by Luke Baumgarten & r & & r & Parasites Shouldn't Kill

Next thing: the music industry -- and by that I usually mean the big four record labels as represented by the Recording Industry Association of America and its royalty-collecting offshoot, Sound Exchange -- is effectively killing Internet radio.

In March, a newish regulatory entity called the Copyright Royalty Board, at the behest of Sound Exchange, changed the way royalties are assessed. Beginning July 14, rather than pay royalties on a per play basis, stations (which often have several "channels") must pay per play, per channel and per listener.

Conservative estimates have royalty payments by stations like spiking by more than 600%. For places like Yahoo Music and MTV, which technically have millions of individually tailored channels, the percentage is much larger. The effect in both cases is the same. After July 14, internet radio goes away.

The main arguments made by opponents -- that art desires an audience and that radio helps introduce people to new bands and is thus a means of free promotion -- are well made, but miss the more fundamental point. The RIAA is eating itself out of house and home.

CD sales are down for good. Digital sales are up, but can't make up the difference. Internet radio is a potential gap filler, but isn't a magic bullet. The nascent industry boasts an estimated 72 million listeners monthly, but those listeners are fragmented across tens of thousands of stations. The RIAA is tampering with economies of scale that just don't work in this new, digital, choice-profuse world. Niche stations draw niche revenues and don't have margins to absorb big rate increases. By requiring such fees, the recording industry is slaughtering the million tiny, potentially industry-saving hands that feed it.

The RIAA's lack of foresight is usually just a humorous footnote in a calamitously bad fiscal decade, but now it's actually going to hurt artists and listeners. Luckily it's egregious enough to spur lawmakers to action. A bill (HR 2060) reversing the CRB's decision is before the House. All nine Washington reps (and 126 in all) have signed on as co-sponsors. But Idahoans would do well to make calls to ensure Sali and Simpson vote on the side of choice. An identical bill is moving through the Senate. Call them up too.

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About The Author

Luke Baumgarten

Luke Baumgarten is commentary contributor and former culture editor of the Inlander. He is a creative strategist at Seven2 and co-founder of Terrain.