Internet Radio Stays Alive – For Now

netradio.jpgSunday, July 15 was destined to be the “day the music dies,” but as the sun rose Monday morning, Live365.com, Pandora, MVY Radio and other webcasters were still streaming.  On Thursday, the nascent Internet broadcasting industry emerged alive from a closed-door meeting convened by Massachusetts Representative Ed Markey, yet still facing an uncertain future.

At the meeting, Sound Exchange the industry group responsible for collecting royalty payments, verbally promised to refrain from enforcing revised rates ordered by the U.S. Government’s Copyright Royalty Board last April.

Additionally, Sound Exchange offered to cap fees for smaller webcasters at $50,000 per year – the original judgment mandated a $500 per channel fee.  Many web stations allow their listeners to create hundreds, often thousands, of personalized music streams.  They faced multi-billion dollar royalty payments. Large providers like AOL, Yahoo! and Rhapsody were expected to start paying immediately; the fees are retroactive to January 1, 2006.
A motion to delay implementation of the new rates was denied by an appeals court Thursday. This left webcasters looking to mounting Congressional pressure to address the inequities of the fee structure, which most webcasters claimed would force them out of business.  The July 15 deadline had been extended from May 15, and on Thursday a bill to move it out another 60 days was offered in the House.

Legislative responses to the rate increases had been filed soon after the CRB decision. The Internet Radio Equality Act, introduced April 26, has attracted 134 co-sponsors, including Carol Shea-Porter.  The New Hampshire representative was an early supporter of the legislation, saying in a statement that the hike “would have a devastating effect on millions of listeners.”
A similar law was also under consideration in the Senate, but on Tuesday, Judiciary Committee Chairman Patrick Leahy expressed hope that cooler heads would prevail.
“He’s been encouraging all the parties to calmly work towards private settlements on the rates, and there has been progress,” said Leahy spokesman David Carle.  “The parties are still talking, and we’ve heard from webcasters that there’s optimism about the final deal on royalties being reached.”
Jay Inslee, the Washington representative who submitted the House bill, agreed. An Inslee spokesperson told Congressional Quarterly Wednesday that “for Jay, the number one thing is reaching an agreeable solution to both sides, where artists feel like they’re being compensated fairly and webcasters can have a sustainable economic model.”

Even though the world of Internet radio breathed a sigh of relief Friday, all was not sanguine.   Sound Exchange’s promise was too vague, said AccuRadio’s Kurt Hanson, and wasn’t even offered in writing.  Referring to Internet advocacy group SaveNetRadio.org’s “countdown clock” to the rate hike, Hanson cautioned, “during this period of negotiations, I would probably set it at ‘2 days and holding.’”

A press release issued by Sound Exchange announcing their decision also raised concerns.  The fee cap, said the statement, was conditional upon stations working “to stop users from engaging in “streamripping” – turning Internet radio performances into a digital music library.”

The recording industry has long fought illegal file trading. But streamripping, the practice of recording songs from an Internet station, is similar in practice to a VCR.  “All you’re doing is time-shifting,” wrote Salon blogger Farhad Manjo – something that’s perfectly legal.  But he worried that web stations fighting for their lives would agree to industry demands for technical steps, such as lowering bit rates and interrupting songs mid-track, to make duplication more difficult.

“You have to wonder if the recording industry — now that it’s got webcasters locked in negotiations for their future — will have any trouble imposing such reduced-quality streams,” wrote Manjo.

Local Rhythms – A Day Without Net Radio

radio1.jpgSince I wrote about the threat to Internet radio a few weeks ago, things have gotten worse for music streamers like Last.fm and Pandora. The Copyright Review Board (CRB), which sets the cost paid to content owners, refused to hear an appeal to a rate increase that stands to shut down a lot of music streams.

Net stations have turned their attentions to Congress, which is showing signs of action, but D-Day is July 15. That’s when retroactive hikes, amounting to more that triple the current rates, kick in. It should be noted that these are fees paid ONLY by online radio operators.

When that happens, many web sites will have but one option – to shut down.

This is dire, not only for net radio, but for artists who’ve given up on the mainsteam as a way to build exposure. That’s the reason for next Tuesday’s “Internet Radio Day of Silence.”

Many prominent webcasters have signed up, though participation from big terrestrial players like Clear Channel is not yet forthcoming. This may change, as Sound Exchange, the music industry agency that successfully won the CRB case, is making noises about trying to raise the “performance rates” paid by terrestrial and satellite operators.

I suppose for some readers, this is all a bit esoteric, but then again so were compact discs in 1984. But if the leading edge of technology is destroyed before it has a chance to become mainstream, everybody loses.

For example, what if the movie studios had won their lawsuit against Sony’s VCR and made it illegal to record movies from your television?

So much stands to be destroyed in the name of protecting an industry that has proven time and again to be its own worst enemy. In a few days, you’ll have a chance to witness where this short-sightedness leads.

Cell phone networks are becoming fast enough to support Internet radio streams, yet this ruling, if it stands, means few if any will ever get started. Those that do will probably play it safe to reach the lowest common denominator.

I’ve already got too many of those in my car.

Great music comes from bending rules and breaking barriers. The Internet is the only truly nurturing environment for the few cultural revolutionaries still in our midst.

Shutting it down doesn’t make sense.

So when Tuesday comes, listen to the silence and ponder what it means. In the meantime, check out these live music choices:

Thursday: Tuck Stocking, Gusanoz – Cinco de Mayo is to this place what St. Patrick’s Day is to Salt Hill, an excuse to celebrate all week long. Tonight, one of the best young guitarists in the area steps up. Tuck provided the secret sauce on Syd’s first record, and his work on the Conniption Fits’ latest helped to turn their new album into a regional hit.

