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RIAA agrees webcasting rates… with non-webcasting AOL, Microsoft

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What's wrong with this headline? It's from an Associated Press wire story published on Friday:

Webcasters reach agreement on online music fees

"The [recording industry and Internet music broadcasters] agreed Thursday on how much big webcasters like Yahoo!, America Online, Microsoft and RealNetworks must pay to broadcast songs over the Internet during 2003 and 2004," according the story.

There's one slight glitch: AOL-Time Warner, Yahoo! and Microsoft are not webcasters. They don't do net radio - or at least, not yet. And Real Networks qualifies only in the loosest sense, as it's more aggregator than content provider.

What really happened on Thursday is that DiMA, the Digital Media Association - which includes AOL, Yahoo! and The Beast among its members - agreed with the RIAA on a royalty rate to be submitted to the Library of Congress.

So the "agreement" referred to in the AP story is tenuous, at best, and at worst, lacks a whole heap of context that renders it meaningless.

This is a proposal - in fact, what DiMA calls a temporary "band aid".

The parties which have created this sticking plaster, do not webcast, and the "deal" doesn't include the 25,000 or so webcasters currently facing crippling royalty payments. Now we've denuded it of the pernicious spin, let's find out what this really means. (Kudos to CNET's Jim Hu, who was the only reporter to distinguish these subtleties, although even Jim forgot that "webcaster" means someone who is actually webcasting.)

The rate for these phantom-webcasters is slightly higher than what the CARP procedure specified for the real webcasters: 0.0762 cents per performance. The RIAA also grabs 10.9 per cent of subscription revenues from the large, silent spectres.

The deal does nothing for the thousands of small, education or non-profit net casters that provide the amazing diversity of Internet radio. In the USA, net radio is handicapped by the burden of paying performance royalties from which the traditional, free-to-air stations are exempt.

Nevertheless, the path is clear for AOL and Microsoft to begin streaming as super-portals.

And before you mail us, yes - there is something creepy about AOL-TimeWarner stitching up a royalty agreement with the RIAA. AOL-TW owns the record labels Atlantic, Elektra, Rhino and related publishing companies.

The RIAA's membership page (catch it while you can) confirms Atlantic (including Atlantic Catalog Group, Atlantic Classics and Atlantic Nashville), Elektra (including Elektra Asylum, Elektra Catalog Group, Elektra Entertainment and Elektra Musician), and Rhino (including Rhino Exclusive, Rhino Handmade, Rhino Music Video, Rhino Records, Rhino/Slash and the temptingly recursive Rhino/Warner) as members.

We can only begin to imagine how tense these negotiations must have been - and how careful the RIAA must have been to avoid letting slip any potentially fatal indiscretions.

21st Century capitalism - at your service. ®

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