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Web radio copes with paying for songs
(IDG) -- 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 continueMaintaining 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 notesThe 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. The music may slow, but it won't stopThe 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 WebRadio 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." RELATED STORIES: Digital media battle heading to Congress RELATED IDG.net STORIES: EMusic sues MP3.com RELATED SITES: Recording Industry Association of America | |||||||||||||||||||||||||||||||||||||||||||||||
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