RIAA Notebook ~ Current Standoff

10/21/08
Source: http://www.law.com/jsp/ihc/PubArticleIHC.jsp?id=1202425402074

*There is a lot of Good Information on this link...

It's no secret that the old ways of doing business in the music industry are dying. CD sales are plummeting. Online piracy and counterfeiting are robbing artists of income. Meanwhile, Internet radio is booming. About 60 million listeners tune in to an Internet station every month, according to a 2008 report by JP Morgan North, American Equity Research. That's up from about 15 million listeners just three years earlier. One of the most popular Internet music sites and iPhone software applications, Pandora, creates personalized stations for listeners and is expected to bring in $25 million this year.

Some Webcasters say there's a big problem. The performance royalties that Internet radio stations must pay to broadcast music are so high, Webcasters say they're being forced out of business. They warn that if the rates aren't lowered, the entire music industry, from musicians to music lovers, will suffer. The Webcasters have done more than complain. They've formed a coalition with small record labels and listeners. They've won support from senators and congressmen, who have introduced legislation aimed at overturning the royalty rates. They've sponsored a day of silence in protest.

SoundExchange has negotiated deals so that some Webcasters can pay lower rates temporarily. And negotiations continue with the Digital Media Association, a trade association that negotiates royalties for its members. But ultimately, it will be up to Internet broadcasters themselves to find business models that turn a profit. For now though, predicting what's ahead for the digital music industry is difficult, if not impossible.