Missing the point: net radio's last stand

In the same week that NMA announced that online (download) sales now acount for 90% of British single sales (yes, ninety!), the UK Copyright Tribunal did exactly what I was hoping they wouldn't: they followed the US CRB in effecting royalty charges that could kill internet radio in the UK entirely. What's more, the UK fees will be up to 9 times the amount their US counterparts will pay. Pandora, one of the most respected US services that had only recently started broadcasting in the UK, is preparing to shut down their UK operation as early as this week.

What stations like Pandora do is provide an excellent way of selling more records. Here's how: you type in the name of a song or musician you like, and Pandora plays you music that is similar. You may never have heard of the artist or song that Pandora plays to you, but if you like it, you can buy it from iTunes or Amazon at a single click. I have no doubt that this has led to an increase in sales, especially for lesser-known artists.

The whole purpose of royalty fees is to protect composers and performers (and of course record companies) by compensating them each time their song is played in public, thus generating income for them. But actions like the new net radio fees will only end up hurting music sales, which generate more income than royalties. The UK Copyright Tribunal and the US CRB have effectively killed off one of music's cheapest and most effective marketing tools.

Until regulatory bodies like this recognise that the world has changed around them and learn to adapt their ways of working to account for the digital age, it's a lose-lose situation. Regulation needs to evolve to support innovative business models like internet radio, or nobody wins.