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May 3, 2002

++ Is The End Of Internet Radio Near?

++ For a long time, to those of us who believe that musical diversity is a good thing — good for listeners, for artists, and for the music industry itself — the Internet seemed like fertile ground. Here, music that was ignored by the major labels and corporate radio might find listeners, and vice versa. Over the years, as bandwidth steadily improved and audio technology developed, no corner of this landscape seemed more likely to flourish than Internet radio, which could take any number of forms, from a tiny, one-person plot to a vast field of streams, arrayed in a rainbow of genres.

Unfortunately, this ideal — the Internet as a planting ground for sonic "community gardens" — is coming under threat from the record industry's scorched-earth policy. If the industry — meaning the Big Five record companies and their lobbying organization, the RIAA — can't own some aspect of the musical landscape, it seems, they're more than willing to carpet-bomb it into oblivion. For an example of this, look no further than the current fight over the future of online radio.

++ As I reported earlier this week ("Proposed Royalty Rate Threatens Internet Radio," in "Datastream"), a number of independent Webcasters are currently protesting a proposal by a U.S. Copyright Office Copyright Arbitration Royalty Panel (CARP) that they say would set royalty rates so high as to drive most Webcasters out of existence. As with most copyright disputes, it's a thorny legal issue, but it breaks down rather starkly.

In 1998, the Digital Millennium Copyright Act (DMCA) — a law staunchly opposed by many online-freedom advocates — dictated that Webcasters were subject to paying royalties to the owners of the recordings they broadcast. These royalty rates were to be set at a future point in time, and would be retroactive to the passing of the DMCA.

In 2001, the U.S. Copyright Office assembled a CARP to determine appropriate royalty rates. After hearing comments from a number of interested parties — including Webcasters, record labels and their lobbying arm, the Recording Industry Association of America (RIAA) — the CARP set the proposed royalty rates at $.14 per song, per 100 listeners (for commercial broadcast radio stations simulcasting their programming over the Internet, the rate falls to $.07 per song, per 100 listeners; for non-commercial broadcast radio stations, the rate is $.02 per song, per 100 listeners, for simulcast transmissions).

Webcasters claim that under the proposed royalty schedule, they'll likely be bankrupted, as the royalties could come to far more than their gross revenues. Their counterproposal suggests royalties based upon a percentage of revenue, which would presumably compensate artists and labels while still offering Webcasters the opportunity to develop profitable business models.

++ The RIAA, on the other hand, contends that the proposed royalty rates are fair, and that the claims of Webcasters' advocates that a mid-sized Webcaster might owe hundreds of thousands of dollars in retroactive royalties are excessive. This is possible; the numbers are certainly complex enough that both sides' figures bear scrutiny. Disregarding such quantitative questions, it's even possible to argue the point — as, presumably, the per-song/per-listener proposal does — that whatever the limitations of Webcasters' revenues, royalties for recorded music carry an absolute value. In other words, if Webcasters want to play the game, they've got to be able to pay their own way to the arena.

The problem with this argument is that it breaks radically with the precedent set for broadcast radio. As Webcasting advocate Kurt Hanson explains on his Web site, radio broadcasters have traditionally paid a percentage of their revenue as royalties to composers of the music they play, but not to labels or artists, as radio has always been assumed to be a promotional tool. In other words, you hear the record on the radio, you like it, you go out and buy it. Everybody wins.

Under the terms of the DMCA, however, everything changes. In his book The Language of New Media, Lev Manovich argues, "[J]ust as the printing press in the 14th century and photography in the 19th century had a revolutionary impact on the development of modern society and culture, today we are in the middle of a new media revolution — the shift of all culture to computer-mediated forms of production, distribution, and communication. This new revolution is arguably more profound than the previous ones, and we are just beginning to register its initial effects."

The battles over copyright and fair use that have arisen in the past few years are just the first indication of how profound, and how confusing, this revolution is.

++ What changes under the DMCA is the perception of the broadcast "object" itself. Under the DMCA, "digital" copies are assumed to be "perfect" copies. And in the eyes of the record industry — especially after they've been burned by Napster and peer-to-peer file sharing — "perfect" copies undercut their ability to sell "original" copies via CD or paid downloads. Hence their insistence upon claiming royalties for all music transmitted over the Internet.

Clearly, as Manovich argues, we're in the midst of a tremendous upheaval regarding the nature of reproduction. The time is ripe for a revision of Walter Benjamin's seminal essay along the new lines: "The Work of Art in the Age of Digital Reproduction." Because if the nature of the representational object has changed so fundamentally, it stands to reason that our copyright laws and notions of fair use, laws grounded in the material history of recording and publishing as they developed in the early 20th century, are equally impacted (and thus outmoded).

