Recording Industry Wins Copyright Issue, But At What Cost?

A three judge panel decided that the Copyright Royalty Board decision about Internet music royalty rates should stand. Companies providing streaming music over the Internet have been vocal in saying that the rate hike would make the difference between any profit for them and running in the red. According to this press release, John Simson, executive director of SoundExchange, the industry group that accepts and distributes the royalties, made the following statement:

Our artists and labels look forward to working with the Internet Radio industry
-- large and small, commercial and non-commercial -- so that together we can
ensure it succeeds as a place where great music is available to music lovers of
all genres.

The question is whether of the companies involved are being realistic. On one hand, the Internet stations, which includes traditional and public radio stations that stream over the Internet, say that they can't afford the new rates. But simmering under the surface of words is an air that I can only classify as entitlement. Of course they want their businesses to exist, but why should the recording companies have to take less than what they want?

At the same time, it seems that the music labels might believe, as this Fortune story suggests, that the stations will adapt and make enough money to stay in business. If not, then it would be clear that the recording industry is targeting the stations - either because the labels think that they'll get more sales of CDs or licensed music for MP3 players, or possibly that the larger labels want to bury the small and independent ones so that few people hear their offerings and buy their products instead of mainstream recordings.

It's usually a good bet that truth is somewhere in the middle. Yes, some number, perhaps many, Internet radio stations will go off the air, and the ones remaining will be those that find ways of making money. But it's been clear for years now that the record labels are in a state of constant reaction to change in technology and listener habits. It wants to keep control over a situation that it has only controlled in its imagination. As much as the stations want a world that will orient itself around their needs, the recording industry wants the same thing. While the end for many if not all of the stations will be swift and obvious, the problems facing the labels will be slower, more subtle, but no less inevitable.