BY KURT HANSON
In yesterday's issue of RAIN (here), Broadcast.com founder and current Dallas Mavericks owner Mark Cuban revealed his thinking behind the licensing deal he helped put together between Yahoo! Broadcast and the RIAA in 1999.

That deal has become incredibly significant, because both the recent Internet radio CARP arbitration panel and, subsequently, Librarian of (CONTINUED BELOW)

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And that is almost exactly what

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From the press release: "Voice of Webcasters (VOW), a coalition of small commercial webcasters formed to promote Internet radio, today decried the June 20, 2002 decision by the Library of Congress establishing royalty rates to be paid by webcasters for the performance of recorded music on the Internet.

"The Librarian's decision lowered the rates proposed by a Copyright Arbitration Royalty Panel ('CARP'), which had suggested even higher rates to the Library in February.

"'These rates, while lower than those proposed by the CARP, are still so high that they will drive small Internet radio stations out of business, and impose such a high barrier to entry that only the largest corporations will be in a position to establish new webcast operations,' said Mike Roe [left], VOW member and President of RadioIO. 'As these rates will put small, commercial webcasters out of business, we have no choice but to fight this decision in courts and in Congress, unless the music industry will finally answer our calls to join with us in reaching a mutually agreeable solution.'

"VOW also condemned the current CARP structure that doesn't allow for small, commercial businesses to participate, and is currently based on 'willing buyer, willing seller' agreements that may not accurately reflect a copyright market value that is representative of the entire industry...

"VOW believes that fair rates and terms for royalties to performers should exist, but must be based on % of revenue, similar to those paid to the performing rights organizations for the copyrights on musical compositions...

"VOW is planning further activities to protest this decision, and to continue informing the public and Congress on the ramifications of last week's announcement."



From an editorial in the San Jose Mercury News: "Webcasters got some help last week in their continuing dispute with the record industry. But the relief won't be enough for most Internet radio stations to thrive and for many to survive. It's time for Congress to intervene on their behalf.

"In a much anticipated decision, the Librarian of Congress cut in half the performance royalties that Internet-only radio stations will have to pay artists and the record labels to broadcast their music. He set it at the same rate -- 7 cents per 100 listeners per song -- that AM or FM stations would have to pay to transmit their broadcasts on the Internet...

"The recording industry says it's open to negotiating with small Webcasters, but the Webcasters say there's been no good-faith discussions, and time is quickly running out. In October, Webcasters must pay four years' worth of royalties, retroactive to 1998. If nothing's settled by then, many may go dark. Internet radio would begin to resemble broadcast radio, dominated by a handful of corporations and homogenous programming. A diverse, vibrant part of the Internet would disappear before it had a chance to develop.

"Congress must not let that happen. It created the performance royalty and imposed it exclusively on Internet radio. It established the process by which it was to be set.

"That process has failed, and must be changed, quickly."

Read this entire editorial from yesterday's San Jose Mercury News here.

From Washington Post columnist Marc Fisher: "On Radio Del Ray the other day, deejay Michael Del Colliano came out of a Doors tune to note that 'incidentally, Jim Morrison went to high school right down the street from Studio B here. 'A few minutes later came a plug for St. Elmo's Coffee Pub, a neighbor of the Alexandria radio station and host to its regular concerts featuring local musicians...

"On the Internet for the past few years, people who missed the community that radio once provided -- and people who crave the kinds of music radio has banished -- have found something new and fresh...

"But the sounds of freedom dimmed last week, when the Librarian of Congress, James Billington, decreed a fee scale that's likely to silence most Internet stations.

"Billington approved a structure that lets traditional broadcast stations pay royalties only to the writers and publishers of songs they play, while Web stations must pay those fees plus extra royalties to the record companies and performers of the music...

"The big companies that produce most recordings and program much of radio fear seeing their audience splinter into such tiny pieces that advertisers would no longer see value in paying for airtime.

"This is the same kind of strategy that last week led Circuit City to wipe videotapes off its shelves. Never mind that virtually all Americans have VCRs and only 30 percent have DVD players. We have offended our corporate overlords by taping too many movies, and we must be punished by being forced to adopt a technology that offers Hollywood more control over how we use their product.

"Similarly, the fraying of radio ratings and the decline in music CD sales turns any alternative -- no matter how tiny -- into a threat. Thus, the incipient demise of Internet radio, even though only about 20 percent of Americans have listened to it."

Read Fisher's column today in the Washington Post, or online here.



From Streaming Magazine: "Loudeye today announced that approximately 37 percent of the company’s current workforce will be affected by a restructuring that will include layoffs and pay-cuts [CFO Brad Berg has reportedly been let go]. Upon completion of the restructuring, the company will retain approximately 130 full-time permanent employees...

"In addition to the headcount reductions and other cost containment actions, executives at the company have accepted a ten percent salary reduction. The company expects to record a charge of approximately $1.7 million in the second quarter related to these actions.

"'We are determined to reach operating cash flow break-even by the end of the year while maintaining sufficient capital reserves,' said John T. Baker, Loudeye chairman and chief executive officer. 'It is clear we must both grow revenues and reduce costs to achieve these targets. Today's announcement demonstrates our steadfast commitment to take the measures required to reach our goals.'"

Read this entire article here.