Wednesday, March 07, 2007

RBC Weighs In On RIAA and Internet Radio

March 7, 2007

In a report issued today, RBC takes a look at the new RIAA rates as they relate to internet radio. RBC, as with many feel that these new rates will hamper the fledgling industry, and that the bigger and stronger companies will be the only players in town. Perhaps this can be an argument that sirius and XM can use as a selling point. The fact that they are a subscription service allows them to continue internet operations, and thus keep the competition in this narrow part of the media business thriving.

RBC Report Excerpts:

Broadcasting & Cable TV/RBC: Internet Royalty Settlement Increases Risk But Worst Case Scenario UnlikelyImplications From Copyright Royalty Board On Internet Radio Royalties Copyright Royalty Board (CRB) Adopts RIAA Proposed Royalties For Internet Radio-In late February, the Copyright Royalty Board elected to adopt, with a few minor exceptions, the webcasting royalty rates proposed by the RIAA pertaining to Webcasters. Most Internet radio operators have openly argued implementation of the RIAA proposal would likely result in making Internet radio streaming business a virtually non economic proposition for all but the largest few providers who have achieved massive scale (we agree). This occurs as XM/SIRI enter early phase of their own arbitration process with CRB to settle royalty issues (a process unlikely to be resolved till 12/07).

Criteria Used For Determining Outcome Suggests Less Onerous Result For XMSR/SIRI-That the newly approved Webcasting royalty settlement likely means the end to many Internet Radio stations currently broadcasting (and that no compromise was reached) suggests CRB has little regard for impact of higher fees on those who will pay. However, the criteria used for determining appropriate royalty rates includes technological contribution, risk to opening of new markets for creative expression and media, and capital investment. We believe DARS' billions in infrastructure investment will be viewed favorably vs. smaller infrastructure investment made by Webcasting Industry.

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3/07/2007 02:03:00 PM

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