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Internet Radio's "Last Stand"
Posted by
kdawson
on Sat Aug 16, 2008 03:20 PM
from the see-i-told-you-there-was-a-wolf dept.
from the see-i-told-you-there-was-a-wolf dept.
We've been discussing the plight of Internet radio for some time, as the Copyright Royalty Board imposed royalties that industry observers predicted would prove lethal to the nascent industry. We discussed Web radio's day of silence in protest, which won the industry a reprieve, and the futile efforts to find relief in Congress. Now it's looking as if the last act is indeed close. Death Metal Maniac sends along this Washington Post story with extensive quotes from Pandora CEO Tim Westergren, who said: "The moment we think this problem in Washington is not going to get solved, we have to pull the plug because all we're doing is wasting money... We're funded by venture capital. They're not going to chase a company whose business model has been broken." The article estimates that XM Satellite Radio will pay "about 1.6 cents per hour per listener when the new rates are fully adapted in 2010. By contrast, Web radio outlets will pay 2.91 cents per hour per listener." That's 70% of projected revenue for Pandora; smaller players estimate the hit at 100% to 300% of revenue.
Related Stories
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New Royalty Rates Could Kill Internet Radio 273 comments
FlatCatInASlatVat writes "Kurt Hanson's Radio Internet Newsletter has an analysis of the new royalty rates for Internet Radio announced by the US Copyright Office. The decision is likely to put most internet radio stations out of business by making the cost of broadcasting much higher than revenues. From the article: 'The Copyright Royalty Board is rejecting all of the arguments made by Webcasters and instead adopting the "per play" rate proposal put forth by SoundExchange (a digital music fee collection body created by the RIAA)...[The] math suggests that the royalty rate decision — for the performance alone, not even including composers' royalties! — is in the in the ballpark of 100% or more of total revenues.'"
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Technology: Internet Radio Will Go Silent on June 26th 250 comments
Spamicles writes "Thousands of U.S. webcasters plan to turn off the music and go silent this Tuesday, June 26th, to draw attention to an impending royalty rate increase that, if implemented, would lead to the virtual shutdown of this country's Internet radio industry. In March, the Copyright Royalty Board announced that it would raise royalties for Internet broadcasters, moving them from a per-song rate to a per-listener rate. The increase would be made retroactive to the beginning of 2006 and would double over the next five years. Internet radio sites would be charged per performance of a song. A "performance" is defined as the streaming of one song to one listener; thus a station that has an average audience of 500 listeners racks up 500 "performances" for each song it plays."
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Net Radio Wins Partial Reprieve 96 comments
Joren writes "Just a few hours after our last discussion on this topic, Wired News is reporting that Internet radio broadcasters have won a temporary reprieve from the new rates. Apparently the details are still being worked out. 'A coalition of webcasters have worked out a deal with the recording industry that could temporarily stave off a portion of crippling net radio royalties set to take effect Sunday, according to people familiar with the negotiations ... For now, the parties involved in what's described as ongoing negotiations have agreed to waive at least temporarily the minimum charge of $6,000 per channel required under a scheme created by the Copyright Royalty Board, or CRB. The deal, brokered late Thursday, is not final and could change. One person involved in the talks described the situation as a reprieve, and said that internet radio won't be saved until a workable royalty rate is set.'"
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Politics: Internet Radio's 'Second Chance' Bogging Down in House 105 comments
An anonymous reader writes "Wired is reporting that the Internet Radio Equality Act is failing fast in the House, with negotiations breaking down over fair pricing for internet radio broadcasters. 'A legislative setback could make it harder to dislodge the new fees, which took effect last month after a federal appeals court refused to postpone the payment deadline. With the threat of congressional backlash fading, SoundExchange could find little incentive to budge from its current position ... SoundExchange has already proposed changes that could relieve small and custom-streaming sites from charges they could not possibly afford to pay, at least in the short term. Many expect a small-webcaster deal to be done by early September, when Congress goes back into session. But the deal on the table hasn't changed since SoundExchange extended an offer in May to charge them 10 percent of gross revenue under $250,000, or 12 percent of gross revenues over $250,000, with a revenue cap at $1.25 million.'" All very cushy for SoundExchange. Wired also points out that this is the same organization illegally lobbying for terrestrial radio royalties through 'third party' shell groups.
