Second Thoughts about Web Radio Reprieve?
By Wes Phillips July 22, 2007 — That harmonious accord between SoundExchange and the Digital Media Association (DiMA) on webcasting that we reported last week? Apparently not so harmonious—and possibly not even an accord.

The agreement as we reported it came about in a closed session of the House Commerce Committee's Telecommunications and Internet Subcommittee. It set a cap on royalty payments for small webstreams and required large webcasters to become more compliant in reporting what they have broadcast. That seemed like a reasonable first step, but it seems there was also a poison pill in the form of an additional requirement for webcasters to "work on a technologically feasible solution" to stop people from recording Internet radio. Stream-ripping, as it is called, uses software to convert audio streams into MP3 files—low-fidelity MP3 files, since most webcasts are streamed at 64kbps or 128kbps.

The Los Angeles Times' John Healy observed, "Large webcasters have already agreed to work on the problem with SoundExchange, but they resent having the minimum-fee gun held to their head. Those fees are intended to cover the cost of collecting and distributing royalties, which isn't related to the issue of copy protection. Nevertheless, the minimum fees would exact such a toll—according to DiMA, Pandora, Yahoo! and RealNetworks alone would owe more than $1 billion—that they give SoundExchange tremendous negotiating leverage."

Healy suggests that the RIAA's preferred tool for this would be from Media Rights Technologies (MRT), which is truly a frightening thought. Click the MRT hyperlink and you'll enter a parallel universe where MRT petitions the Library of Congress to revoke webcasting licenses from iTunes, AOL, Rhapsody, Yahoo!, RealNetworks, and MSN Music, arguing, as we read it, that by not utilizing MRT's technology, they "incorporate or accommodate stream-ripping."

Even if Healy is wrong about MRT being SoundExchange's go-to solution for stream-ripping, any scheme would involve webcasters installing anti-copy technology at the source and consumers using that technology's media players on their end—which sounds like an inter-operability nightmare. Further, it seems to violate existing fair use rights.

That's not all we don't understand, either. DiMA's executive director Jonathan Potter and SoundExchange's executive director John Simson have been trading letters all week accusing one another of obfuscation and deception. On July 17, Potter fired off a letter charging SoundExchange with making "unrelated and unworkable demands as a condition for resolving the minimum fee issue." He followed it with a press release calling the stream-ripping requirements "backtracking" and "unrelated technology mandates that have previously been rejected several times."

Simson responded on July 18 with a letter characterizing the DiMA press release as "disingenuous" and part of a "pattern of misinformation, mischaracterization and political maneuvering at a time when we should all be focused on negotiating, as several Members of Congress have urged."

Really, you have to read the exchange for yourself. Fortunately, Wired's Eliot Van Buskirk has not only prepared a helpful timeline, but has posted the letters and the press release in their entirety.

It would be funny if it weren't so very, very sad.