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This story appeared on Network World Fusion at
http://www.nwfusion.com/columnists/2002/0701bradner.html

The final (for some) report
 



Network World, 07/01/02	

The librarian has spoken. Right on schedule, the Librarian of Congress decided what royalty rates Webcasters will have to pay to stream music out onto the Internet. The decision is bad news for many Internet radio stations and listeners, and has the record companies poor mouthing their way to the bank.

This column follows two previous columns (see Subscription only? and 'Net radio update: Sanity may yet prevail) that covered progress of the proposal for Internet radio stations to pay royalties to record companies and performers. 

By law, the final decision about the level of the payments was left to the Librarian of Congress. At first glance, and in the eyes of many headline writers, the librarian came out swinging and cut the proposed fees in half. But in reality, the fees stayed just about the same for over-the-air stations that copy their broadcast over the 'Net and stayed prohibitive for most of the few thousand existing Internet-only Webcasters. Lower fees apply to some noncommercial Webcasters. 

The fee level will be hard for even the larger commercial stations with strong advertising revenue to justify - unless there is significant change in how much advertisers will pay to reach listeners halfway across the country. The fees are impossible for small experimental stations; I expect that almost all of them will go out of business soon.

To me, this is a shortsighted plan, but is consistent with the approach that the copyright industry has followed for many years. The industry has fought every technical advance with the claim that the technology will drive its members out of business. Historically, every time that the industry has lost its fight, such as in the case of VCRs, the industry winds up making lots of money. Every time it has won, the industry ends up killing the media - music on DAT tapes, for example. 

In this latest case, the industry is killing the companies that are experimenting with this new media, the very companies that would be most likely to figure out new ways for the copyright folks to make money. Sure, the commercial stations should pay a fee, but that fee should take into account what sort of revenue can be realized for this type of service. These fees do not do that.

When I last wrote about this topic, my editor wanted to know how it related to enterprise network professionals, the Network World target reader. A flip answer is that network professionals are people, and some of them find listening to music at work improves the environment. But the more important reason is that this is yet another example of the general case of pricing based on anything but the real world of what people are willing to pay.

Something we run into all the time in the network business. 

Disclaimer: Harvard's music department did not tell me what it thought of this topic, so the above lament is my own.

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