Due to coverage of yesterday's late-breaking news of the RIAA/DiMA webcasting royalties proposal, we've postponed Part 5 of Kurt's "The Future of Radio" series until Monday's issue. If you'd like to go back to previous installments of the series, simply click the following links: Part 1 — Part 2 — Part 3 — Part 4.

BY PAUL MALONEY
The biggest news about yesterday's late-announced webcasting royalty agreement between the RIAA and DiMA (see yesterday afternoon's RAIN News Flash here) is that it's really no significant change from the 1999-2002 Librarian of Congress's rate.

The agreement, however, does save both sides a costly arbitration to settle the rate at which webcasters would pay royalties to the owners of sound recording copyrights for the use of their music. .

Late yesterday DiMA, a lobbying group that represents mostly large webcasters and technology companies, announced that it had reached an agreement with the Recording Industry Association of America (RIAA) on a webcasting royalty rate for 2003 and 2004. The joint proposal was submitted to the Copyright Office, which presumably will publish the deal for review and comment, then decide whether to approve it for industry-wide use.

Under the deal, "nonsubscription" webcasters would have the choice of paying 0.0762 cents per listener per song (actually slightly higher than the Librarian's determination), or 1.17 cents per listener per hour (which means this rate would be advantageous to the webcaster if the channel averages more than 15.35 songs per hour). Minimum fees for nonsubscription webcasts leap to $2,500 per year (from $500 per year for 1998-2002).

Smaller webcasters — those with revenues of less than $500,000 in 2003 — will continue to be able to elect, if they prefer, the rate set in the Small Webcaster Settlement Agreement — 10% of the webcaster's first $250K in gross income and 12% of any additional income (or 7% of expenses, whichever is higher).

"First, webcasters remain at a competitive disadvantage to terrestrial radio by having to pay huge royalties for sound recordings that broadcasters get for free," acknowledged Jonathan Potter (pictured below right), executive director of the Digital Media Association (DiMA). "And second, the arbitration process that determines these royalties is sorely in need of reform."

Absent a joint industry proposal to the US Copyright Office, the Digital Millennium Copyright Act (DMCA) mandates that the Copyright Office convene an arbitration panel to recommend a royalty rate to the Library of Congress. This arbitration, known as the Copyright Arbitration royalty panel (CARP) wasset to begin May 5.

The executive director of SoundExchange, the record industry body set up to collect and distribute the royalties, agreed that avoiding arbitration was a benefit, and added that the proposal would prevent webcasters from "holding out" on the money they owe.

"Webcasters had stopped paying royalties pending the setting of new rates even though they continue to exploit sound recordings for their businesses," said John Simson (pictured below left) in a press release. "This action threatened to deprive SoundExchange of royalties necessary to continue operations, and the Register of Copyrights has even asked Congress to clarify that webcasters cannot do this in the future."

Note that this deal includes terms for new subscription-based models, which can pay the same rates as nonsubscription webcasters, or instead can pay 10.9% of the subscription revenues, (but at least 27 cents per month per subscriber), with a $5,000 per year minimum for webcasters electing the "percentage-of-subscription-revenue" rate.

Also note that webcasts of AM/FM broadcasters and those of noncommercial/nonprofit entities are not eligible for this deal. Also excluded would be small webcasters who have elected to pay royalties under the Small Webcaster Settlement Act of 2002, or SWSA.

Some webcasters complained that the new proposal does nothing to help the upstart businesses in the industry. According to DiMA's press release, bigger media companies like RealNetworks, Yahoo!, America Online, Microsoft, MusicMatch, Listen.com, and FullAudio support the deal.

Even Potter admitted that this proposal's main benefit would be to keep the royalty determination out of arbitration. "The agreement is a temporary band-aid that avoids millions of dollars of legal fees associated with a broken arbitration process," he said in yesterday's press release.

If you're planning to attend NAB 2003 in Las Vegas (April 5-10; details here), we hope you'll join us for our RAIN reader get-togther. We've reserved the patio of the Gordon Biersch Brewery Restaurant (about a $4 cab ride from the Convention Center) on Tuesday, April 8th. This year, we've also reserved a private room for the U.S. debut of Kurt's "The Future of Radio" speech for those who'd like an advance look at it. (Please note we've moved the time up a bit. The presentation will now be at 4:30pm, and cocktails at 5:00pm.) See you there!

BY PAUL MALONEY
Coverage of the US/Iraqi conflict is driving increased media use among consumers, and that includes news and talk available via Internet radio.

ABC Radio's WLS-AM/Chicago and Clear Channel KFI-AM/Los Angeles both reached the top ten most-listened-to Net radio channels according to Arbitron's Measurecast ratings for the week of March 17. WLS-AM hit number three with 255,623 hours TTSL (or Total Time Spent Listening). KFI-AM ranked tenth with a 130,233 TTSL.

And, according to their content delivery service provider Speedera, National Public Radio (NPR) saw a record 8-fold increase in audio usage on the first day of the war. NPR's site offers original online content and audio streaming, hourly newscasts, and seven years of archived audio and information. NPR's online listenership is not rated by Arbitron.

"With the beginning of the war, we have seen a significant increase in online tuning to news and talk Internet radio stations," said Bill Rose (pictured below right), vice president and general manager, Arbitron Internet Broadcast Services, in a press release. "For the week of March 17, the 65 Talk and News/Talk stations measured by Arbitron MeasureCast Ratings had a combined 1,389,717 hours of TTSL, nearly three times the listenership of the same stations for the week of January 27, which had 493,430 hours of TTSL."

In September of last year, KFI ranked #48 in Measurecast's monthly rankings (at the time a separate competitor of Arbitron's, here) with just 125,896 TTSL for the month, while WLS was not rated in the top 50. In fact, Cox News/Talk WSB-AM/Atlanta was the highest-rated News Talk station at #26, with 182,995 TTSL for the month. Arbitron's monthly ratings for that period (here) have Bonneville news station WTOP-AM/Washington D.C. at #18 (193,700 TTSL, again, a monthly total), the highest news or news/talk outlet of all rated stations.

One year prior to that, for the month that included the September 11th terrorist attacks in New York and Washington, WLS was ranked #27 (64,816 TTSL), while KFI did not appear in those ratings (here, though WSB-AM was #8 with 137,250 TTSL, and Salem KRLA-AM/Los Angeles was #16 with 95,525 TTSL). Boston University's WBUR ranked #4 in Arbitron's list (here), but with only 187,400 for the entire month.

The US debut of Kurt's "The Future of Radio" speech (in a slightly-condensed preview version) will take place next week in Las Vegas, immediately preceding the RAIN Reader Cocktail Party at Gordon Biersch Brewery Restaurant (Tuesday, April 7th, at the new time: 4:30 PM). To reserve a seat for the presentation, call 1-312-527-3879 or write kurt@kurthanson.com.