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Copyright Board Lawyer Responds On Pandora's End 174 comments
mattnyc99 writes "A month ago we talked about the impending death of streaming music site Pandora thanks to a very backwards fight over royalties. PopMech follows up with an article that, besides noting how insane it is that Pandora has to pay record labels for the bad songs that users skip, also gets the (three-member) Copyright Royalty Board to try and defend itself about why the government is determining royalty rates for the music industry. Quoting: 'It was uninvited,' says Richard Strasser, senior attorney for the Copyright Royalty Board. 'I don't think anybody was jumping up and down with joy in the government that they have this responsibility, but the former systems just weren't working out.'" No one seems to be trying to defend or explain why Internet radio is being hit so much harder than satellite or broadcast.
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The day the music died (Score:5, Funny)
(I have to pay $0.08 for every person reading this post because of the subject.)
Re:The day the music died (Score:5, Interesting)
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Pirate Radio?? (Score:5, Interesting)
You know, it seems that we need to try to take lessons maybe from the Pirate Radio stations of the past and present that operate on the fringe, or in areas untouchable by the powers that be.
Too bad we can't do some kind of distributable P2P type application, that would allow anyone to run streaming music/video into the ether....but, is untraceable as to origin. Some type of freenet type thing for streaming content. That way, anyone could set up a Pirate Internet Radio Station (PIRS ?).
Is anything like this possible I wonder?
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Re:Pirate Radio?? (Score:5, Insightful)
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Re:Pirate Radio?? (Score:5, Interesting)
Yes, because at this moment it's not [fragmentmusic.net] possible [mono211.com] to create [thinner.cc] free music [uran97.com]. We totally need a network for that sort of stuff, which will also somehow solve the problem of Internet radio dying.
Parent
Re: (Score:3, Informative)
You forgot Dance Industries [dance-industries.com] and Jamendo [jamendo.com].
Re:Pirate Radio?? (Score:5, Informative)
Trouble is...they way things stand as I understand it...even if you play ONLY indie, free music, you are still subject to SoundExchanges fees. I think they collect even for people not registered to them....the laws passed were pretty sweeping if I recall from older Slashdot discussions on this.
So, to get by even that...I was thinking of some kind of Pirate Network Radio thing on a P2P or Freenet type network.
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Re:Pirate Radio?? (Score:5, Insightful)
However, I'm pretty sure U.S. laws still only apply to operations actually *in* the U.S., unfortunately, all of my favorite Internet radio stations are in the U.S. Despite that, there are many good stations out there that are not located in the U.S., worst case scenario I'll have to switch to one of them. (There's some good indie metal coming out of the Nordic countries these days anyway and I've always had a liking for some of the grungier J-rock)
I see no reason why "pirate" Internet Radio hasn't already sprung up all over the place. Find a host somewhere overseas who offers cheap bandwidth and set up a paypal account for your donations. It's easy enough to configure your sample rates and maximum allowed connections to keep under your hosts bandwidth cap. The only problem I can think of is finding a very cheap host who allows you to set up a Shoutcast/Icecast what-have-you server. I've oft been tempted to do just that myself, if only for my own use, but it strikes me as a way of going broke slowly. (Which is what i gather many of the existing Internet Radio stations are doing anyway.)
One last thought, I find it weird as hell that record labels have gone from paying DJ's to play the songs they felt needed promotion (Payola" [wikipedia.org]) to having to hit the DJ's over the head with a legal club to force them to pay for the privilege of promoting the band's material. They've cleverly but evilly managed to turn a marketing and promotion expense into another revenue stream, and it's one I have no doubt that the artists themselves don't get a piece of.
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Re:Pirate Radio?? (Score:5, Insightful)
... even if you play ONLY indie, free music, you are still subject to SoundExchanges fees.
That, above anything the recording industry has done-- aside from possibly the litigation/extortion campaign-- gets my goat. The nerve of those people, claiming to collect royalties for people who didn't ask for compensation of any sort. The fact that Congress let them collect and pocket indie music royalties, at rates decided by a few appointed-by-RIAA judges, is one of the best examples of how truly evil the recording industry is.
