Net Wars: How Radio is Killing the Internet Star

by Terry Matthew | Published September 2007 | Features Archives

THIS IS A FACT, and it's not debatable: if the Hot Mix 5 were to come about in 2007, there's not a single commercial radio station in the United States that would give them a timeslot.

This has nothing to do with the talent but the times. Legislation has made commercial radio a wasteland for new music. A handful of corporations have devoured most of the radio spectrum. Through experience, they've discovered that the cheapest way to run a station when you own hundreds of them nationwide is to plug in an out-of-the-box format and run it by remote control.

The internet was a natural outlet for frustrated enthusiasts of music that falls outside the "acceptable" formats for a major market commercial station, including House Music. Naturally, the Recording Industry Association of America (RIAA) is working diligently to stomp it out.

If you thought the recording industry's "net wars" ended with Napster, you're in for a rude awakening. In May 2007, a little-known entity known as SoundExchange, formed by the RIAA to collects artist performance royalties from broadcasters, announced that it would be tripling licensing fees for webcasters. Webcasters are charged a fraction of a penny for every song they play... per listener. This would be charged against a $500 minimum fee per channel. Many webcasters host thousands of channels - and every time a user sets up a "playlist", legally speaking, another "channel" is created.

By way of comparison, AM and FM stations are 100% exempt from paying performance royalties, and satellite stations pay a fixed 3 to 7% of their revenue.

The D-Day for this crude powerplay was July 15, 2007. But in response to pressure, SoundExchange announced they would not immediately enforce the new royalty system while negotiating.

However, in exchange for capping their $500 minimum-per-channel, SoundExchange is reportedly attempting to force webcasters to act as RIAA watchdogs by adding copyright protection to music they play. There was nothing illegal about using a cassette to record the Hot Mix 5 on WBMX for your own use, but apparently they'd like to make it impossible for any webcast to be recorded by listeners. The lesson here is pretty clear: the industry was too weak to prohibit cassette tape recorders in the analog days, but they're not going to make the same mistake again.

Pressure from listeners to net radio has resulted in Congress finally starting to get involved. Senators Ron Wyden and Sam Brownback are sponsors of the Internet Radio Equality Act, which would effectively force SoundExchange to grant internet broadcasters the same payment system used by satellite broadcasters - a small percentage of their revenue. Those with little to no revenue would owe little to nothing. Despite offering satellite broadcasters the same payment system, SoundExchange and the RIAA are viscerally opposed to the bill, and have the money and lobbying power to thwart it.

If another Hot Mix 5 comes about, they're probably going to be on the net. We'll never know if the RIAA gets their way. To find out more on how you can help save what's left of free broadcasting in the States, take a few minutes and check out savenetradio.org.

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