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Thursday, March 8, 2007
On the continuing death of Internet radio 
| | Only this time Jesse Helms isn't around to save it. We have to find other means. Or it will die. |
| | Here's some background many mainstream (and online) journals are missing: The insane fee structure that the CRB process today impose on Internet radio traces back to a deal between Yahoo and the RIAA that was based on plans Mark Cuban made when he was still at Broadcast.com (the company he founded and sold to Yahoo for $5.7 billion) that were intended to snooker small webcasters out of a market that Broadcast.com/Yahoo then dominated. Here's what Mark wrote to Kurt Hanson's RAIN in 2002: |
| | It's very interesting that they built this on the Yahoo!/RIAA deal. |
| | When I was still there (the final deal was signed after I left Yahoo!), I hated the price points and explained why they were too high. HOWEVER, I was trying to get concession points from the RIAA. Among those was that I, as Broadcast.com, didn't want percent-of-revenue pricing. |
| | Why? Because it meant every "Tom , Dick, and Harry" webcaster could come in and undercut our pricing because we had revenue and they didn't. Broadcasters could run ads for free and try to make it up in other areas so they wouldn't have to pay royalties. |
| | As an extension to that, I also wanted there to be an advantage to aggregators. If there was a charge per song, it's obvious lots of webcasters couldn't afford to stay in business on their own. THEREFORE, they would have to come to Broadcast.com to use our services because with our aggregate audience, if the price per song was reasonable, we could afford to pay the royalty AND get paid by the web radio stations needing to webcast. |
| | More importantly--and of course I didn't tell the RIAA this--we had a big multicast network (remember multicasting? Yahoo! didn't seem to after I left). Well, multicasting only sends a single stream from our server, so that is what we would record in our reports for the RIAA, and that is what we would pay on. |
| | So that was the logic going into the Yahoo!/RIAA deal. I wasn't there when it was signed, but I'm guessing and I've been told that there weren't dramatic changes. |
| | Now, no one asked me any of these things prior, during, or after the first or second pricing. I'm not sure that this matters. But if it does, here it is: The Yahoo! deal I worked on, if it resembles the deal the CARP ruling was built on, was designed so that there would be less competition, and so that small webcasters who needed to live off of a "percentage-of-revenue" to survive, couldn't. |
| | So, as I also put it in 2002, ...the real plan was to squash the little guys and play rope-a-dope with regulators by funneling many streams into only one, so Yahoo! would spread the cost of one stream across hundreds or even thousands. Nice, huh? How come the CARP panel didn't pick that up in its "far ranging inquiry"? Mark Cuban's a talkative guy. Did they even bother to ask him about it? |
| | Apparently not. So, as I put it today in today's piece, Now it's five years later, and we have another crazy decision, based on law built on bad guesses at the height of the dot-com bubble, about what the Internet radio business might become. |
| | There's a book's worth of lawmaking and regulatory insanity in this whole thing. But I see one positive way to approach fixing it: by making a bi-partisan appeal to congressfolk: |
| | This decision has much to offend both free-speech-loving Democrats and free-market-loving Republicans. Especially the latter. You're not going to find a better example of government interfering with free markets — or preventing them outright — than with this one. |
| | Internet radio is a canary in the coal mine of an insane Net-hostile Regulatorium that stretches from the cableco/telco duopoly to the copyright oligarchs who are strangling what Professor Lessig calls Free Culture. That Regulatorium should be the enemy of every free-market Republican and every free-speech Democrat. It's slowing down the U.S. and its businesses as competitors in the World Wide Marketplace we call the Net. |
| | Will this decision to execute the Internet radio canary motivate us to do what we should have been doing more of for the past ten years? That's up to you and me. |
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