that which songwriters and music publishers get from both broadcasters and webcasters. The per-song standard ensured an amount of money owed far beyond what any small webcaster can pay. Since the rates are retroactive to 1998, some web stations owe several hundred thousand dollars each, payable in October. Smaller webcasters like SomaFM, French ambient station BlueMars, and Tag's Trance Trip folded before the ink dried on the decision.

The small webcasters have been fighting ever since, but that fight took a note of urgency this year when the LoC's Copyright Royalty Board increased fees dramatically for all stations. Furthermore SoundExchange, the organization set up by the RIAA to collect fees for artists, convinced the LoC to allow it to demand an additional $500 per "channel" every year just to cover their administrative costs.

SoundExchange also threw in another monkey wrench that caught the ire of webcasters by claiming that they have the right to collect fees from non-SoundExchange members. If your stream only plays the music of independent artists who waive the fees from webcasts to gain visibility, SoundExchange says you still have to pay them the full tab. From Slashdot on April 29, 2007:

"With the furor over the impending rate hike for Internet radio stations, wouldn't a good solution be for streaming internet stations to simply not play RIAA-affiliated labels' music and focus on independent artists? Sounds good, except that the RIAA's affiliate organization SoundExchange claims it has the right to collect royalties for any artist, no matter if they have signed with an RIAA label or not. 'SoundExchange (the RIAA) considers any digital performance of a song as falling under their compulsory license. If any artist records a song, SoundExchange has the right to collect royalties for its performance on Internet radio. Artists can offer to download their music for free, but they cannot offer their songs to Internet radio for free ... So how it works is that SoundExchange collects money through compulsory royalties from Webcasters and holds onto the money. If a label or artist wants their share of the money, they must become a member of SoundExchange and pay a fee to collect their royalties.'"

The small webcast community exploded over these changes and interpretations, which leads us to the conflict we have today. The webcast community recently lobbied for the introduction of the Internet Radio Equality Act to bring balance to what they see as an unjust situation. In a show of solidarity webcasters will go silent on Tuesday June 26. According to Kurt Hansen's radio and Internet Newsletter, joining this blackout is none other that Yahoo itself. This goes to show how dramatic the new fees have gone up as well as the fluidity of the landscape and its participants.

The Day of Silence is designed to bring awareness to these issues. It is already picking up major press with the buzz online very high. So far online posts on the story, like this one at Slashdot show overwhelming support for the webcasters.

Personally, I'm still bugged about the death of hobby webcasting in the US. That's why I support them too. But it will be a tough fight. With CD sales dropping precipitously, the major labels are more determined than ever to drive strong revenue from other sources. For the webcast landscape that means they will want more control, not less.

Other MP3 stories:
iPhone Poll Says 9% of Cell Users Want It
iPod Killers for Summer 2007
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HD Radio Effort Undermined by Weak Tuners in Expensive Radios


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