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The final (for some) report

By Scott Bradner

The librarian has spoken. Right on schedule the Librarian of Congress decided what royalty rates Internet-based webcasters will have to pay to stream music out onto the Internet. The decision is bad news for many Internet radio stations and for many listeners and has the record companies poor mouthing their way to the bank.

This column is a follow up to two previous columns ( "Subscription only?," nww 4/1/02 and "Sanity may yet prevail," nww 6/3/02.) which talked about the progress of the proposal for Internet radio stations to pay royalties to record companies and performers. By law, the final decision about the level of the payments was left to the Librarian of Congress. At first glance, and in the eyes of many headline writers, the Librarian came out swinging and cut the proposed fees in half. But in reality, the fees stayed just about the same for over the air stations that send a copy of their broadcast over the 'Net and stayed prohibitive for most of the few thousand existing Internet-only webcasters. The final fees are just about what I detailed in the "Subscription only? article. (See http://www.copyright.gov/carp/webcast_regs.html for the final regulations. Lower fees apply to some non-commercial webcasters.

The fee level will be hard for even the larger commercial stations with strong advertising revenues to justify unless there is some significant change in how much advertisers will be willing to pay to reach listeners half way across the country. The fees are totally impossible for small experimental stations, I expect that almost all of them will go out of business soon.

To me this is a very shortsighted plan, but it is consistent with the approach that the copyright industry has been following for many years. They have fought every technical advance with the claim that the new technology will drive them out of business. Historically, every time that the industry has lost their fight, in the case of VCRs for example, they windup making lots of money, and every time they have won they windup killing the media, music on DAT tapes for example. In this case they are killing the companies that are experimenting with this new media, the very ones that would be most likely to figure out new ways for the copyright folks to make money. Sure, the commercial stations should pay a fee, but that fee should take into account what sort of revenue can be realized for this type of service. These fees do not do that.

When I last wrote about this topic my editor wanted to know how it related to enterprise networking professionals, the NWW target reader. A flip answer is that networking professionals are people, and some of them find listening to music at work improves the environment. But the more important reason is that this is yet another example of the general case of pricing based on anything but the real world of what people are willing to pay. Something we run into all the time in the networking business.

disclaimer: Harvard's music dept did not tell me what they thought of this topic so the above lament is my own