Adventures In Utility Computing

The business of utility computing.

Monday, April 09, 2007

CRB ruling, an impediment to internet radio adoption

It has been a while since I have posted. While utility computing technology continues to march along I have turned my personal focus to the structural impediments to broad utility computing adoption. The best example is the recent Copyright Review Board ruling on web-cast royalty rates.

This ruling, applied retroactively, increases streaming royalties by over 130% over the next few years. This structural impediment will delay the adoption of internet radio. From my perspective you can delay technology adoption but you can not prevent it, at least until now.

Everyone can agree that the artists need to be compensated for their efforts. However, the internet is just another medium of audio transmission. Unfortunately there are different royalty rates applied to terrestrial, satellite and internet transmission. Of these 3 types of transmission the royalty rates for internet transmission are by far the highest.

Borrowing from the broader internet effort on "Net Neutrality" the internet radio inustry should be advocating for "Broadcast Neutrality". The same royalty rates should apply to streaming, satellite and terrestrial radio. One reason is that the internet provided "no promotional value" for CD sales while terrestrial radio did.

I find it odd that the RIAA finds no promotional value in internet radio yet can not only find promotional value in terrestrial radio but also have to pay fines for payola. Many bands have their own MySpace page that stream a sampling of their content to those who visit their page. All done for promotional value.

While it is true that the CRB should not set rates to ensure the success of a poor business model they should also look at other mediums of content delivery for compensation. By setting the streaming rates at such a high level compared to transmission of terrestrial broadcasts they have favored terrestrial broadcasting over other modes of delivery.

If the royalty rates were normalized across the broadcast mediums we would see a faster transition to internet radio and newer business models for getting music out to the masses. It would be a shame if Pandora or Yahoo's Launchcast were shut down while they are just starting to get going.

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