The .14 Cent Solution

New royalties proposed by the music industry threaten to kill independent Internet radio

Likewise, Radio Juno Beach (www.junobeach.com), a four-year-old Minneapolis Web-only station that promotes local and indie bands and features live DJs, is insulated from the CARP fallout because it negotiates directly with artists rather than with record labels. "We all thought something like this was coming down," explains Juno Beach CEO Stephen Lawson, who operates the station from a basement studio redolent of wet cat. "There's no control over the Internet, and big record companies weren't going to let it stand. As we all know, control is one thing big companies like.

"It [the CARP] is not about them getting their fair share," Lawson asserts. "What they're doing is trying to narrow the field. They're saying, 'Oh, our poor artists aren't making any money.' Well, fuck, you shouldn't have signed them to deals where they have to recoup their studio time."

Like many observers of the debate, Lawson suggests that there's more to the CARP decision than bureaucratic immobility and fuzzy math. If Net radio stations were forced out, he notes, it would clear the way for forays into vertical integration like pressplay and MusicNet, Napster-like subscription services run as joint ventures by the five major record labels. (Both pressplay and MusicNet have been subjected to scrutiny by the Justice Department's antitrust division.) "There's a huge air of anti-competitiveness about this," Lawson says. "It's elephants stepping on ants. You can't blame them--they're in the business to make money. But they're the biggest elephants on the block and they don't want to fight for foliage."

If the future plays out as Lawson and others suspect, the few companies who will be able to broadcast music on the Internet will be deep-pocketed media conglomerates like Yahoo and AOL Time Warner--and, of course, the major record companies themselves. With streamed Internet advertising projected to top $5.8 billion by 2005, there's ample motivation for media companies to make a land grab. (Split 50,000 ways, this money may not go too far; but in a dozen hands, it is a hefty sum, indeed.) But if that happens, the Internet, now a hothouse for non-mainstream genres and artists, will likely be colonized by the same hit parade of unit-shifters that dominates the commercial airwaves.

 

With so much at stake for both Webcasters and the music industry, the question of royalties seems unlikely to be resolved either quickly or amicably. If Librarian of Congress Billington accepts the CARP's recommendations, Net radio stations could begin to go silent almost immediately. If he chooses to reject or amend them, negotiations would begin anew.

"If I had to speculate, I'd say there's some chance the librarian might send it back to the panel," says William Mitchell's Schaumann. "But I wouldn't hold my breath."

Meanwhile, Net radio has recently become the topic du jour on Capitol Hill. In a strongly worded April 22 letter to Billington, Virginia Democrat Rich Boucher and 19 other House members urged the librarian to reject the CARP's recommendation. "In our view, if the royalty rates or formula stifle an inchoate industry and force hundreds of small Webcasters out of business, Congress's goals would not have been met," they wrote. Just last Wednesday, the Senate Judiciary Committee held a hearing at which both Webcasters and RIAA president Hilary Rosen aired their views.

Yet even if Net radio survives the current assault, many observers say, this is only one skirmish in an ongoing battle for the future of the music industry. For now, the music industry is determined to forestall its decline--whether through litigation against services like Napster, or by lobbying for severe anti-piracy legislation like the Consumer Broadband and Digital Television Act (widely known as "the Hollings Bill"). But it's hard not to conclude that the industry is actually engaged in a fighting retreat.

"You've got to remember that these aren't the most far-sighted people," Schaumann says. "That's how you get [Motion Picture Association of America president] Jack Valenti raging against the Betamax, when [video] eventually became one of the industry's biggest sources of profit. When you're talking about new technology, they perceive the threat rather than the benefit."

To believers in the Net's utopian possibility like Zoetek's Iverson, it also appears that record companies are now trying to stuff an ungovernable genie back into its bottle. "They complain so much about piracy," Iverson says. "Well, that box is opened. If it can come out of a speaker, you can digitize it and send it to your friends. What they should do is make it easier to be legitimate than to be a pirate. I mean, how many people are pirating paperback novels? But they want to set up tollbooths wherever they can. There's a potential sea of thousands of listeners for them, it's free publicity, and they're acting like they're doing us a favor by letting us play their music?

"It's sad, because the Net could be the best thing that's ever happened to the music industry. But big centralized organizations want to control everything. The system is a mess. If the music industry doesn't change, it's going to die."

Iverson has sampled the future of music. The question now is whether it will be open enough to accommodate him.

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