Internet Audio and the Smallest Step Forward

Some many months ago, I railed against the Downing of Internet Radio--an effort that A) pays artists and labels fairly for the use of their work or B) jacks up royalty rates to such an extent that some consider this nothing less than an attempt by representatives of the music industry to price webcasters and services such as Pandora off the Internet. Since I penned that article, little had changed until this week. The rate hikes haven't yet been imposed, thus allowing webcasters to continue operations. But Pandora and others suggested that should those rates come about, they would be forced to close shop.

This week, however, there's been a slight movement on this front, though not the kind of movement necessary to guarantee Pandora's or webcasters' future. The Digital Media Association (representing such large outfits as Napster and Rhapsody) and SoundExchange (a division of the RIAA responsible for collecting royalties) have come together to settle a portion of the royalty issues.

Specifically, if the agreement is approved by the Copyright Royalty Board (the panel of three judges who concocted these usurious fees), subscription services such as Napster and Rhapsody, that allow users to rent their music as long as they continue paying the subscription fee, and interactive streaming services--those where the user chooses the music rather than having an entity such as Pandora choose it for them--will pay a royalty of 10.5 percent of their overall revenue. This is more than satellite radio outfits such as XM and Sirius pay, but far better than the per-track-poke-in-the-eye that the Copyright Royalty Board had imposed.

While DiMA and its clients may be breathing a sigh of relief, this action does nothing for broadcasters who push playlists to listeners in the way terrestrial radio does. These broadcasters, which include not only Pandora, but also traditional radio networks such as NPR and your local rock station, continue to face draconian per-track royalty rates. California Congressman Howard L. Berman has been working to negotiate a deal between SoundExchange and webcasters, but little progress has been made.

I understand your local representatives are busy with their accountants this week, but once they've packed up their abacuses and snake-oil, you might launch a letter their way suggesting that nothing cheers up a long wait in a soup line like Internet radio streaming to an iPod touch.