• PC World
• » Tech Industry

Web radio is hearing a change of tune. The musical aspect of the young streaming media industry is coping with a new song from the U.S. Copyright Office, which is now requiring terrestrial radio stations that stream music on the Net to pay a licensing fee to the recording industry.

"Radio stations were disappointed because they already thought they had the rights," to do Internet broadcasts, says James Grady, an analyst with Giga Information Group. Internet-only stations have always paid a fee. The traditional stations that also have a Net presence must now pay fees retroactive to the 1998 passage of the Digital Millennium Copyright Act. Fees must be negotiated with the record companies, so many players can't even figure out what they owe.

Traditional radio stations already pay a fee to broadcast music over the airwaves. It's a preset performance fee paid to songwriters through organizations like the ASCAP and BMI. The new fee covers copyright licensing, and goes to record companies and, through them, to the artists.

The only real consensus in the industry on the decision's impact is that it levels the playing field between terrestrial radio stations and purely Web-based stations. Now both groups pay the same fees to stream content on the Net.

Beyond that, opinions are divided.

The Copyright Blues Continue

Maintaining harmony between the broadcasters who want to play popular tunes, the artists and music companies who get exposure for them, and the legal issues of paying to use copyrighted material is an ongoing tune for those in the industry.

When radio joined the scene more than 70 years ago, record companies considered imposing a copyright fee, since radio was using their property and making additional money by selling ads. Radio broadcasters persuaded record companies to skip the fees because the on-air promotions would bolster record sales (and bring money to the music companies). A precedent was set. When MTV burst onto the airwaves, it negotiated a similar deal.

But as both radio and music television grew, record companies decided they were cheated out of potential profit, says Ric Dube, analyst with Webnoize. By the time Webcasters came around, the record industry wasn't feeling at all generous.

Besides that, they're afraid that the ease of copying the digital format could lead to widespread pirating of Webcast music, which could diminish sales.

Sounding Discordant Notes

The net result could mean fewer stations will go online, says Eric Sheirer, analyst with Forrester Research. Some who are already Webcasting may opt to go offline while they sort out how much it will cost and whether they can afford to pay.

"You will lose some folks who can't play," agrees Rocky Thomas, manager of affiliate relations at SonicBox, a service that aggregates different Internet radio stations for broadcast through its site or on custom hardware. Some station managers are anxious because profits are low in this closing quarter of the year, and they're wondering how they'll be able to pay the fees, she says.

The Recording Industry Association of America (RIAA) has not made it easy to comply, she contends. And it's still not clear how to comply for certain types of music, such as foreign recordings or obscure, niche audio, she says. The ownership of some of these recordings is difficult to determine.

• See more like this:
• music,
• streaming,
• Webcast,
• streaming media