Internet Radio Royalty Payments Not Settled Yet - Contrary To Reports

Today's news that the RIAA, DiMA, and the National Music Publishers Association (and other publishing groups) seem to have reached some sort of agreement on music over the internet is apparently not all it's cracked up to be.  Some good will come out of this, should the Copyright Royalties Board (CRB) approve the settlement these groups submitted to them, but, contrary to how this is being portrayed in some circles, it doesn't fix the problem with internet radio.

Here's a good explanation at the Broadcast Law Blog of what's really going on.

This agreement deals with limited-time downloads and interactive streaming.  The latter is becoming increasingly common, so it's good to get that out of the way finally, although since that's mostly about "on-demand" streaming, it doesn't cover anything else.  But how many people really do limited-time downloads?  I wonder if this move is intended to push that to the forefront a little more?  It's certainly a good marketing ploy if they can swing a useful price differential.

One thing this agreement does do, though, is allow people like me to record a stream without being chased down for royalties by the RIAA as if I were an illegal file-sharing college student.  I don't make copies of anything I record off the internet, I don't post it on the torrents, and I don't do anything else except listen to it again once in a while.  So I'm certainly happy about that.

Still, this does not deal with everyday internet radio, which is the real problem.  Live365 and Rhapsody are still in limbo, and this is the biggest obstacle right now for those who want to start new internet radio stations.  I suspect the CRB will want to get the biggest bang for the buck, and stick with the SoundExchange (an unincorporated division of the RIAA, naturally, and a near monopoly) deal they struck last year.  While this year's figure - $.0018 to stream one "performance" to one listener - doesn't look like much, this adds up in a hurry with lots of listeners, tuning in 24/7.  Unless we're talking about an internet radio station that operates for one hour a day, and they only tell their friends about it.

And let's not forget that this configuration is based on the pop music format, i.e. one "performance" = one song. Classical Music gets screwed in places like iTunes, because a four movement symphony counts as four different tracks.  Internet radio has the same problem.  In one sense, this is okay, because Classical works are generally longer than rock tunes, and should cost more.  That's fair enough for direct sales of a recording.  But radio stations can get killed if they handle it this way.

What will happen is just what this commenter on the Broadcast Law Blog said after last year's punt by the CRB:

Strategically, we'll withstand the increase by doubling the minimum length of each selection we play, creating less numbers of "performances", as well as aggressively seeking out marketing deals with labels housed outside the U.S. that are willing to provide airable product and waive U.S. performance rights fees on behalf of their orchestras in exchange for preferred treatment on our station and website.

Guess what this means?  Fewer US records being played, and fewer listeners for US labels, which usually means US artists and composers get shaft as well. And nobody should even bother making a recording of, say, Chopin Waltzes or Preludes, because nobody will play it if they have to pay a royalty for every single short work.

Here's the official press release, if it helps.  I believe the CRB has until Oct. 2 to make a ruling.  Let's hope cooler heads prevail.