Doom and Gloom for Web Radio

DailyTech posted interviews with the founder of Pandora and management from Proton Radio (and Proton Music) asking them what SoundExchange's latest rulings mean to them. A lot of net radio stations are dreading the upcoming changes in royalty rates, which are said to be around 400%... a number that would bankrupt most of the industry. An interesting read for anyone who uses online radio.

Common new-business problem

[cdrguru]

There is certainly a market for "Internet radio" in some form. It just isn't a market that pays anything meaningful yet.

This leaves the content owners in somewhat of a quandry. They can allow "Internet radio" (whatever that means) to skate by without paying anything and try to convince the rest of their market that the music is worth paying for, or they can pretty much say "everybody pays!" Obviously, "everybody pays!" is more lucrative but it also doesn't start the worrying notion that the music is worthless. There are enough sources for that idea today as it is.

By forcing everyone to pay they may indeed be shutting the door on a possible future paying market. But they may also be preserving the current source of their revenue. I don't think the music industry is ready to go to an ad-supported business model, and I don't think you want to hear ads for Pepsi at the end (or in the middle!) of every song.

I've Stopped LIstening To Internet Radio Anyway

[hedkandee]

The only internet radio I listen to these days is BBC radio [bbc.co.uk], you can't beat it for quality programming and no ad's, that's unlikely to get affected by any internet radio royalty ruling because (a) it's main listener base uses old fashioned radio wave technology and (b) it's in the UK where licensing clearly controlled by some more enlightened individuals. There is another place to go if you want more control over your listening - imeem.com [imeem.com] is kinda like youtube for music - people upload music and then you can listen to music. Imeem does some mojo to figure out who the artists are and pays them a cut of the ad revenue, but if the artist has said no then all you can hear is a 30 second clip of the tune. The most astonishing thing is that somehow they've managed to convince one of the major labels - Warners - to sign on, this means that artists like Metallica and Madonna who used to sue site like napster are now supporting 'free' sharing of music. Sure there are a lot of artists still blocking their music, but there's so much in the way of fully licensed music that it's hard to run out of things to listen to. In a way it's like napster was, but with instant gratification and with the warm fuzzy feeling that the artists are getting compensated every time you listen. Forget most internet radio, much of it remains at the same production values as a winamp playlist in shuffle mode, I left that behind as soon as imeem turned up.

It's all about the DRM folks

[ObjetDart]

Once you understand that, everything SoundExchange is doing makes sense. These seemingly counter-productive actions by SoundExchange lead to a lot of head scratching by a lot of people. Why would the music industry want to kill such a seemingly obvious way to generate more music sales? Etc.

The RIAA has been trying for years, without success, to pass legislation to require all internet radio broadcasters to use DRM in their streams. In practice this means only one thing: they desperately want to make it illegal to broadcast internet radio in mp3 format.

The RIAA has got in their heads that the combination of DRM-free readio broadcasts in mp3 format with tools such as StreamRipper is leading to rampant music piracy. I have no idea how rampant the piracy actually is, but it could be bad at least in theory. The problem is that it is possible, with relatively little technical know how, to point a tool like StreamRipper at, just for example, one of the many fine music 128k music channels available at somafm.com, leave it running, and come back a day or 2 later to a directory containing gigabytes of free MP3 music.

Anyway, since they have not been able to make mp3 broadcasting illegal, SoundExchange's behavior is simply the RIAA attacking the "problem" from a new front. They want to shut web broadcasters down. They know the new rates are way too high! That's the whole point. They want to bankrupt all the broadcasters who are streaming near-CD-quality mp3s out to the world for free.

Re:Meh...

[meatspray]

I'm a systems engineer for a mid sized company. Yes, many people listen to streaming radio.

Though a lot of people these days have easy access to mp3's, many people don't feel that bringing their pirated music to work is a good idea.

Add that to the people who have mp3's but can't justify getting an mp3 player of a adequate size, add in the group that can afford it, justify it, but are simply too lazy to get one and those that are afraid of leaving their players around their desk and you have a booming number of desk workers that dearly love their streaming radio.

With streaming radio, they can pick a station that's non explicit and not have to worry about NIN:Closer blaring out of their speakers while they're headed off to the bathroom.

The price of bandwidth in a big city is ever decreasing so our management has decided that it's better to up the pipe than to cut off the users access.

Personally, I think streaming radio is the devil, it's a constant drain on your internet connection that can grow quickly out of control when you throw a few hundred users at it. People feel strongly about it so when you try to tell a user at a 768K site that they need to have people shut down some streams so they can work, they think you're just being an ass. My personal feelings aside, Something needs to be done to keep streaming radio as healthy as possible. Our legal system has us walking a very narrow path. Stray much from that path and it's a long long way back up to get back to where you were.

 

One problem with that theory...

[daBass]

The problem with that theory is, why go through all that trouble only to end up with songs whose start and end overlap with other songs and have gone through audio processing when you can simply get onto the usual torrent sites and other P2P networks and get CD rips?

I have no doubt P2P is costing them money, though not to the tune they calculate; just because someone downloads it doesn't mean they would have bought it otherwise. But online radio is not costing them money, it is free advertising. I have nothing against revenue sharing; that is how radio in Europe has worked for a long time and at the end of the day the station is making money off the music too. But the rates need to be reasonable as the stations are also advertising the music.

Right now, SoundExchange is being rather unreasonable.

Re:It's all about the DRM folks

[ObjetDart]

It's a compelling story, but I just don't believe that the epic battle of Big Labels vs. independent artists adequately explains what SoundExchange is currently up to. Many of the popular web casters who would be put out of business by the new rates play mostly Big Label music (e.g. Radio Paradise, etc.) Personally, I'm absolutely convinced it is all simply about piracy. The RIAA is hopelessly obsessed with the possibility that anybody, anywhere, could possibly receive a free copy of un-DRM'd music from any source. The fact that SoundExchange offered an exemption to their new rates to those webcasters who agreed to use DRM pretty much cinched it for me.