I have to ask those of you who are artists, lyricists, composers, and managers trying to scrape by under the cartel labels: Seriously, what makes you think that the execs who green-lighted the driftnet lawsuits, or the suits at SoundExchange with nothing better to do than sue people who play loud boomboxes in garages, give a rat's ass about how you're struggling to make a fair living? I'm betting that in order for you to get their full promotional and distributive services, you have to sign away the copyrights to your songs and become contractually obligated to make more at a factory's pace. Meanwhile, their lobbyists continue to tell Congress that a human's lifetime plus a half is still not enough to recoup the losses-- they want the copyright term to be longer and more indefinite. They're not going to let your work go where it can be seen or heard by everyone, they want to be the gatekeepers who dictate who gets to hear your works, when, and for how much. All they have to do to keep the prominent artists on their side is to entice them with lots of money and swag, and all they have to do to keep the lesser-known artists is to handcuff them with the contract, and/or feed them the RIAA propaganda that even a fleeting reference is a stolen song.
That a judge hasn't struck down the Bono amendment to the Copyright Act as unconstitutional, or the fact that SoundExchange essentially makes money off the backs of all musicians has not been challenged in the judiciary, is appalling on many levels.
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Re:Pirate Radio?? (Score:5, Interesting)
Last time I checked, more avant-garde music was exactly what the world needed. What, were you looking forward to Britney Spears' comeback single or something?
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It looks like they've already gotten started (Score:5, Informative)
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Re:The day the music died (Score:5, Insightful)
Now though... I work from home, I don't have a stereo with a radio in it. My only radio is internet radio. This is garbage. Ironically this will mean that RIAA and the like will be getting much less of my money. I'll be finding fewer bands whose music I like, buying fewer CDs as a result and they'll be getting no revenue from the Internet radio I listen to. I'm not sure what makes them think this is a good business choice.
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Re:The day the music died (Score:4, Informative)
I'm not sure what makes them think this is a good business choice.
For control of what you hear. This will also keep you from listening to independent music. It maintains their gatekeeper status. That's what it's all about.
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Re:The day the music died (Score:5, Insightful)
I've found a ton of new bands that I love, and after discovering them, I've often purchased their music,
See, there's the problem. You finding new bands dilutes the revenue stream of the big players in the music industry. Web radio reduces the value of payola, distribution control and marketing. It reduces the artists dependency on crap contracts, and gives them a larger chance of succeeding on merits.
The very flexibility and customer use of web radio is what pits it against the industry interest; it allows people to build their own taste instead of having it built for them.
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Re:The day the music died (Score:5, Informative)
Screw pandora! the internet is worldwide, they should move to terrestrial boardcast if they are going to get picky about geography.
Licensing constraints are pretty clearly not their fault. Blame the RIAA.
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What it comes down to is GREED! (Score:5, Insightful)
They also need an educational rate for colleges and schools and a non-commercial hobbiest rate for small 'bedroom' Internet stations
Re:What it comes down to is GREED! (Score:5, Insightful)
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Re:What it comes down to is GREED! (Score:5, Informative)
Obvious solution -- broadcast from Venezuela. Chavez probably won't give a rip about the RIAA.
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Re:What it comes down to is GREED! (Score:5, Funny)
Actually I have a buddy who broadcast using a server in Sweden, they don't care and if anyone busts in the bunker to get to the servers they explode, yeah they're hard core about server rights.
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Re: (Score:3, Interesting)
You're missing the point -- they aren't thinking in terms of "half of something is better than nothing" -- they're thinking in terms of stream rippers. They WANT internet radio to die.
Right aim, wrong motive... Streamed internet radio is ok on a pair of PC speakers... but hardly full quality like a good CD rip. Especially once it is put into a new format, and compressed even further. What is much more dangerous to the big labels is...UNSIGNED OR INDEPENDENT ARTISTS!
