Cut Off in Midstream
By Lincoln D. Stein
Over the years, the Web development community has come up with some pretty kooky ideas, and by and large I've been able to spot them in advance. Examples include server push, Web-based grocery stores, and the idea that advertising alone will float a Web site. Sometimes I've completely missed a trend, for example, the concept that wiring your home with digital cameras and broadcasting your life to the world would actually attract a large number of viewers. And sometimes, I've been dead wrong.
One topic on which I've been dead wrong is streaming, which I derided a year or so ago as a misguided attempt to turn the Web into television. Streaming takes a live audio or video source, and transmits it in real time to whoever happens to be listening.
Audio streaming has become a popular way of transmitting live radio programs over the Internet. Video streaming is less widely used because of the bandwidth requirements, but content providers have used it with some success to retransmit television broadcasts and ever-present Web pornography. The most widely used streaming technology is the Real Player protocol, a product of Real.com. However, several other streaming technologies are available, including Apple's QuickTime, Microsoft's MediaPlayer, and the open-source MPEG standard.
My argument against streaming, roughly, was this: Why would people squander bandwidth on a passive experience that's no different from radio or television? The essence of the Web, I wrote, is its interactivity. Users won't waste time on a Web service that's a technically inferior substitute for a traditional broadcast medium. Boy, was I wrong.
My opinion of streaming started to change earlier this year when I learned that my wife listens to streamed NPR broadcasts throughout her workday. She sets up her laptop (a teeny-tiny Sony PictureBook) on her desk, plugs in two powered speakers, and tunes into to WHYY in Philadelphia.
When I asked her to explain why she was spoiling my beautiful theory, she explained that it was simply a matter of choice and reception. She doesn't care for the classical music program played by our local NPR station in the afternoon, and instead prefers to listen to Fresh Air and the other talk programs that WHYY runs. Another consideration is the poor radio reception in her large research building. As a tribute to Internet technology, the fidelity of streaming audio is superior to that of typical radio reception.
Feeling a bit chagrined, I started looking around, and soon discovered that hundreds of local radio stations stream their programming to the Internet. In addition to NPR, I came across talk stations, news stations, music stations, religious stations, and college stations. Overseas radio stations also stream: I found the BBC World Service fairly easily, as well as several French broadcasters. I looked up my college radio station (WJHU in Baltimore), and sure enough it was streaming live. Ditto for WBUR in Boston.
I felt like an expatriate, listening on the shortwave radio to news and events from places I'd left long ago. Recognizing the appeal of streaming, I began to reconcile myself to the idea that Webcastingas audio and video Internet streaming has come to be calledhas a permanent place on the Web.
Soon thereafter, I started to experiment with streaming. I looked into closed-source streaming products such as Shoutcast, which lets Webmasters with sufficient bandwidth operate their own Webcasts, and open-source equivalents like Icecast. And just for fun, I wrote an Apache/ mod_perl module for streaming MP3 files. I MP3-encoded my entire library of CDs, and now can listen to them from wherever I amwhether at the office or on the road (provided that I can get a decent Internet connection).
The Stream Runs Dry
Unfortunately, just as I was getting enthusiastic about Internet streaming, the headwaters dried up. On April 11, 2001, two coincidental events conspired to make it difficult or impossible for radio stations to continue their policy of Webcasting content.
The first event came when the Recording Industry Association of America (RIAA) and the Digital Media Association (DiMA), a trade group representing the Webcasters, offered different royalty payment terms for Webcast music from those for more traditional broadcasts. Under the Digital Millennium Act, copyrighted works can't be Webcast over the Internet without payment of royalties, but the appropriate royalty values for Webcasting have not yet been determined. In papers filed with the U.S. Copyright Office, the Webcasters proposed a royalty schedule of 0.15 cent per listener, per hour of copyrighted music. RIAA, however, proposed 0.4 cent per song, per listener, per hour: a rate Webcasters claim is approximately 30 times higher.