Friday: Sol Y Canto, Lebanon Opera House – This Latin-flavored combo will be busy today, performing two educational shows early Friday morning, and playing with the Upper Valley Music Center’s Children and Youth Chorus at 7 PM. Buoyed by Rosi and Brian Amador, the band’s name means “Sun and Song.” With Rosi’s redolent singing and Brian’s expressive Spanish guitar stylings, it’s a sound that’s as hot as good salsa.

Saturday: Joey Leone’s Chop Shop, Claremont Opera House – Will the plaster stay on the walls? Can the old opera house stand the shock of the rock? We’ll see when Leone takes the stage. Over the course of his two-hour set, Joey channels everyone from Zeppelin to ZZ Top. Lonnie Youngblood calls him the best guitarist he’s played with since Hendrix, and fans pack the ski resorts whenever he plays.

Sunday: Ronnie Milsap, Paramount (Rutland) – He established his bonafides with hits like “There’s No Gettin’ Over Me”and “I Wouldn’t Have Missed It For The World.” I was reminded of how talented Milsap is when Joan Osborne recorded his Grammy-winning hit, “Please Don’t Tell Me How the Story Ends” on her most recent album. This, my friends, is the Nashville Sound. If you love it, Ronnie’s your man.

Tuesday: Wailin’ Jennys, Iron Horse – As Pete Townshend said, all the best heroes have Chinese Eyes, and all the best Americana comes from Canada. Rough-hewn and utterly charming, this trio got a nice nudge from regular appearances on “A Prairie Home Companion.” Their music is a mix of Dixie Chicks harmonies, rustic overtones and some seriously sweet picking.

Wednesday: Terry Diers, Canoe Club – Like a lot of area musicians, Diers wears a few hats. He plays with the rock bandk Skinxs and does bluegrass with Celtic hammered dulcimer player Samantha Moffatt. Tonight, he plays solo on several instruments – 6 & 12-string guitar, mandolin, and even a little piano.

In RIAA Protest, Chicago’s 9 FM Bans CD Giveaways

In a post-millennial update to the Loop’s legendary 1979 “Disco Sucks” record-smashing party, NewsWeb Radio Company’s 9 FM in Chicago has banned CD giveaways and invited any and all past winners to return their discs; they’ll get a station T-shirt for their efforts. Via FMQB:

“When I read that the RIAA and SoundExchange needed money so badly that they were going to price gouge independent Web streamers and radio stations who stream online, I knew we had to do our part,” said Matt DuBiel, Director of Programming for 9 FM. “In the face of the RIAA’s struggles, it just doesn’t seem fair for us to be giving away CDs (for free) to music fans fully capable of paying for the music themselves. We’re inviting everyone who has won a CD from 9 FM or any other radio station in Chicago this year, to return it to us and we’ll exchange it for a 9 FM t-shirt and give the CDs back to the RIAA. Radio stations need to be able to stream online affordably.”

One piece of advice to fans sending back their discs – be sure to rip them to MP3 first!

Internet Radio/Copyright Royalty Board Update

edison at phonographVia RAIN, still the best source for information on the Copyright Royalty Board’s ongoing effort to kill Internet radio, comes word that the brains behind the CRB operation is, well, dumb. The Washington Post quotes CRB’s chairman, “Scarecrow” John Simson:

‘The attitude that really has to change is the idea that the people playing this music on the Web are somehow doing artists a favor,’ Simson says. Artists want their music to be heard, of course,… but Simson rejects the popular notion that the only thing small webcasters owe artists is the exposure they get from having their work streamed over the Internet…

It’s called promotion, John. Passionate music listeners, making little or no money, spread the word to others. It sells, music, exposes unknown bands, and its exponential growth should be cheered. Here’s how webcaster Adrian Koren described it to the New York Times:

“I run this as a hobby,” Koren says. “I get virtually no income from this — just some small fees from my share of CDs sold through links on the site, and that just helps pay for a few CDs. Copyright law should encourage innovation. If it’s having the opposite effect, something’s wrong.”

What’s really puzzling to me is that hardly anyone is pointing out that for indie bands, the Net represents a way around the old paradigm, a world that’s forced good bands to break their records through iPod commercials and episodes of “Heroes.” That, apparently, is the way Scarecrow thinks the world should work:

Is 10,000 stations the right number?’ asks Simson of SoundExchange, which sought the higher royalties. ‘Does having so many Web stations disperse the market so much that it hurts the artist? What’s the right number of stations?… Are artists better off having hundreds of listeners on lots of little stations, or thousands of listeners on larger stations?’

Yeah, the “thousands of listeners on larger stations” is working SO WELL to sell CDs, isn’t it? A New York Times article points out that the CRB decision will sit fine with dinosaurs, but independent bands will inevitably suffer:

“Internet radio operators also say it would not be in the interest of labels to stifle a business that is paying them fees to use their music, especially at a time of declining CD sales. ‘That’s counterproductive to the copyright holders,’ said Terry McBride, chief executive of the Nettwerk Music Group, a label and artist-management company, adding that the ruling could be bad for performers whose music would not be played on conventional radio.”

Nice to hear McBride, a real maverick in the business. But the industry isn’t interested in up and coming bands. RIAA has always been a dinosaur protection racket, for both musicians and executives (mostly for the latter).

The CRB is just one more political face of the enemy – of music fans, indie bands and pretty much anyone who isn’t clinging to the old order.