Web Radio Copes With Paying the Piper

The Music May Slow, but It Won't Stop

The decision could affect the number of stations streaming, notes George T. Bundy, chief executive officer of BRS Media, a multimedia e-commerce consulting firm targeting radio and the Internet.

Of the approximately 4000 radio stations worldwide that stream, only about 10 percent are strictly Internet stations, he says. About 100 to 120 new stations are coming online each month, according to his company's research. Bundy is curious whether that level of growth continues in light of the ruling. But if the growth of Webcasting stations slows, that's not necessarily bad, he adds. Now, stations must consider why they want to stream and what they hope to get out of it, instead of rushing online, he says.

So, the old media law has caught up with new media opportunities. Music companies who think they lost a financial opportunity with radio broadcasting aren't cutting Webcasters the same slack. And Internet stations find they'll have to pay for their tunes.

Neither Grady nor Dube believe the industry will be affected much.

Striking a Chord

"It doesn't benefit [the recording industry] to put stations out of business," Grady says. They'll have to pay royalties, but they shouldn't be overbearing, he adds.

The largest radio station networks already have a good relationship with the record industry and will be able to negotiate the fees quickly, Dube says. Smaller stations may have a harder time, he admits; but projects and procedures are in the works to ease the way to getting a license and negotiating a fee. One group, SoundExchange, has the right to give Webcasters licenses and collect fees on behalf of the RIAA.

Mostly, record companies wanted the acknowledgement and enforcement of their copyrights, says Grady.

Still, the future of radio is on the Internet, contend many in the industry. While this decision may slow some development, it won't halt the movement.

"People [are] in it for the long haul," says Nick Wild, director of technology at House of Blues, part of HOB Entertainment. "Business won't evaporate." Because the House of Blues owns what it streams, it is unaffected by the decision.

Can't Pass Up the Web

Radio stations will keep going online, just like many other aspects of life, suggest others.

"They will have to [Webcast]," says John O. Jeffrey, an executive vice president with Live365.com, a custom Net radio service. New ventures are prompting more need for Net radio. For example, Wingcast, a shared venture of Ford Motor Company and Qualcomm, is intended to bring Internet access to cars. High-speed wireless networks are becoming more available, and handhelds are gaining the capability to play streaming content.

Internet radio will be everywhere, Jeffrey says. He expects the Internet version will eventually replace the old media model in this case.

"There's no reason to throw out copyrights just because you're on the Internet," says Giga analyst Grady. The rights of copyright holders have been tread upon for the past few years because of the Internet. But as that medium matures, the balance is being redressed, he adds. It couldn't be a free ride forever, he adds, advising the industry, "Deal with it."