As an example of this, you need look no further than the Beta Lounge, one among many Webcasters potentially affected by the CARP ruling. I choose the Beta Lounge partially because the impact on them — a Bay Area organization that broadcasts and archives streaming DJ mixes — hits close to home. As an unofficial "resident at large" there, I've performed at their space, and been broadcast and archived on their servers, several times. The Beta Lounge is a true Bay Area institution, an Internet pioneer that's become a model for DIY activity in the digital age. A ruling that shut them down would be a terrible blow, to San Francisco's electronic music community and the global audience alike. But my argument is far more than merely personal. The example of the Beta Lounge demonstrates how far wide of the mark the CARP proposal falls (sort of like bombing a civilian village from 35,000 feet in the attempt to root out terrorists hiding in caves on the other side of the mountain range).

++ The arguments regarding the supposed perfection of digital copies streamed over the Internet are shaky under any circumstances. Streamed audio is encoded at a lower bit rate than CDs, so as a copy it's not "perfect" to begin with. There's certainly no indication that listeners are more likely to copy streamed audio than they are to tape radio broadcasts; the difference between streamed audio over the Internet and radio broadcasts doesn't entail a qualitative difference in the promotional value of broadcasting. If listeners are likely to purchase recordings of music they hear on the radio, there's no reason this shouldn't be the case on the Internet as well. In fact, it's theoretically easier for a listener to purchase music they hear online, as they can buy the album the song is from by simply clicking to an online record store. Often the artist, song title and the name of the album it's from are available online; as we all know, that's not the case when you're driving in your car, listening to a traditional radio station.

On the Beta Lounge, or Groovetech, or any Webcaster specializing in DJ mixes, the "perfect copy" argument falls apart altogether. To begin with, these services feature DJs spinning vinyl recordings, so according to the logic of the industry, there's no CD-quality audio source to make a perfect copy from to begin with. But that argument pales next to the qualitative nature of the DJ mix — namely, no song is included in its entirety. Each song is blended into a seamless succession of beats and melodies. Even if she were to record the entire stream, the listener would have no way of extracting the original song from the context of the mix. The audio object is fundamentally changed; there is no original of which to make a copy.

That's not to say that composers, artists and labels don't deserve to be compensated with a fair royalty. But the industry's argument, that digital copies enable widespread thievery of Internet audio and thus justify royalties far above those set for radio, is completely irrelevant here. Indeed, it's widely understood within dance music and hip-hop alike that DJ mixes help to sell records; that's why publicists supply promotional 12-inches to tastemaker DJs. In hip-hop, there are even independent promoters that specialize in pitching not radio stations, but mixtape DJs.

++ A corollary of the CARP proposal also fails to address the particularities of vinyl mixes. As a means of collecting on their royalties, record companies are demanding that Webcasters compile and submit thorough data logs, including 18 data points for each song played (as well as seven data points for each listener). It's one thing to compile this information when working off of CDs, which carry much of it in encoded form; it's another when you're dealing with a DJ feverishly digging white-label 12-inches out of her crate, playing two minutes of each and moving on. I suppose you could hire an intern to stand there with a clipboard and log every track played, along with artist, label, etc. But I challenge you to find a bar code on a white label!

That last point is more than a quip; it speaks again to the qualitatively different nature of the DJ mix and organizations like the Beta Lounge. Dance music DJs — at least in my circle — play mostly music from independent labels. In fact, it's safe to say that 90% or more of the songs played in the history of the Beta Lounge have been independent label productions. What jurisdiction, then, does the RIAA have? They're strong-arming laws through Congress to benefit their own interests — but not necessarily the interests of artists, or indie labels and their artists for that matter.

To be fair, it's not the RIAA that's directly responsible for collecting royalties under the proposed ruling; an organization called SoundExchange has been established to track, collect and distribute royalty payments. SoundExchange describes itself as "a dynamic and modern organization comprised of large, medium and small recording companies and artist representatives, united in receiving a fair price for the licensing of their music in a new digital world."

What remains to be seen is how effectively the organization may treat independent labels — bedroom imprints pressing up vinyl in the hundreds, say. Can a system like this work to the benefit of interests both Leviathan and atomic?

++ There aren't any easy answers; I'm still wrapping my head around much of the theory. And it's difficult to sort out competing claims, when the imbalance of power is so stark. I'd like to see a consortium of independent labels and Webcasters come together to address the issues as they pertain to a non-Big Five perspective. What is clear, however, is that it's potentially a lose/lose situation.

If Webcasters go out of business, record companies will suffer as well. Deprived of legitimate means of hearing broadcast music, listeners will continue to illegally download digital audio, and sales of CDs will continue to slip as a result of the diminished promotion. And when CD sales continue to drop and nervous, behind-the-times executives continue to lose their jobs, then who will they blame?

Given the consolidation and corruption in the radio industry — Salon this week reported that even non-commercial stations may gradually be coming under the sway of pocket-lining "indie" promoters — Webcasting remains one of the few places where small, independent artists may find exposure, and where listeners may find the music they choose to listen to. Let's hope that corporate greed and outmoded copyright laws don't destroy that possibility.


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