Internet radio can play anything and everything. No predefined time slots, no specific genres, and each listener can have something different. And if it is tagged and suggestion based like Pandora or LastFM, then it can sugge
Re:What it comes down to is GREED! (Score:5, Insightful)
The record companies don't want the revenue from internet radio, they want it gone. Internet radio allows easy discovery of music, something that the record industry has a pretty solid monopoly on currently. If they give up that monopoly, they risk becoming obsolete and actually having to work for their bread.
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What are they thinking? (Score:4, Insightful)
By raising the rates, they're practically ensuring that they're not only pissing a lot of people off (almost everyone I know uses Pandora, for instance), but they're taking their revenue stream and choking it to death. Tons of net radio broadcasters are going to be forced to shut down over this, and I wouldn't be at all surprised if it means that, despite the increased royalty rates, they actually make far less in fees in the long run. And that goes doubly so for Pandora, which is one of the best ways I've seen for music fans to find new artists and new styles of music they may never have considered before. So much for that revenue-boosting avenue.
Re:What are they thinking? (Score:5, Insightful)
If your mom-and-pop just plays the song once, there's no revenue to the record label from that. No great public interest is created in the song or the artist. The CRB and record labels are driving the current internet radio stations out of business to open the market up for major companies like ClearChannel to spring up their own crop of internet radio sites. Only since they'll be run by a corporate giant, they'll be more controlled and regulated to the labels' liking.
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Silly Record Execs (Score:4, Insightful)
More arbitrary fees (Score:4, Interesting)
What if I'm the owner of an internet radio station that plays only music that has become public domain through the consent of the owner or the expiration of copyrights?
Or perhaps I only like to play songs by artists who sell their CD's for less than the industry standard. Say, $5 a CD. Will my fees be lessened?
The artists really need to get involved. Laws like this are taking away more revenue than they are generating. For example, last.fm will recommend a group based on what I've been listening to. More often than not, I will listen to more of that group's music. If I like it, I find out if they are coming to a venue nearby. I go to the show and buy merchandise, because I know that's the best way to get money into the right hands.
It's kind of what I imagine FM radio used to be, but we all know what happened to that.
Re: (Score:3, Interesting)
Or perhaps I only like to play songs by artists who sell their CD's for less than the industry standard. Say, $5 a CD. Will my fees be lessened?"
The trouble is...if I recall correctly, somehow, they passed laws that anyone streaming content...is subject to SoundExchange fees...regardless of if you use RIAA or other content of providers t
Re:More arbitrary fees (Score:4, Informative)
disclaimer: i have inside connections with the bigwigs of major music labels. i despise their business model but they are good people. therefore my information below comes from their mouths
you are incorrect. any music soundexchange collects royalties for is subject to fees. an artist has to register to soundexchange in order to collect royalties. its pretty open and shut. except for this little tidbit: if you are an indy artist and a jukebox plays your music in a bar but your music is free.. soundexchange is collecting money on your behalf. your only option to ensure your music is free is to enforce your copyright and tell the bar to remove your music from the soundexchange-tethered jukebox. downside of that is your music won't be heard unless you can somehow convince the bar owner to replace the jukebox with a jukebox that allows free music to be played on it (but this creates a huge liability for the owner. see the problem?)
similar things happen with the radio, except you have to negotiate your own royalty deal with radio stations. generally they won't play music unless the general public knows who you are. the big 4 can throw money at billboards to garner interest and then pressure the radio station into playing them.
artists need to break away from the big 4. the original mp3.com was perfect for this... then they sold out and that, my friends, killed the internet radio star.
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Royalty Pricing (Score:3, Insightful)
It's such a joke. we aren't going to have free radio anywhere anymore. Hardly anyone listens to XM or Sirus (hence the merger) and the radio already has so many ads that it takes more effort than its worth to constantly flip stations.
I was going to start using Pandora off my iPhone at work and on the way to work along with my normal playlists, but I'm afraid that web radio stations aren't going to make it after this price point.
I'm sure Pandora will stick it out since 30% of it's profit, will still be profit, but most places with limited ads on their sites will either have to increase their ads or ad revenue to stay afloat and knowing how little companies like to pay for advertising space this wont work out well for them.
I'm sorry everyone who listens to music for free, but doesn't download illegally, it looks like the music industry knows no bounds in how to FUCK PEOPLE OVER.
