Royal Flush: The Battle for Digital Music Royalties

Can Net radio find a way to survive?

December 19, 2000 12:00 AM ET

While the battle over bootleg MP3s wages on, the recording industry is trying to shore up ways that artists can get compensated for at least one other form of digital audio: streaming music. To do this, the Recording Industry Association of America recently launched SoundExchange (www.soundexchange.com), a collection agency that would procure royalties from sites that play music in streaming radio format. Yeah, it's a good plan, but a collection agency run by an association that represents the five largest record labels is a conflict of interest. If the industry really wants to represent the best interest of artists -- including independents -- than it should organize a third party group to monitor the streams.

There's no question that the time has come for artists to get compensated for streaming music. Thousands of sites are now profiting in part by offering music in Real or Windows Media format. On these sites, a listener can tune into the songs but not easily save them on a hard drive -- kind of like listening to music on a car radio. And, as with offline radio, artists should receive royalties based on how often their songs are played.

Thing is, streaming music is still very much a Wild West. Everyone is getting in on the action. Big offline radio stations are now streaming their broadcasts online. DIY web sites are creating their own streams. And even individual fans are taking part. Right now, just about anybody with the will and technical know-how can stream music online. On a site like Shoutcast, for example, anyone who downloads the wares can broadcast his or her entire CD collection.

Monitoring/tracking all these sites is no easy task, though. First off, there's a technical challenge: how to keep track of what's playing online on hundreds of thousands of sites around the world, when it's playing, etc. If that's not formidable enough, then there's the chore of actually following up with all these sites and, more importantly, getting them to pay. Will Joe Blow indie DJ actually pay? Doubtful.

Ultimately, it would probably only be the commercial radio sites that would have to fess up. And surely the RIAA would know how to collect. For major recording artists like, say, Britney Spears or Madonna, there's probably no harm in letting the RIAA handle the funds. But it's the indie artists who potentially have the most to lose. After all, they've specifically chosen -- for whatever reason -- to stay outside the fray of the major label recording industry. Why should they be forced now to go through the RIAA to get paid? Who's to say the RIAA will prioritize their interests? They'd be better off having some separate organization that would represent the interests of both artists and labels.

What does all this mean to listeners? If SoundExchange becomes the standard, you might see fewer independent sites offering streaming music. Having a less biased collection agency will ensure the Wild West of music online stays, if not wild, at least interesting. Otherwise, it's just lame old commercial radio all over again.

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