7.13.2007

Internet Radio: The Beginning of the End

by Rick Rockwell

This weekend the end of internet radio begins. Never mind that the internet could resurrect radio. Never mind that the most creative radio is on the internet. Never mind that an audience of 70 million people like internet radio.

Never mind all that because corporate greed is going to win out. As usual.

Pushed by the recording industry, the Copyright Royalty Board set in motion a new fee structure, which could almost triple rates for internet music use by 2010, and the board also instituted a new annual fee of $500. Come Sunday, internet radio providers won’t just have to pay the new rates, but also apply them retroactively to music played in 2006 too. (For more details, please see “Save Internet Radio.”)

What this is really all about though is corporate media limiting competition and pushing the music the corporate bosses have designated for you to hear.

The new rates would not just eliminate grassroots webcasters (many have already shut down rather than fight) but it also threatens the existence of the biggest internet radio hubs: Pandora, Live 365, Yahoo Music, and Rhapsody.

Who wins if internet radio dies? Well, the winners are traditional broadcasters who are now mostly corporate chains. And you know what those folks have done to the radio dial. They have crushed the creativity out of it. Note that traditional broadcasters pay royalty fees that are much lighter than what is being imposed on internet radio. Could that be due to the fact that traditional broadcasters are part of the corporate media hierarchy and the wily internet competitors are not?

Of course, the big four music companies also win. Not only do they get more revenue, but they get to squeeze out grassroots and independent sources of music that aren’t associated with the major labels. Those independents have used the internet to successfully gain notice for their acts. Less competition is good for the big corporate concerns of Sony BMG, Universal Music Group (part of France’s media conglomerate Vivendi), EMI, and the Warner Music Group (no longer part of Time Warner, but still tied to other corporate concerns). Note that the big labels have obvious connections to some of the biggest media empires on earth. The independent nature of internet radio and the reputation of services like Pandora to customize listening for individuals goes against what the music cartel wants. What the cartel prefers is to push a specific number of artists to consumers and maximize the profits from those. This is the economy of scale at work.

So don’t let the music industry fool you into believing this is about artists getting more return for their work. Yes, the heavily marketed artists of the big companies will reap more, but for the most part, independent artists who were finding new audiences via the internet will again be high and dry.

Although some members of Congress have filed bills to roll back the new rates, that legislation is stalled.

So to the tens of millions who were grooving on internet tunes, get ready, but government and corporate media, which of course are intimately tied together, are getting ready to shut down your party. This is just another happy postcard from the people who claim they really care about you.

Update, Saturday 7/14: Apparently, as this piece was posting the music industry began to realize the backlash may be too much on this issue and agreed not to impose all the new fees beginning on 7/15. The industry stated its position that it is still willing to negotiate on new rates and it may cap some of the new costs such as the $500 per station charge which would have hurt services like Pandora which allow users to create unlimited numbers of personal stations. You can read more about the reprieve here.

(Photo by altemark of Stockholm, Sweden via Flickr, using a Creative Commons license.)








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