The Blame Game

I love NPR, National Public Radio. It is the bright shining glimmer of hope in a world where radio has become a repetition of obnoxious commercials, offensive jocks and bad music. NPR has quality news programming and play lists that stray away from commercial radio, MTV and the United States in general. They know that the Internet is the future, so they stream web casts in the Internet along with their terrestrial radio content. NPR is good radio on every level.

But NPR, as well as all other public and commercial radio who have updated with web casting, is facing a possible crisis: The Copyright Royalty Board has proposed royalty hikes for music on the Internet. These increases are justified by Sound Exchange, an entity created by (who else?) the Recording Industry Association of America, to collect royalties from Internet, satellite and digital music. The current royalty system is two-tiered: small web casters pay 12% of the annual revenue for royalties while large companies like Yahoo pay royalties based on the number of songs played in a "tuning hour." However, Sound Exchange, who claims to protect the artist and the record companies, decided that there should be a universal royalty system. This could put many small Internet broadcasting companies out of business. Accuradio, which operated over 320 Internet radio stations, made about $400,000 last year in revenue. Under the old system, they paid out $48,000. The new system, which will be based on a per-song, per-user fee, will make Accuradio's annual royalties $600,000, much more than their annual income.

Why has this happened? Why have the proponents for the record industry gone after its one friend?

I call this the Blame Game. The record companies have seen a decrease in CD sales in the last few years. According to them, here are a few options why this has happened:

1. CDs are so 20th century. Consumers are tired of just your average, basic compact disc with twelve tracks. They want more. They want two-sided CDs, they want DVD components with live performances and music videos, they want a steak dinner with their CD. Clearly CDs have gone out of style and the record manufacturers must find a way to augment the format to attract people. It has worked wonders. Just look where Tower Records is now.

2. File sharing has turned music consumers into thieves! How can record companies compete with free stuff? I know! Sue their consumers for finding a new way to discover music! It is clear that the way to bring people back to buying CDs is to take them to court, humiliate them, and take their money in large sums.

3. Web casting has contributed to the decrease in CD sales so the record companies must make up the difference by putting them out of business. Record companies want to support and protect the artists. They do this by not allowing them on the Internet, because consumers are never on the Internet. Everyone still listens to terrestrial radio to get their new music and the Internet clearly cannot reach as many people. Internet broadcasting is not the future. So we must penalize all the web casters for being stuck in the past.

My sarcasm is harsh but this game of blame is a symptom of the record companies not recognizing the simple truth that they need to change their model. The model is dead. They are seeing the repercussions of their ignorance and instead of address the problem, they go after their long-term partners. This is worse than cheating, this is a divorce where one side tries to leave the other destitute. The record companies need to embrace web casting, because the Internet is where all their consumers have gone. Trying to drag them back kicking and screaming will not work. You must go to them, adjust to their needs, and they will give you what you need.

Web casters have until tomorrow to file a motion for a re-hearing of the Copyright Royalty Board. For my and and everybody's sake, I hope they come out on top in this ugly divorce.

Contreras, Felix. "New Royalty Rules May Reshape Internet Radio". All Things Considered. National Public Radio. 27 Mar 2007.