Although these numbers sound small, they add up. Last year, conventional FM and AM radio stations paid $350 million in royalties to the recording industry. DiMA arrived at its number by analyzing the rates currently used for terrestrial broadcasts (which garner 0.22 cent per listener, per hour). It derived the lower 0.15-cent value by reasoning that a Web audience is smaller than a conventional broadcast audience, and that the recording industry will benefit from exposing its music to a new audience. This is the "common and accepted practice" approach. RIAA chose the 0.4-cent rate on the basis of contracts that it had already negotiated with numerous Webcasters. This is the "what the market will bear" approach.
The Copyright Office is expected to begin the first in a series of hearings in July 2001 to determine the appropriate mandatory royalty rate. It will probably be less than what RIAA wants, but more than what DiMA proposes. I wouldn't be surprised if the Copyright Office settles on a value very similar to the rate for conventional broadcasts.
However, having seen RIAA all but shut down Napster, even the remote prospect of sky-high royalty rates scared some Webcasters out of the business. Soon after the filings, the Clear Channel Internet Group, one of the largest of the radio broadcast Webcasters, shut down its streaming operations, saying that it might resume Webcasting "when it makes legal and financial sense" to do so.
What really broke the camel's back, however, was an action by the American Federation of Television and Radio Artists (AFTRA), which filed papers with the Copyright Office in parallel with RIAA. AFTRA reminded radio broadcasters and their advertisers of a clause in the Radio Recorded Commercials Contract, signed in November 2000. This clause requires compensation for the artists involved in producing the advertising spots if the spots are rebroadcast across the Internet.
AFTRA and various news reports differ in their interpretations of the magnitude of the fees for Internet broadcasts. Most news reports quote the artists' fee for Web rebroadcast as three times the rate for conventional broadcasting. AFTRA's press releases have it the other way around; with Webcasting being discounted to one third of the artists' usual rates.
Whatever the actual rate differential, the effect on Webcasters was dramatic. At the behest of their advertisers, hundreds of radio stations closed their Webcast operations, from the Rochester, NY soft rock station KYBA-FM, to the St. Augustine, FL online news and radio station, staugustine.com.
Killing the Golden Goose
Radio Webcasters are caught in a double bind. They can't Webcast popular music without paying a high royalty rate to the music companies, and they can't finance the royalties with commercials because advertisers are unwilling to pay the additional commercial artists' fees. For now, at least, Webcasting is in a state of suspended animation.
Having shot itself in the foot over Napster, it seems that RIAA is now shooting itself in the head over the issue of Webcasting royalties. Webcasting is in its infancy, and nobody can tell for sure the value of the material that's transmitted across it. As radio did decades ago, Webcasting has the potential to expand the music audience, leading to heightened exposure for artists and increased sales in the record stores. If I were running RIAA, I would give Webcasting a chance to take root and mature before attempting to harvest it.
My feelings about the AFTRA issue are more ambivalent. Artists who write and act in commercials are underappreciated and sometimes underpaid. If their work is redistributed in digital form, they should be compensated, just as musicians should be compensated when people Webcast their songs.
Unfortunately, as I've already noted, the medium is just too young to know what value to set on Webcast advertising. On the one hand, Webcasting potentially reaches a far wider geographic audience than traditional radio or television. An ad rebroadcast on the Internet can be heard by anyone on the globe; a local advertisement suddenly becomes international. On the other hand, it isn't at all clear that an advertisement for a deli in New York City would have much of an impact in York, PA or New Delhi, India.
If advertisers are asked to pay more for the privilege of Webcasting their ads, they might not pay at all. Webcasters could digitally excise the advertising content and substitute filler music, but I don't see much incentive to go to the trouble of doing so. The combined efforts of RIAA and AFTRA may have nipped commercial Webcasting in the bud. For more information, read the
Fortunately, this doesn't trouble my domestic bliss. My wife and I listen to Webcasts from public radio, which hasn't been touched by these latest events. Yet.
Lincoln is an M.D. and Ph.D. who designs information systems for the human genome project at Cold Spring Harbor Laboratory in New York. He can be reached at email@example.com.