Tuesday, August 19, 2008

Music Biz *Still* Trying to Kill Web Radio

If you're a fan of new music and easily offended by corporate thuggishness, you may not want to read my colleague Peter Whoriskey's story from Saturday's paper about the possible demise of the Pandora Web-radio service.

This is only the latest chapter in a sad saga that's been dragging on for most of this decade: how a largely unaccountable regulatory body and a trade group dominated by representatives of major record labels have tried to inflict a punitive system of royalty payments on Web-radio broadcasters.

The unfairness and irrationality of this idea seemed obvious when I first devoted a column to it, back in 2002. More than six years later, nothing seems to have changed.

In case you've tuned out of this story, here's a quick recap:

1. The royalty payments at stake are supposed to compensate performers (and their record labels) for the use of their music, much as songwriters have long received a small royalty payment for the use of their work.

2. But unlike royalties paid to songwriters, these "performance royalties" don't apply to FM or AM -- whether analog or digital HD Radio broadcasts -- but do cover satellite, cable and Internet broadcasts.

3. Cable and satellite broadcasts pay a simple percentage of their revenues.

4. The proposals cooked up by the Copyright Royalty Board -- a panel of judges appointed by the Librarian of Congress to settle certain intellectual-property disputes -- and backed by SoundExchange, the theoretically nonpartisan group charged with collecting these royalties, would impose a per-song, per-listener fee that many Webcasters say would put them out of business. (See, for example, musician and Webcaster David Byrne's analysis.)

5. Maybe this is all one big coincidence, but in terms of political clout and lobbying efforts, FM and AM broadcasters vastly outweigh satellite- and cable-based music outlets, who in turn easily outrank Webcasters.

As I wrote a year ago, when the CRB reaffirmed this foolish idea, choking off Web radio by imposing discriminatory and disproportionate fees is just about the last thing the music industry needs. Webcasters like Pandora are far more effective at exposing listeners to new music than the playlist-choked wasteland of commercial FM and AM -- so of course we should tax them to extinction, ensuring record labels and musicians a one-time profit, followed by years of much poorer exposure for new musicians.

Seriously, who comes up with this kind of strategy? It's one thing for the CRB to lose its collective mind, it's another for businesspeople who ought to know the market to start sawing their own feet off. It's not as if they'd even make much money in the process: The Web radio industry just isn't that rich.

The people at SoundExchange do not help their cause when they continue to spout melodramatic hyperbole like this line, from Whoriskey's story:

"Our artists and copyright owners deserve to be fairly compensated for the blood and sweat that forms the core product of these businesses," said Mike Huppe, general counsel for SoundExchange.

"Blood"? Give me a break. You represent musicians, not the Marine Corps.

I'm past tired of seeing this story refuse to die. There's only so many times you can see such obvious, blatant abuse of power before you want to find the people responsible, grab them by the lapels, and ask: "What's wrong with you? Why do you hate America?!"

There is, however, one simple and fair way out of this: Congress and should finally pass the Internet Radio Equality Act, which would vacate the CRB ruling and apply the same per-revenue scheme to cable, satellite and Internet broadcasters alike.

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