The Day the Music Dies

Will Internet Radio Dry Up Come July?

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First, a small mea culpa.

Doug Zanger Doug Zanger
Some months ago, I wrote an article about payola. I tried to point out an issue that I found benign: Disclosure of on-air play and promotion, in my mind, seemed OK. My attitude was relatively cavalier and clearly smug. I was (deservedly) pummeled for what I wrote. Though I still stand by the piece, I admit the articulation needed some work. Fact is, I love finding and listening to music. I love radio in any and every form. Anyone who knows me well enough knows I'm all for the ability of any artist (musical or otherwise) to reach an audience and succeed.

By now, you've probably heard about a highly contentious battle between internet broadcasters and the Copyright Royalty Board (CRB). The issue of compensation as it relates to artist rights, record labels and broadcasters is beginning to reach a fever pitch. Major record labels have remained eerily quiet, while the public outcry elsewhere has been vocal, severe and passionate. The stakes in this tête-à-tête are heavy with Goliaths -- and even more Davids.

In a nutshell, the CRB has proposed a rate hike that would render internet broadcasters unable to continue operating. The estimated increase is somewhere between 300% and 1200%, depending on the size and scope of the broadcaster. Sound Exchange, an organization chartered with collecting and paying artist performance royalties, and a handful of artists and record labels, are in favor of the hike. Internet broadcasters, not to mention a very vocal listening community, are against it. If a compromise can't be reached by July 15, the music dies, so to speak -- at least online.

The government has recently weighed in, introducing two bills in favor of finding some equity within the rate. The recent "Internet Radio Equality Act of 2007," sponsored by Sen. Sam Brownback, (R-Kan.), and Sen. Ron Wyden, (D-Ore.), has been gaining momentum on the Hill.

I had a chance to catch up with Tim Westergren, founder of Pandora. Familiar with this flavor of battle, Westergren points out there are plenty of misconceptions about internet radio. Chief among them is a belief in proportionate, waning music sales (when in fact, they tend to rise with internet play), how the artist is undercut in the process and -- perhaps most notably -- that internet radio is to blame for the challenges currently facing record labels.

What I like most about Westergren's perspective is that internet radio has been progressively carving out what he calls a musical "middle class." Artists who before may never have seen the light of day now have the forum and opportunity in which to build a fan base, without enduring the rigors of hitting the road, hoping to be "discovered."

To wit, I stumbled upon a Northern California artist named Adrian Bourgeois who I may never have heard unless my favorite radio station decided to play him. Through Pandora, Bourgeois found a real fan: me. I can't wait until he visits Portland.

Local radio stations are seeing the benefit of artists' online presence as well. Portland's alternative-rock station, 94/7 FM, is bringing Colbie Callat to its very successful "I Saw Them When" concert series. I got to know Callat's music on MySpace. Now she is getting her shot to attract a broader live audience. Music's middle class may be in its formative stages, but CRB's flip of the switch could end it all.

A practical advertising application has emerged amid the debate. Westergren and Pandora have been evolving an ad revenue model he considers very strong and viable. Take my registration experience as an example: Upon signing up for Pandora, after reading about it in Fast Company, I was asked whether or not I would support a small chunk of advertising within the audio programming of the site to help continue its operation. I was very much for it, though this has yet to happen: The current advertising on Pandora is actually engaging and highly sticky. I've clicked through to advertisers far more often than usual.

While some internet radio advocates argue that artists are merely protecting their turf, and others blame the record labels' lack of foresight, we can all agree on the need for a level playing field conducive to business growth.

Melissa Merz, spokesperson for Sen. Wyden's office, offers the following words: "Our bipartisan legislation allows internet radio to grow and prosper as a money-making medium that will provide additional revenues to artists as it becomes more profitable. Keeping internet radio alive is part of a broader issue that is important to Sen. Wyden -- keeping the e-commerce engine running by preventing discrimination against it."

Agreed. Keep the machine going, because everyone stands to gain.

Quick Hits

Do you listen to internet radio? If so, what do you like?

Would you be upset if internet radio disappeared? Why?
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