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Will the RIAA kill net radio?

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Several organizations have filed motions to reconsider with the CRB. The Digital Media Association asserted in its motion, inter alia, that SoundExchange offered expert testimony that conflicted with its positions in other royalty discussions. They attribute this to "gamesmanship," but it's not hard to see what they're really saying.

The Collegiate Webcasters and the Harvard Radio Broadcasting Company have also challenged the CRB's actions in lumping them in with all other webcasters and requiring them to maintain massive amounts of information for each song played.

SoundExchange, on the other hand, has filed its own motion arguing that the CRB's pronouncement didn't cast a wide enough net. Some of the terms the CRB used in the decision, according to SoundExchange, could exclude cellular radio, or other music delivery systems that don't use TCP/IP.

In addition to the rehearing motions, National Public Radio has already said it will file suit in the District of Columbia Circuit Court of Appeals regardless of whether its own motion is granted, since its beef with the CRB's decision goes far beyond what the CRB can address in a simple rehearing.

So gear up, Net Radio fans, looks like we've got a grudge-match on our hands.

The logical response to NPR's announcement is a simple question: isn't a lawsuit more expensive than compliance with the royalty decision? Maybe, maybe not. Since the case will go directly to appeal, many of the major expenses for things like discovery of evidence will already have occurred. Thus, the appeal itself won't run up too much of a bill beyond what NPR has already put out for as part of the whole review process.

Setting a precedent

Plus, NPR has argued that its format will make compliance with the new royalty structure particularly expensive. Since NPR plays its music interspersed with news and other non-music programming, it is unable to determine how many people are listening at the precise moment that music is played. This prevents it from determining whether the programming exceeds the tuning hour threshold and requires per-performance royalties.

Thus, NPR asserts, the CRB's decision will place a peculiarly heavy burden on it, and prevent it from fulfilling its mandate. Which is, of course, to provide the American people with free, high-quality programming so that the American people can ignore it and listen to shock jocks instead. Moreover, NPR is here to stay, and it has a vested interest in ensuring that the royalty review process works. Some legal precedent telling the CRB how to conduct a review in a decent fashion is good insurance for NPR against any outrageous royalty increases in the future.

SoundExchange, for its part, doesn't see what all the fuss is about. Webcasters have been saying that royalties will push them out of business since 2002, according to a SoundExchange spokesperson. Plus, Simson argues, the webcasters wanted the system involving the CRB, and now they have to live with the results, even if they don't like them.

But a basic question remains: Why would SoundExchange and the RIAA want to kill a source of revenue in these lean times, especially one that has the potential and the market to keep growing into the future?

The answer is complicated. One solution is that RIAA doesn't want to kill the webcasting industry, it just wants to force webcasters into licensing deals whereby it can offer them lower royalties in exchange for the end of broadcasts in mp3 format. The RIAA would love nothing more than to infect all content everywhere with DRM, and this represents a convenient means towards that end.

Another suggestion is that the RIAA does in fact want to cull the small and non-profit webcasters that offer more diverse and esoteric content, while preserving the larger, more easily-controlled players. The fact that Simson justifies the royalty increase by trotting out a sample station that rakes it in with a $20 CPM shows that he's primarily concerned with these bigger, richer stations.

From SoundExchange's perspective, cultivating a smaller number of mainstream webcasters will cut down on administrative costs, since it means fewer songs to keep track of and fewer artists to pay out to. From the RIAA's point of view, keeping listener interest in more varied musical forms and artists to a minimum will allow it to focus on the bland, mass-produced artists that have been its members' bread and butter for the past decade.

Keeping the big webcasters around while letting the small stations and non-profits wither away will keep the money streaming in, but cut out the deadwood that the organizations consider a threat to their long-term interests.

Great plan - unless that deadwood happens to be your favorite music station. ®

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