Two years ago, we commented on the "Internet
Bonus" as we saw it (RNW Comment
May 2000), comments made in a much more optimistic time.
Most of what we said about the potential pluses of Internet audio
still applies but the combination of the bursting of the dot.com bubble,
intervening economic downturn and now the current proposed charges
for Internet streaming of music, have put major obstacles in the way
of turning the potential to actuality.
The two facets of audio in the Internet that we perceived then as
most important, on-demand availability and the ability to pick up
a station from the other side of the world, are still with us but
the former is still not developed to the extent we had hoped (Some
praise here for the BBC, which is gradually extending the range of
its programming that is now available on-demand, even if only for
a limited period) and the latter has developed but is now approaching
a point where copyright charges could take a significant number of
stations off the Net since advertising and marketing income seems
unlikely for the moment to pay the costs that would now be involved.
We still see the main benefit of Internet audio to the listener in
the terms we did two years ago and feel it appropriate to look in
terms of Internet radio at the question we considered in our April
Comment on "Choosing Diversity": "What,
from experience round the world, is the best means forward to broaden
both choice and diversity?"
Because Internet audio operates in a generally
unregulated framework does not mean this it will inevitably
do so since many countries already impose various restrictions
on Internet Service Providers.
However we do not see that content regulation should ever be
imposed with a medium where people have to specifically "log-on"
and which, because it can offer a textual description of what
is on offer as well as the audio itself. This means that the
maximum regulation that is called for is that anyone who offers
Internet radio should comply with general laws, including those
of libel, incitement to violence and so on and, we feel, a very
limited regulation beyond that of a site having to identify
its source (which we'd like as a listener to know anyway) and
also, should there be material likely to offend, to post a text
That regulation could be a matter for hosts and registration
bodies but beyond that is the limitation of the marketplace.
Here we come into the issues brought up by the Digital Millennium
Copyright Act (DMCA) and the record keeping and royalty charges
suggested by the US Copyright Arbitration Panel (CARP).
If we were assuming that the marketplace were truly a matter of
free choice, there would be no problem at all but for that of administrative
load since each provider of a stream would negotiate individually
with every provider of programme material a fair "free market"
Since that is impractical, there has to be a compromise and this
is where the nature of the market comes into play. To us, it is
not a "fair" market should a very small number of large
suppliers, in this case the record industry, be able to dictate
conditions to a very large number of buyers, in this case the myriads
of small Internet stations.
That, of course is why the CARP hearings were held, so the question
arises as to what the committee's brief was, the circumstances of
the time and how far current recommendations remain appropriate.
The brief related to fair payments and a lot of evidence was taken
in reaching the decision but the times were different. The optimism
of the boom meant, we suspect, that many sites seeing a crock of
gold at the end of the rainbow, expected large profits and didn't
want to share them.
The current situation.
The current situation is very different and each
side has a point. The rise of Napster showed how vulnerable the
record companies could be if its products could be easily pirated
and there are understandable concerns by the recording companies
of a repeat situation; at the same time, there are many significant
differences between the two situations.
Whereas the product being pirated in the case of Napster was effectively
almost CD-quality, we would suggest that this is not the case
for current streamed product (In fact, we would suggest that anyone
with a good ear who wanted to listen to music would never consider
the usual computer set up as remotely suitable in quality terms).
In addition technology can ensure that the streamed product cannot
be recorded (unlike current analogue signals, which on FM with
good equipment in a good reception area are certainly as good
as MP3 recordings and better than the streamed product.
To us this indicates that the recording companies would be better
to agree a suitable deal that permits Internet streaming to grow
but maybe restrict it to a degree in terms of technical factors
(i.e. continue to prevent recording) and ally themselves with
the flow to gain benefits for their main product.
Our suggestion therefore would be that the
US Congress should stop the clock for say six months and
produce a brief in terms of ensuring diversity and put the
ball back to the recording companies and webcasters try
to negotiate a more sophisticated solution than that currently
With modern technology, it would be simple to set up a sliding
scale that combined a much lower per play charge that in
turn varied according to various groupings (webcasters range
from hobbyists to small stations simply streaming their
signal to giant groups like Clear Channel).
This could be combined with a charge variance depending
upon the nature of the site and signal (a site, for example,
that gave the relevant details to allow purchase of a song
being played would attract a lower charge, because it was
doing marketing for the recording). This could be linked
with a profit-share mechanism for sites operating commercially.
Such a system could easily, with current technology, even
work wonders to extend the diversity of material being played
if rates were higher the higher an artist was ranked, say,
in the world top hundred for recordings sales, than for
those in the 100-500 top ranked groups and so on).
This would give an economic incentive to the webcasters
to be more adventurous and wide ranging in terms of their
One area in particular that could benefit is classical music,
which is currently in dire straights with many orchestras
no longer having recording contracts with the majors.
Should the classical music webcasters get together with
the orchestras, there's no reason this model couldn't allow
the formation of a new recording company to take up the
Indeed looking at the sameness of many play lists, that
could be true of quite a few genres; Motown, after all,
did not spring from a major when it began!
Any views? Please comment
on the above. For that matter, if you can put the time aside,
we'd like your "Guest comment" pages this year to stimulate
more feedback and dialogue.