Wired In
Interactive Net radio targeted
By Jefferson Graham
USA Today
MTV's Radio SonicNet calls its "Me Music" an attempt to bring radio into the digital age by giving online users more choice of what they listen to. You get to select the genre (jazz, for example) and the style (swing or bebop).
Users aren't downloading songs for free or trading pirated tracks with friends. But the Recording Industry Association of America, fresh from court wins against song-swap service Napster, has turned its legal sights to MTV and other Internet radio services that let consumers participate in what they hear.
The RIAA says webcasters who go beyond a preprogrammed listening experience should have to pay more for those rights.
So the RIAA is back in court, this time to resolve its differences with services such as MTV's SonicNet, Launch, MusicMatch and Xact Radio. Countersuits have been filed against the labels by webcasters and the Digital Media Association, a trade group.
Unlike the Napster battle, musicians so far are siding with the webcasters.
"We want to see independent distribution of music online, and the webcasters thrive," said Noah Stone of the Recording Artists Coalition, formed this year by Don Henley and Sheryl Crow to look out for the interests of musicians. "The labels' controlling this new path and the old path doesn't do the artists or consumers any good."
New approaches, RIAA fears
A handful of Net programmers have tried to profit from music fans' love of Napster — and desire for instant gratification — by offering similar services that they believe adhere to the law and that reward artists by paying copyright fees. Should they lose, netcasters likely will return to offering a mirror image of traditional radio, rather than broadcasting with interactive twists.
The recording industry fears that if consumers can, with a little effort, request songs online, CD sales could suffer. And the success of these radio services could hurt the industry's own paid subscriptions/services, expected this summer.
The battles have been spurred by the rules in 1998's Digital Millennium Copyright Act, when music labels feared a new world in which Net users listening to music online could record crystal-clear copies, eliminating the need to ever buy a CD again.
So specific provisions were written into the DMCA, which MTV, Launch, Xact and MusicMatch adhere to:
- Webcasters can't tell users what the next song is. MusicMatch gets around this by telling who the upcoming performer is.
- All abide by the rule of playing no more than three songs from any album, and no more than two consecutively, within a three-hour block.
- Webcasters also can't play more than four songs by a specific artist within three hours.
"We believe we've abided by the DMCA," said Kenneth Steinthal, the webcasters' attorney. "We have not impaired the labels' ability to sell records."
The "almost-on-demand" music sites aren't big now, but Net radio clearly is growing. Market research firm Webnoize says 21 percent of young Net users (ages 16 to 24) say they use Net radio as their primary source of listening, up from 1 percent in 1998. Overall, 75.5 million in the United States listen to Net radio.
The most popular of the services being sued, according to Jupiter Media Metrix's May numbers, is Launch, with 1.7 million visitors; MTV SonicNet, 1.2 million; and MusicMatch, about 1 million. (Launch has settled with one label, Universal, and announced that it was being bought by Yahoo! for $12 million. EMI, BMG and Sony continue with their lawsuit.)
The RIAA's Cary Sherman said the trade group was forced to sue when other webcasters complained that Launch, SonicNet and others were stretching the boundaries.
Vague language
Complicating matters is the meaning of "interactive" music services, something that no one seems to agree on. Webnoize analyst Ric Dube said the language in DMCA is "very vague," which is why Launch and the other webcasters filed their countersuit — they want a court to define the term.
The lawsuits kicked into gear because Launch and the other Webcasters sought to be included in a July 30 meeting of the Copyright Arbitration Royalty Tribunal, which sets what's called a "compulsory" license fee — lower than what labels would seek in individual negotiations — when both sides can't agree. The labels would get to keep 50 percent of the royalties; the rest would go to artists and songwriters.
The RIAA doesn't think the webcasters are entitled to the compulsory license. But recording artists could fare better under such a deal. If deals are negotiated between labels and webcasters, the labels then can pay artists the rate defined in their contract with the label, "which could be little or nothing," Stone said.
