Day of reckoning arrives for Internet Radio

Today is the day that crippling new fees for Internet Radio broadcasters mandated by the record industry and the Copyright Royalty Board go into effect, and I have a mixed bag of news to report on this subject. On the one hand, there's reason for webcasters and their listeners to breathe a sigh of relief; SoundExchange, the arm of the RIAA responsible for collecting the fees, has announced that at least for the time being they will not "enforce" the new rates that are retroactive to January 2006, which would have caused many stations to be silent today. These outlets can continue to stream tunes while Soundexhange and representatives of the Internet Radio industry try to hammer out a compromise rate structure under the watchful eye of Congress.

But make no mistake, it is only due to the threat of legislative action that Soundexchange is being even remotely accommodating, and if you're one of the millions of web radio fans who have contacted their elected representatives in the last several months, you can pat yourself on the back as your efforts really have made a difference. The public outcry has been phenomenal, and so far over 125 members of the House and Senate have co-sponsored the Internet Radio Equality Act in direct response to your concerns. This bill would cap royalty fees paid by webcasters to a reasonable 7.5% of revenue, the same rate paid by satellite radio broadcasters, and would address the outrageous "per-channel" fees which would bankrupt even commercial providers. But while many legislators are on board, the bill is not yet law -- so please continue to contact your local officials and ask them to support H.R.2060 and S.1353.

The bad news is that as things stand at the moment, the March decision by the CRB remains in place; even though Soundexchange has announced it will not "enforce" collection of the fees, it still expects webcasters to pay them voluntarily. In a press release last Friday, the organization claimed that the "new rates and fees are in effect, and royalties are accruing". This follows a ruling the previous day (July 12) by a federal appeals panel who dealt webcasters a setback by refusing to grant an emergency stay of the new rate structure. Therefore, lacking any legal remedy by webcasters, Soundexchange is simply saying, "the law is on our side and you owe us the money, we're just not going to go after you ... yet." Of course, their benevolence could expire any time they damn well feel like it.

In any case, an uneasy status quo exists today while negotiations continue to try and reach a compromise to provide artists with fair payments yet allow a still-developing medium to thrive. But what does it all mean to you?

It means that there is a Battle Royale taking place for control over what music and other entertainment you are allowed to hear and see. Right now, this power is concentrated in a handful of media corporations known as "The Big Four": Sony BMG, EMI, Universal, and Warner. For many years, the music industry has been mass-marketing whatever lowest-common-denominator product they can sell, making tons of money for themselves and for a very select few "star" artists. Smaller and independent artists who make music in what is known as the long tail of the popularity curve are effectively shut out. But suddenly, along came mp3's, iPods, and the Internet -- and the traditional methods of music production and distribution have been forever changed. To say that the music industry has not handled this well is the understatement of the century, and they are desperately trying to return to a business model that is evaporating right before their eyes.

In the last few days, I've searched the web looking for reaction and commentary from "plain folks" about this issue, and the results have been eye-opening. I think it's fair to say that the music industry in general and the RIAA in particular is one of the most reviled organizations on the planet, in no small part due to their strong-arm tactics like this move to silence web radio as well as efforts to curb downloading. Here's a sample of comments left on various web sites like this one that I've visited recently:

What the record industry is trying to control here is the ability of small, independent musicians to gain any audience at all - the kind of musicians the commercial radio stations and even satellite radio will never play. They're trying to assure that real art doesn't distract from their marketing of sex and violence dressed up as music. Any politician concerned with the state of our mass culture should recognize that the degeneracy is largely a corporate product. So anything that decreases the power of these corporations by allowing more real art to flourish in spaces they can't control is key to restoring health to popular (and less-popular) culture.

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The RIAA hates what it can't control. It hates P2P (despite all the free promotion), barely tolerates iTunes (even though they've made hundreds of millions of dollars from ITMS sales), and has even sought to stop public libraries from lending out music (communists!) This move isn't about revenue, it's about killing net radio. The RIAA knows that it's impractical (if not outright impossible) to strongarm every net radio station out there like they do with terrestrial or satellite radio, so they destroy what they can't control.

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Look, the goose is already cooked. Let's face it, the RIAA has all but completely destroyed the recording industry rather than give up control. Putting all the internet radio stations out of business is a scorched earth move, merely a spiteful parting gesture from a walking corpse.

