Bye-Bye Free Music

    Since the broadcast of a song over a commercial radio station has proven promotional value, radio stations only have to pay a flat fee to BMI and ASCAP and grand total of absolutely nothing in performance royalties to the record companies or artists. That's zero cents. Anybody who wants to can legally tape any song off the radio without paying royalties either, as long as it's only for their personal use. Hello free music and thousands of personal cassettes.

    Radio stations who broadcast radio over the Internet have always assumed the same rule would apply the Internet, where anybody who wants to can legally save any song played on the Internet without paying royalties. Hello overloaded hard drives and personal MP3 players.

    Then came a triple whammy. 

    Strike one: The Supreme Court of the United States, in a knee jerk reaction to Napster, declared that "computers are not recording devices," so traditional "fair use" in copyright law didn't apply.

    Strike two: The Digital Millennium Copyright Act (DMCA), states that the Librarian of Congress is required to set royalty rates for Web radio stations by May 21. 

    Strike three: The Copyright office put together the Copyright Royalty Arbitration Panel (CARP), who recently recommended that all broadcast radio stations who simulcast on the web should now pay recording companies a rate of 7/100ths of a cent per listener per song, while webcasters who DON'T also broadcast have to pay double that.

    Doesn't sound like much unless you consider that a) there is no rational explanation for why anyone should pay more for listening to their free music through an electronic device called a computer instead of an electronic devise called a radio, b) this brand new expense will double the operating cost of most Internet Radio providers, who constructed their business models around the "broadcast" template. Many will go out of business, and c) in the great tradition of reverse capitalism, they penalize you for being popular.

    It's arithmetic from hell. If this goes through, radio's the next logical step. Radios in cars will be replaced by satellite feeds where you pay for the service. Bye-bye free music unless you drive a classic.

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