*sad face*
*middle finger* (D.C. beltway style)
Re:Royalty Pricing (Score:5, Funny)
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This is the only way (Score:5, Insightful)
There is a point when trying to fight the society with it's own rules is futile.
Think about what this sick society orders you: You have to believe in stupid jesus, you can't smoke pot, you can't have privacy, you can't listen to music, Save on your energy use so the big industries can have more oil for them, You can't say shit on tv, blah blah blah!!!
B U L L S H I T.
Screw them, most of what we do daily to maintain some level of freedom in our lives is illegal. If you really abide by all the rules, pay all the taxes, and stick to stupid society's moral rules, YOU ARE NOT ALIVE, you become a Zombie.
I'll sniff, drink, believe, take, download, copy, share, do, read, write, think, say, modify, film and build WHATEVER THE FUCK I WANT.
Parent
Re:Royalty Pricing (Score:5, Informative)
You're confusing profit with revenue.
Profit is what is left over after you pay for servers and bandwidth and salaries and everything else.
Revenue is what you take in before you've payed for all of that.
The fees are hitting 70% of the REVENUE.
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Even satellite radio can't survive at their rates! (Score:5, Informative)
Remember that Internet radio's rates are almost TWICE as high as satellite's. The only thing I can come up with is that SoundExchange WANTS to put Internet radio out of business for some reason-that's the reason they're setting rates as high as they are!
Re: (Score:3, Interesting)
They obviously haven't worked out the model yet - traditional broadcasters don't pay nearly as much - in Australia the equivalent body takes less than 4% [apra.com.au].
How many times can you shoot yourself in the foot (Score:5, Insightful)
I've been exposed to and promoted countless new bands that I never would have heard of on my own.
A small correction (Score:5, Informative)
*US based* internet radio's last stand...
Don't forget... In the free world US laws do not apply...
Re:A small correction (Score:5, Insightful)
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Re:A small correction (Score:5, Informative)
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Re:A small correction (Score:4, Informative)
The caveat about Deezer is that it's a European operation. Deezer and other European sites offering similar services are allocating money for royalties while the European versions of SoundExchange figure out just how in the hell things are going to work.
If the royalty rates come in as expected, then great -- Deezer and their ilk will be going strong. But if European royalty negotiations go the way they have here in the US, Deezer might be the next to go.
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If you like Pandora... (Score:4, Insightful)
...then please consider paying the $3 a month to subscribe. Seriously.
I know the sentiment is that we don't want to pay for music unless it's in the form of a DRM-free, lossless file which we can give to all of our friends. We want it for $0.10 per track, and when the industry makes it available for $0.10 a track, we'll just say that we want it for $0.05 a track and go about our swashbuckling ways.
I fully understand that Pandora does not meet this requirement. It's just not their model. I just ask that you think of it it this way: does Pandora give you $3 worth of musical enjoyment a month?
Mainstream radio sucks. Supporting Pandora gives each of us a chance to be part of the solution, not the problem.
Retarding progress of science and art again (Score:5, Interesting)
This is just yet another example of how the current copyright regime is prima facia unconstitutional.
To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries
Copyright is not a property right; copyright is an agreement between the public and authors & inventors creating a privilege [wikipedia.org] of limited exclusive right as incentive for dissemination of ideas because otherwise authors & inventors have only the choice of keeping their inventions secret or sharing them that the recipient does what he or she will with the information without limitation, which is the natural right [wikipedia.org] of the recipient.
Any mechanism of securing exclusive right to the author or inventor must meet two tests to be constitutional:
An attempt [nytimes.com] was made to test the absurdly long exclusive term against the "limited" requirement and that failed because any finite term is by definition limited.
The test that must now be made is against the requirement that copyright laws "promote the progress of science and the useful arts." The burden of proof should be on demonstrating that the laws do promote the progress of science and the useful arts because copyright is a limitation on the rights of the public and therefore intrinsically a burden on society. In granting copyright society temporarily yields their natural right to a privilege offered authors & inventors, a privilege that may be revoked at any time. [uchicago.edu]
Current copyright laws do not pass the test of promoting the progress of science and the useful arts; they are a burden on innovation and have systematically retarded the progress of science and technology, strangling many significant innovations, once again with internet radio. Current copyright laws are therefore unconstitutional.