Let them do it.

Let them use their sweaty, mean spirited little pencil pushing lawyers to take their ball and go home.

Nothing short of this will precipitate the revolution that is needed in the media, and it starts with the smallest independent broadcasters.

You think these businesses will roll over and disappear without a fight? No way, they will merely adapt to circumstance.

The RIAA works by creating a false scarcity of content. In reality there is a glut of high quality Free content out there, millions of musicians and podcasters who have had a decade to become highly skilled content producers are just waiting for the death of Big Media so that their work can become valuable. The myth of "artists need to be paid" has been so completely destroyed only fools cling to it. Everybody knows how crooked the game is, that artists never get paid properly anyway, and that all the ones who have any merit produce because they want to and would do so even without an audience. Once they skulk off home to mommy taking their hyped manufactured rubbish with them there's gonna be an explosion of new talent, new voices, fresh political commentators and documentary, new celebrity.... It's ripe to happen, simple supply and demand. There is a vast reservoir of supply, and now the demand is about to kick in. I hope to God they pass this law, because it will be the death of the bastards. Once mainstream radio and TV get a sniff of how internet stations are surviving by bypassing corporate controlled material they will want a piece too. And thus the whole filthy mess begins to unwind....

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Yeah well, every third person I meet claims that they're a "musician." So some slackers might have to get actual jobs and actually work for a living. I do not care. I look forward to the day Avril Lavigne takes my order for a cheeseburger. Musicians and artists tend to have an extremely high self-opinion in terms of what they think they contribute to "culture." John Coltrane contributed to culture. The world would not be significantly different, however, if the last ten years in top 40 music had never happened.

Where's the rock style life for the people who build bridges and clean up bathrooms? Where's the rock star life for teachers who contribute something directly measurable to our civilization? Where's the free booze and blowjobs for activists, community organizers, and people manning the soup kitchens tonight?

And for that matter, where's the rock star life for the countless musicians in less lucrative genres like jazz or folk music? Some of the most mindblowing music I've ever heard was hardcore jazz played furiously with wild abandon on snowy nights in hole-in-the-wall bars in towns and cities you haven't heard of by amateurs who had no chance in hell of ever making a living at it even in an ideal intellectual property/copyright environment.

What this all may portend is the end of the corporate-generated rock star and frankly, I couldn't welcome it more.

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This new technology has been sacrificed on the alter of old-technology profit-taking. What else do you expect from the US government with the jerks we have in power?

Are you sensing a theme here?

I predict that if webcasters and the RIAA are unable to reach a compromise and these new rates stand, several things will happen: (1) The largest internet radio services like Pandora, Last.fm and Live365 will begin charging subscription fees to cover the cost of the huge payments to Soundexchange; (2) The majority of stations who wish to remain law-abiding citizens of their communities will simply shut down, taking their independent voices and music with them; (3) A certain number of smaller broadcasters will thumb their nose at the new rates and continue to stream music until they are sued off the air by the RIAA; and (4) Most remaining stations will be located offshore, out of reach of the US legal system.

There's been a temporary lull in the action today, but this battle ain't over yet by a long shot. Please keep up the pressure on your Senators and Congressmen until we have a permanent solution.

LATE BREAKING UPDATE!

SoundExchange is already beginning to backpedal, with director John Simson saying late today that his organization never "promised" to not enforce fee collection (whether they do or not), and that barring any intervention by Congress, webcasters will still owe payments retroactively. Not only that, but Simson is adamant that any fee negotiations must be contingent on Internet radio stations adopting DRM technology -- a.k.a. "copy protection" -- to prevent listeners from ripping and recording broadcast streams. Never mind that for decades it's been considered "fair use" for people to employ conventional taping methods to record over-the-air radio stations; no, somehow this is different.

Internet broadcaster DJ Profusion quite rightly points out in this excellent article posted on the Daily Koz that Simson is "an unethical weasel who will say anything to further his own evil plans", and SoundExchange is a corporate cartel with "no interest in a negotiated settlement, they want to destroy Internet radio."

We must keep this issue in the news - you can help by contacting your local Congress person to thank them for their support (or ask them to support Internet radio if they haven’t decided whether or not to support it), or your local reporter to bring the story to your news outlets.

Keep the pressure on!