Hobson’s Choice for Net Radio
Hobson’s Choice for Net Radio
Hobson’s Choice for Net Radio

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    If you've been following the controversy over webcasting fees, you know that the higher fees recently set by the Copyright Office would effectively shut down all kinds of Internet radio broadcasters. Those fees were set to go into effect in the coming week, to the dismay of webcasters and music fans alike. But at a closed-door meeting yesterday, SoundExchange agreed that it would not ask for the prohibitively expensive minimum fees.

    Any celebrations are likely premature, though. First of all, the deal isn't necessarily final. So if negotiations blow up, we could revert to the higher rates. But more worrisome is the specter of mandatory DRM.

    Take a look at the proposed terms of the deal, as reported by the Washington Post:

    Yesterday during a meeting of both sides organized by members of Congress, SoundExchange offered an annual fee cap of $50,000, if the broadcaster reports everything that is played and adopts technology that limits the ability of listeners to copy broadcasts.

    And from the Radio and Internet Newsletter:

    [SoundExchange Executive Director John] Simson said there were two conditions attached to this solution: “First, that they become much more compliant in their reporting obligations — only 3 of the top 20 webcasters are in perfect compliance, and only 11 have even tried — and we need to move to census as soon as we can. And we asked for their help with stream ripping, to work on a technologically-feasible solution.”

    SoundExchange wants to stop users from recording songs off net radio. The phrases “copy broadcasts” and “stream ripping” might be tinged with connotations of illicit infringement, but these activities are no different in practice than what people have been doing with tape cassettes and their broadcast radios for decades.

    And this isn't a mere matter of some webcasters deciding that they prefer DRM or not. What's being proposed here is far more troubling. The Copyright Office-set rates are so ridiculously high that any small webcaster who doesn't aide by SoundExchange's terms might as well just close up shop. It's their way or the highway. And that makes the DRM provisions of the deal a de facto mandate, in which SoundExchange gets to determine what kinds of distribution technology will and won't be allowed in the marketplace. And do we really want to leave the future of information technology in the hands of the record labels and their allies?

    But even if the agreement allows webcasters to choose from a variety of DRM technologies, the listeners and the public at large are the ones who lose. What this means for consumers is that the vast majority of net radio will be intentionally crippled–it will prevent listeners from exercising their fair use rights to teach, report on, criticize, parody, or time-shift these works. And the DMCA makes it illegal to crack the proposed DRM, even if it's to make a completely fair use of the work.

    The deal struck may be better than no deal at all, but it's hardly an evenhanded bargain between two parties–it's more like a ransom negotiation. The major labels were handed their weapon by the Copyright Office–the exorbitant royalty rates that webcasters large and small alike would have had to fork over to SoundExchange–the RIAA-originated collecting society. The threat of enforcing the punishing fee hike is enough to get webcasters to concede to terms that treat their listeners like thieves.