Friday, July 13, 2007

The death of internet radio

A moment of silence if you please. On Sunday, July 15th, the Copyright Royalty Board's new rates for internet broadcasters will go into effect. And hundreds of streaming radio stations will pass quietly into the night. The impact will largely impact smaller broadcasters who were barely breaking even in terms of revenue vs expenses before. But now, they will essentially be paying more out to the record companies than they are taking in from ad revenue. This article from the good folks over at P2Pnet gets at the heart of the issue. Here are some quotes to give you some background:

"On March 2, 2007 the CRB hiked Net radio royalty rates, and not by a few points. They’ll rocket up by between 300% and 1,200%."

The rate hike was then postponed in court while a group of broadcasters appealed the decision. On July 15th, the rate hike goes into effect even while the appeal is still on-going.

"At the request of the Recording Industry Association of America, the CRB ignored the fact that Internet radio royalties were already double what satellite radio pays, and multiplied the royalties even further,” says macadavy on pogge.ca, going on:

The 2005 royalty rate was 7/100 of a penny per song streamed; the 2010 rate will be 19/100 of a penny per song streamed. And for small webcasters that were able to calculate royalties as a percentage of revenue in 2005 – that option was quashed by the CRB, so small webcasters’ royalties will grow exponentially!

Before this ruling was handed down, the vast majority of webcasters were barely making ends meet as Internet radio advertising revenue is just beginning to develop. Without a doubt most Internet radio services will go bankrupt and cease webcasting if this royalty rate is not reversed by the Congress, and webcasters’ demise will mean a great loss of creative and diverse radio. Surviving webcasters will need sweetheart licenses that major record labels will be only too happy to offer, so long as the webcaster permits the major label to control the programming and playlist. Is that the Internet radio you care to hear?"

The article has a distinct "down with corporate fat cats" bent to it, which I couldn't disagree with more. Corporate greed is not what's killing internet radio. It's our complacency with government over-regulation that's put broadcasters in a choke-hold. Corporations will always be greedy and try to throw a knee in the groin of their competitors. That's Hobbes at his best. And that's also the beauty of the free market. Alternatives will evolve, and the best thing the government can do is LEAVE THEM ALONE! But that's not what the CRB and FCC did in this case. They caved to corporate interests, and we let it happen. Why? Because the level of political dialogue in this country has dissolved into Michael Moore vs. Ann Coulter. There is no longer a substantive debate over issues, so much as a name-calling shouting match about who loves the troops more, and who's more patriotic. Meanwhile issues like immigration reform simply vanish in a puff of smoke and artistic finger-pointing. And we're letting it happen. We are letting the Michael Savage's, Bill O'Reilly's and Randi Rhodes' of the world frame our political debate. I can't think of a slower and more painful death for a democracy than to having a growing populace that does not understand the importance of civics; a populace that increasingly turns to sound bites, talk radio rants, and you-tube clips as a primary source of news and information.

This is why internet radio is dying. And a lot of you will read this and say, "who gives a sh*t. I don't listen to it anyway." Do you listen to satellite radio? What makes you think the CRB will stop at internet broadcasters.

“They hated the cassette recorder,” said Hodges. “They hated the CD Burner. Soon they’ll hate people who hum songs.”

Just you wait. Do nothing for long enough and they'll eventually over-regulate something that you DO like. Or need...

Check out Save Net Radio and DO something. I have.

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