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SoundExchange Missing the Point?

3:30 PM -- I love the Pittsburgh Pirates, but I hate the organization. Why? Because the Major League Baseball revenue sharing system guarantees the company makes a profit whether or not the team wins. And the management understands this, so the 2007 season will very likely extend our record streak of losing seasons to 15. Like the cynical decomposition of my favorite baseball team, SoundExchange's latest compromise on Webcasting royalties ruins something I greatly enjoy by punishing success.

The new proposal extends the Small Webcaster Settlement Act (link provided for reference -- I didn't read it either) to "small Webcasters" until 2010, while still demanding the insane royalties of "large Webcasters." The SWSA establishes some somewhat arbitrary criteria for the difference between large and small, but as SaveNetRadio (caution, it's a .pdf) notes, even the most successful Internet radio stations are still reasonably small businesses by most standards.

Arguing about this distinction misses the point entirely: Internet radio (just like terrestrial radio) is a promotional tool for many of the same artists that SoundExchange supposedly represents. It's not just not a zero-sum game -- it is actively detrimental to the entire industry to shut down the Webcasting. Sites like Pandora and Last.FM are specifically designed to direct listeners to new artists, thus increasing exposure. It is a service the public wants, and more importantly, a service in which the market believes: Viacom has expressed interest in acquiring Last.FM, and Sprint just struck a deal to offer Pandora on its phones.

Seeing as how SoundExchange's claims that they are trying to collect money for the artists are laughable, can we consider them some form of patent trolls? They are, after all, attempting to profit off an innovation for which they were not responsible.

— A.L. Friedman, Editor at Large, Light Reading

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