Most of the press coverage of the recent determination of royalty rates for Internet radio has been of the "Internet babies to be strangled" school.

SoundExchange begs to differ:

The review of 2006 webcasting royalties paid SoundExchange shows that 82 percent of royalties were paid by the 10 largest webcasters, which make up 4 percent of all paying services. In contrast, small webcasters paid less than 2 percent of all royalties paid SoundExchange.

“Not only is Internet radio not going to die,” said Simson, “it’s going to continue to flourish. The statistics show it is a vigorous business dominated by large businesses that can easily pay fair market rates while also having room for small webcasters and niche services.
. . . .
[W]ebcasting is growing dramatically and it becomes unconscionable that these huge businesses are not willing to pay artists and labels their fare share for the product that is the engine behind their businesses.

Sound Exchange was created by the music biz, including artists and labels:

[T]o collect the revenue stream created by 1995's Digital Performance Right in Sound Recordings Act (DPRA).Before 1995, U.S. copyright law did not provide a performance right in sound recordings. So, unlike our counterparts in other countries (United Kingdom, France, Germany, the Netherlands, Japan, etc.), record companies and recording artists were not entitled to license and collect royalties for the public performance of their sound recordings. [NOTE: This does not encompass downloading, which are in a different statutory category.]

A big problem, of course, is that Internet radio is disfavored compared with over-the-air radio, which still pays no performance fees. The solution is not to add a new category of welfare recipients who get to build a business on the creativity of others, but to extend the artists' performance right to regular radio.

posted by James DeLong @ 9:36 AM | Internet: P2P, Search Engines..., Radio

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