Bay Area leading light SomaFM faces crippling debt and insolvency along with many of its Internet radio peers including Pandora and Live 365 this Spring. Late last March, the Copyright Royalty Board — three dudes in Washington — raised SomaFM's webcasting rates from $10,000 in 2005 to $600,000 for 2006 (applying retroactively).

Eric Lister

 

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The ruling is "fair," says the top honcho of SoundExchange, the royalty collection group lobbying for higher rates on behalf of the major labels and artists.

"Staggering," is more like it, says SomaFM founder Rusty Hodge. "We were expecting rates to go up 10, maybe 20 percent. It would be painful, but at least it wouldn't put us out of business."

SoundExchange says it needs top dollar for artists. "Webcasters have a number of opportunities to maximize revenue with ... banner ads, pop-ups, video pre-rolls, audio commercials," says John Simson, executive director of SoundExchange.

But Hodge says he isn't interested in annoying his listeners, and exposure means more than gold to the indie bands he streams. Webcasters will seek relief through the legislature, because Hodge doubts such relief will emerge during a possible re-hearing before the Copyright Royalty Board in the coming weeks.

Zooming out for a moment, the whole netcast debacle fits into a bigger picture that spells out the banal maxim: Fool me once, shame on you. Fool me twice, shame on me. Recording labels suffered two major burns in the 20th century: 1) Labels failed to negotiate terrestrial, on-air radio royalties and radio became a billion-dollar industry with their music; 2) Labels failed to negotiate royalties for music videos on MTV, and another empire cashed in.

Now, no one's building any more empires with their content, goddammit. Not Napster, Kazaa, Morpheus, LimeWire, or BitTorrent. Not YouTube (sued by Viacom), MySpace (sued by Universal), and definitely not a bunch of pissant throwbacks to college radio.

The majority of Americans who don't listen to netcasts should care about all this, because developments in that pond have ramifications for the on-air world, says Hodge. Terrestrial radio stations may soon face Internet radio's two sucky choices: 1) Pay SoundExchange through the nose for whatever the station wants to play, or 2) Save money by making direct, legal deals with record labels to play a label's free "Abomination of the Week." I'm looking directly at you, Korn Unplugged.

It's the opposite of payola but with all the effects, says Hodge. It's Dark Payola.

"They're going after the over-the-air broadcasters next," he says. "There's no doubt. And if you think media consolidation is bad now, wait till it's back to the old payola days."

At this point, you, the reader, are supposed to write congresspersons, sign petitions, and make bumpers stickers stating: "Down with Dark Payola!" There better be concerts, artists. Good ones. Plugged-in ones. Korn will not be invited.

Being a cynic means you get to be right a lot. So after expecting and then watching Internet radio webcasters strangled in their crib, there comes a certain dark glee in seeing Big Radio finally get its long-awaited approval for its horrid new HD system.

To recap what I wrote in March, HD Radio tops the list of corporate scams. The word "monopoly" fails to encompass this carny shill. Public broadcasting licenses are licenses to print money, and Big Radio's mints just got four times bigger with no givebacks to the public.

"A dream delayed" is what one FCC dissenting commissioner called the dream of a thousand little local radio stations doing their thing. New technology can boost the number of radio stations similar to TV's move to cable. If we stick to the metaphor, it's as if ABC, CBS, Fox, and NBC now owned all the cable channels too.

Cracks in my cynicism have come courtesy of more than dozen letters from all over the country. A lot of veteran broadcasters wrote in positing very cogent points. One pointed out: "All my peers in radio have been silenced, even though they don't want to go along." They say HD's flaws include super-bad distortion in the AM range and a bass-ackward interface courtesy of thirty-year-old technology.

Yet, these keen readers don't see HD and the billions of dollars that support it in Washington as a done deal. Public comments on HD are still open, they say, and people on the street seem to be voting "no" with their pocketbooks. "Big Radio covets our public airwaves," says Milspec390. "Our influence counts. Let's use it."

If by "influence," Milspec means "money," then yes, it does count. But most people are saving their influence right now for something more important to them ... like an iPhone.