May 2002
Internet streaming

Internet streaming.

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 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?"

A non-regulated area.

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 warning.

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).

The market.

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" price.

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.

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 proposed.

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 play lists.

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 reins.

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.

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