Web Wars

by LUKE BAUMGARTEN & r & & r & & lt;span class= & quot;dropcap & quot; & M & lt;/span & onday, July 16, was supposed to be the day the streaming, digital, pre-recorded music died. On March 2, a judicial panel called the Copyright Royalty Board (CRB), acting under the authority of the Library of Congress, had decided to raise the rates paid to recording artists and record labels by Internet radio stations by some 300 percent conservatively and up to 1,200 percent in extreme cases. It was to take effect on July 16.





The hike was enough that even the pond's biggest fish-- Yahoo, MTV, Pandora -- warned they'd be instantly bankrupted by the new rates. Though Internet radio is both geeky and niche-y, the idea of losing streaming audio caused a firestorm of grassroots protest that flooded Washington 1st District Rep. Jay Inslee's office. According to his press secretary, Christine Hansen, Inslee was getting as much correspondence from his constituency on Internet radio at the height of the tumult as he was on Iraq.





That led Inslee to draft a bill that would overturn the decision and setting rates equal with those of satellite radio. It gained broad bipartisan support and caught the attention of SoundExchange, the arm of the Recording Industry Association of America that stood to reap the windfall. The rate increases the CRB authorized were almost identical to what SoundExchange had asked for, but the threat of the Inslee legislation slashing these new profits before they take effect sent the recording industry scrambling to negotiate a compromise with webcasters. The rates took affect on schedule, but SoundExchange has said it won't collect the new rates so long as good-faith negotiations are ongoing.





While July 16 didn't kill Internet radio completely, the CRB decision has left the RIAA holding most of the cards. Inslee's bill is still a tool webcasters can leverage. Hansen, though, told me that Inslee won't begin moving it through the House unless talks break down completely. "If [the parties] can work out an agreement that's feasible for webcasters and that fairly compensates artists," she said, "Congressman Inslee is OK with that."





Those webcasters at the bargaining table, though -- Pandora, Yahoo, MTV, NPR and others -- aren't necessarily looking beyond their own interests. That leaves the smallest webcasters without a voice. The situation's been bad enough to push Thin Air Radio (KYRS) -- which used to have its programming streaming continuously -- off the virtual air completely. With a miniscule budget and almost no paid staff, that's all Station Manager Lupito Flores can really do. "I'm just trying to let things shake in the courts or the legislature or wherever," he said, "Until then, we aren't streaming."





Prudent as it is, that may not save them from fees. In addition to the royalty hike, the CRB decision mandates an administrative fee of $500 per year. The decision is retroactive to Jan. 1, 2006, meaning all the songs KYRS played off CDs, iPods and LPs between then and the day they stopped webcasting would be subject to the new rates. Given the fact that Station Manager Lupito Flores estimates that the station only had between 12 and 18 people streaming at any given time, KYRS might not have to pay anything above the administrative fees. Those fees, though, amounting to $1,000, represent a considerable amount of the community station's operating budget.





Janean Jorgensen, of local NPR member station KPBX, is worried too, though she says her problem isn't primarily monetary. NPR is a party to the negotiations with SoundExchange and she's pretty confident that, given a moderately favorable compromise, the Corporation for Public Broadcasting (which has been paying much of her online royalty bills) will continue doing so.





Jorgensen's problem centers on how to go about figuring out what the station owes. That's because SoundExchange collects royalties in a manner similar to the way the IRS collects income tax. They expect stations to track their own usage statistics -- how often a song gets played, how many people were listening when it was played, etc. -- and pay accordingly. At a Top 40 radio station, she says, that's a pain, but given the digital systems they have in place and the relatively small number of different songs they play (it's called Top 40 for a reason), the tracking process is simple and, often, computer-generated. The system at KPBX, by contrast, isn't even remotely digital. Moreover, in the ongoing quest to chronicle as much (marginal) culture as possible, their playlists bloat with hundreds of different artists a day, many of whom are on vinyl, some of whom might only get one spin a year. "Some of our folks don't even know what they're going to play three songs down the road, they just go with what the mood demands," she says, reveling in the whimsy but exasperated at the administrative nightmare it poses. "Right now, our logs are handwritten."





In order to give SoundExchange the information it demands, then -- whatever that ends up being -- Jorgensen and KPBX are going to have to think about creating a position for a royalty reporter. The alternative, as with KYRS, is to kill the music altogether. "I really don't want to do that," she says.





& lt;span class= & quot;dropcap & quot; & "T & lt;/span & he world is changing so much," she says, "public radio included. My thing is: We're part of a greater communication landscape and we have valuable things to offer listeners outside the Spokane area."





To Jorgensen, the value is in the shared cultural experience that a regional show broadcast internationally can create. For SoundExchange, the value is in the royalty revenue that broadening.





The two ideas aren't exclusive, necessarily, but the more contentious the debate gets, the better the chance small stations like KYRS and KPBX opt out of the cultural proliferation altogether. If they go, they'll be taking, a fraction at a time, pieces of SoundExchange's stream of new media cheddar with them.





Tammy Marshall contributed reporting to this story.