Recording industry threat looms over Net radio

Attorney Sherwin Siy says the threat to Net radio's survival is really about the recording industry's obsession to control digital music.

The recording industry has a long history of trying to dictate what you can listen to and when.

Time and time again, the industry has tried to get the government to require electronics manufacturers, Internet service providers and digital radio services to lock down music with "digital rights management" systems.

Now, the recording industry is threatening the survival of Internet radio. Behind closed doors, the record companies are turning a fee negotiation into a bid to control what applications and file types you can use to play online music.

Webcasters, who provide the public with Internet radio by streaming music over the Web, are required by law to pay royalties to SoundExchange, a collecting society that distributes those fees to record labels and artists. Those royalty rates are set by the U.S. Copyright Office.

Recently, the Copyright Royalty Board raised the royalty rates so high that many Webcasters--businesses and hobbyists alike--would simply have to shut down. These prohibitively high rates have now given SoundExchange and its allies in the recording industry a tremendous amount of leverage to use against Webcasters.

Music piracy isn't coming from Web radio recordings.

That's because there is an exception to the rates set by the board. SoundExchange can offer rates lower than the ones set by the government, if the rates are the result of a negotiation. But SoundExchange won't agree to lower rates unless Webcasters agree to restrict the public's uses of the music by installing DRM that will prevent people from recording off Internet radio.

While this recording technology goes by the ominous name of "stream ripping," it is no different from recording songs off the radio. Putting these provisions into the contracts with Webcasters will create a technology mandate that harms consumers, and it won't do anything to curb copyright infringement.

Placing these locks on streamed content prevents consumers from making legitimate use of the music they receive. Consumers have fair use rights to, for example, excerpt, comment, criticize, and time-shift the content they receive. DRM prevents them from doing even that, and current laws make it a crime to get around the DRM, even if you're not violating copyright law.

Underlying all of this, though, is the largest problem with Webcasting DRM: it won't prevent infringement. Music piracy isn't coming from Web radio recordings. It's faster and easier to download a near CD-quality song from either iTunes or LimeWire than it is to wait for a song to roll around on an Internet radio station and then record it--at a far lower quality.

So if DRM for Webcasts won't prevent piracy, why do the record labels want it? The reason is that requiring these digital locks gives the record industry more control over your music. The objective is to make every step in the process of moving music around involve a flow of cash to the labels, even if that movement is "me to me"--from my CD to my computer, or from your computer to your iPod.

SoundExchange seems to be winning this battle for the labels, since the Copyright Office has given it the upper hand with the royalty fee hikes. If anyone walks away from the negotiation, the higher fees will prohibit a large number of Webcasters from doing business or pursuing their hobby. SoundExchange might be willing to take a lower rate, but it will take its payment in the form of consumers' rights.

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