Staving Off the Future

There's been a lot of talk lately about internet radio. Is it the next vehicle for that dying art of music broadcasting? Is it the savior of the radio format? Many people seem to think so. It is often said, when trying to market to the generation (namely Y) that has left it, radio must look to where that generation has gone, and the answer is the internet.

Just a few days ago on March 1st, the copyright board issued new rates and based them on a "per play" equation championed by the RIAA. The computation assumes mass audience and significantly large commercial revenue. For the consolidated group like Clearchannel, it makes sense.

However, for smaller stations or pretty much any station that is not of Clearchannel or ABC roots , this is certainly less so. Radio Paradise was one of the first groups to appeal to its listeners to stop this from taking effect by making people aware through blogs or other means. RAIN (Radio And Internet Newsletter) has a posting of the exact fee schedule, it and agrees with Radio Paradise that the fees come out to over 100% of station revenues in a typical internet radio scenario.

Now Pandora has joined the ranks by sending out out an email asking its listeners to contact Congress. Radio Paradise has posted links that they are asking people to follow, including an online petition.

Internet radio has had to pay higher performance royalty rates than analog broadcast services for some time now. It has put a damper on the growth of the industry, and this new fee schedule is not likely to help innovation in the area of digital radio. Note the RIAA and Clearchannel's desperate attempt to save their dying media by killing new ones. History clearly demonstrates that this is not the way to achieve rejuvenation. Internet radio will likely bounce back, but its hard to believe that in the meantime, terrestrial radio is the suggested alternative.