Re: (Score:3, Insightful)
I would agree if you changed that to read "patents" instead of copyrights. Internet radio is a technology; the creation of the technology is already complete, and there are still players in that market who will work on incremental i
Greed killed FM broadcast radio (Score:5, Insightful)
All the FM stations got bought out by Clearchannel and other conglomerates, and they all play the same songs broadcast from a central location. No more local DJs, no more local news, no more local weather, no more local music.
FM radio puts an emphasis on back catalog - rarely is there any new music that appeals to me. I do not care for hip hop, rap, etc. There is no variety in music, and there is a lot of music out there (esp independent labels) that is not getting played on FM radio.
Payola has pushed the independents out of FM radio. Nobody wants to admit that there is a white elephant in the room. Because the radio conglomerates have gotten greedy, the music variety suffers.
The obesity of advertising - way too much of it - has driven listeners away from FM radio. They are tired of the high ad-to-program ratio of program time. Radio conglomerates got too greedy when they consolidated all the FM stations and then tried to raise revenue through advertising.
The end result is a mass exodus of listeners away from FM radio. Many of my friends no longer listen to radio and they listen to songs on their ipods, their mp3 car radios, their internet radios, etc.
Independent labels found an outlet through internet radio and former FM radio listeners are embracing it enthusiastically. The FM radio lobby is extremely powerful and they conspired to use the royalty fees to drive the internet radio out of the market. That is not how capitalism is supposed to work.
Re:Extreme capitalism stiffles faster innovation (Score:5, Insightful)
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Re:Extreme capitalism stiffles faster innovation (Score:5, Insightful)
When laws are passed that drive a company out of business because it's no longer economical to consume their product (internet radio), that really is the government and not the consumer's fault. When a transaction is taxed for more than anyone is willing to pay for it, it stops happening legally.
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Re:Extreme capitalism stiffles faster innovation (Score:5, Insightful)
Sure, after a long time (50 years or so) the RIAA will be bankrupt and disband, but not before taking the US and any other "free" country to 1984.
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Exactly (Score:5, Insightful)
They'll claim that there will still be "radio" on the internet offered from regular radio stations. However, that is only a gimmick and advertising to promote another separate business (the original radio station), and means that an entire industry is being destroyed.
This move makes no sense other than to "test the waters" to see how far they can push business before they go bust.
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Re:Extreme capitalism stiffles faster innovation (Score:5, Insightful)
What we see in the US is not capitalism, it is corpratism, an unholy alliance between large corporations and the government. This is why you see laws created to make more profit for large companies, and bail outs from the government to large companies who lose a substation amount of capital due to bad business practices.
If we had real capitalism in this country, even capitalism with regulated markets (you know, laws to live by, like every other Individual has to follow) we would have a lot more innovation and new industries would rise up over night because they do not have to contend with being killed in the crib by a new law passed to favor established markets.
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The Dark Side of the Greed. (Score:5, Insightful)
Ah, that's the Dark Side of greed.
The Light Side of greed sparks innovation because folks have an incentive to make money by creating something new.
The Dark Side always goes after the weak: the ones that can't innovate. It promises easy money, high barriers to entry with laws and regulations, keeping the status quo. Some greed masters like Masters Jobs and Wozniak break into a field of greed. They, being great greed masters, broke IBM along with another, though maligned greed master, Gates. But even then, The Dark Side can even ake the best of us as it did Master Gates. He seams to be coming back to the Light Side with his charity work.
Pay heed young greed patiwan, the Dark Side is always there for the lazy!
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Re:The Dark Side of the Greed. (Score:5, Informative)
Some greed masters like Masters Jobs and Wozniak break into a field of greed.
That's not entire fair to Woz [wikipedia.org]. Jobs may have broken in, but Woz more or less stumbled in, and then reduced his role after a plane crash. He still has associations with Apple, but he's no "greed master" like Jobs or Gates. He's the sort who upon getting rich realizes he doesn't need to keep on with his day job, and moves on to more interesting things.
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Re: (Score:3, Funny)
That's not legal. No matter what the law says, that's not legal.