Net radio stay of execution really a stay of suicide

Stan Beer
Monday, 16 July 2007 17:43

Opinion and Analysis

It is a testament to the confused state of the US music industry and the political vacuum in which US lawmakers exist. Recording companies have been handed the power to crush the emerging US Internet radio business out of existence but the all powerful recording moguls have been exposed as being too frightened to act on their threat.

The fact of the matter is that the punitive royalty fees on Web radio sought by the recording industry's enforcer SoundExchange and granted by the Federal Government's Copyright Royalty Board is potentially as devastating to record makers and artists as it would be to Internet broadcasting.

There is not one doubt in the world that Internet is the radio broadcast medium of the future. It offers a potential range, reach and variety of channels simply not possible using the limited bandwidth and power of traditional wireless broadcasting.

For musical artists, Internet radio offers possibilities to reach audiences in places and times that are closed to conventional radio and it's only going to get better and more ubiquitous. Right now,  Internet radio is but a pup turning over a few million bucks a year. By the end of the decade, however, it could easily be a multi-billion dollar monster.

Of course everybody, including the recording industry knows this. Record companies promote their music through conventional radio. They beg radio stations to play their music. The last thing record companies would ever contemplate is asking radio stations to pay royalty fees on the music they push out to their audiences. It would be analogous to asking websites and TV stations to pay advertisers to run ads. If it were legal, they would pay selected high rating disc jockeys to play their music.

So why should Internet broadcasters pushing music out to audiences be treated differently to conventional radio broadcasters? The short answer is they shouldn't. The reason that they are is that they are new and not powerful or organized enough to hold sway over content providers - yet. Even the bigger Internet broadcasters don't rake in much money at present. However, the potential audiences are huge, so the advertising money will come and as will content providers begging to get exposure on the most trafficked Internet broadcasting channels.

The argument being put forward by SoundExchange that Internet broadcasters need to implement copy protection on the music they push out is a furfy. Listeners have been illegally copying music off FM radio for decades. Unfortunately for artists trying to make a buck out of their talent, there will always be illegal copies and downloads of good music. However, the best way to combat that is to provide good legal download services coupled with great promotion of music through the Internet.

So why has SoundExchange pulled back from its threat to drown Internet broadcasters in a financial quagmire? When you have Internet broadcasters like Pandora and Yahoo Music who can irrefutably demonstrate that they reach millions of listeners with your products each day, putting them out of business is like committing suicide.