Perspective: Recording industry threat looms over Net radio

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.

Biography
Sherwin Siy is the staff counsel for Public Knowledge.

More Perspectives

[mattumanu]

Witnessing the breakup...

Back in the early 70s, the Studio system for movies broke down with the exit of the early pioneers. The big studios wound up in the hands of big corporations. But what grew up out of the ruins of that old system was another similar system that came out of the same need to fill a demand.

The same is happening with the recording studios, the big names are falling apart at the seems, but this time there's a safety valve. It's in amatuer productions, podcasts, freelance musicians, youtube video pioneers... things like this will cause the eventual splintering of the big name studio system.

The question is, will a similar system grow up from the ashes this time? Or will something radically different grow up to fill the void?

As for right now... This soundexchange extortion attempt pukes snot up the ass of every red blooded American. Yeah, I have copyrighted stuff I don't want people stealing from me, but at the same time if someone wants to play a clip from my song or use some of my artwork, I don't some artificial DRM system making it impossible for me to even give permission to people to excercise fair use.

Shame on the big studio names. The days are gone where you can pump bilge into my ears and expect me to pay for it. I'd rather have a mule sick with dysentary dump diarreah in my ears than listen to the crap the spew. I've developed the self control, not only to not pay for this crap anymore, but not even consider stealing it either.

You lose, Punks. Get a few million more of me and you're toast. Have a nice time at the breadline.

[digitboy-201514575024412298112]

...me either

I'm not going to pay for their crap any longer either. And, likewise, I won't consider stealing it. I have enough music on hand for a lifetime of listening.

There is NO WAY I will help finance an industry that wants to DRM the crap out of us like some presumed-guilty-criminals. No way!

And if the American consumer ends up allowing them to spread their DRM-virus, well, then they get what they deserve.

[247mark]

Impossible

Just when you think the RIAA can't get any more stupid, they come up with this genius condition. Just as sure as you can hear music through your computer, or any other device for that matter, you can record it, stream rip, whatever those idiots want to call it. This cannot be prevented, even if they wanted to. You'd think an organization whose title includes the word "Recording" would understand that this cannot be done. Morons.

[bobby_brady]

If I can hear it, I can record it

hey motha fa RIAA! If I can hear it, I can record it, loser RIAA! Can't possible stop that last analog line to the speakers, eh? HAHA!

[starmarie10]

Unbelievable

This proves one thing. The RIAA is afraid of technology. Greed rules their world, as many musicians have agreed. I know and believe that this will all come back to them in a very negative way.

[pixelm]

Should read "recording industry comes to rescue"

I don't want to weigh in on the rates set by the government - I don't know enough. But private licenses are not a "mandate" and DRM is not fraud. If some record companies want to make songs available for less if they are wrapped in DRM, then consumers have a choice. They can pay less for DRM'd content or more for DRM free. That's the apple model. Now the internet radio stations should embrace drm - without it, the lawbreakers who don't pay those expensive royalties will undermine the licensed radio stations. And unlicensed distribution will undermine the creation and distribution of content.

I think people are completely right when they argue about whether price and terms are fair -- but it's nonsense to argue that consumers are served if the "technology mandate" is that all content to MANDATE that it be in the clear.

[aabcdefghij987654321]

Shill..

You're an industry shill, aren't you? Go back and read the article again. You clearly didn't, since what you post doesn't seem to have anything to do with what the perspective article was about...

[w00kiex]

To the rescue of whom?

The recording industry is acting as a cartel, pure and simple. By using the DRM negotiations as a tool they are able to control the market for their music, who gets to listen to it, and who has access to be played. They piracy element is a very minor element of the story. If you can keep people only listening to only what you want them to listen too, then you get much greater profits when they purchase music, which is what the huge majority of people do.


"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

Adam Smith, The Wealth of Nations, 1776

[cnetnews]

One Word Or So

Tunebite.

DRM is easily bypassed.

It is long since time for the recording industry to face facts.

Review how you price music. Higher prices drive down sales and prices out of the market those most likely to use P2P services ... kids.

Conversely, a lower price will increase sales and decreases the incentive to steal the music.

The same is true for the royalty rates being imposed on webcasters and on satellite radio and satellite TV, and cell phone companies.

Make the rates high and LESS music is played. That converts to LESS royalties being collected.

Drop the rates and the USE of music will increase expotentially and that will bring in MORE revenue to performers, record companies, composers and publishing companies.

It's the bottom line that counts.

We see the same principles in other aspects of the economy. Higher taxes reduce revenues. Risk is increased and incentive langers.

Lower taxes INCREASES revenues expotentially and results are dramatically higher than anything that higher taxes would have achieved EVEN if output and consumption remained the same. That's what's wrong with the "higher taxes" argument ... output and consumption is reduced in a high tax environment.

Or, take welfare. Rewarding those who are not working with higher and higher benefits does not reduce poverty; it increases it. Rewarding those who are working with credits and exemptions increases the work pool and reduces poverty.

A recent symposium in Canada discussed DRM and the March 2007 CRB royalty decision. One of the panelists stated that the REAL cost of music should be ten cents per track. At that rate he estimated that hardly anyone would waste time downloading tracks from a P2P network when they could get a non-DRM copy which was at a much higher quality level from a legitimate online service. A similiar pricing strategy could be used for retail CDs. Sales would skyrocket. He estimated that the recording industry would DOUBLE their revenues and reduce the cost they now pay to distribute music.