Today, Hanson and Rosenthal debate how and whether webcasting should be open to hobbyists, or only to those who can generate revenue for performers and labels. Later this week they'll discuss the promotional value, economic challenges and shifting categories of airplay.

How you learn to love music

Jay,

For the past 70 years, broadcast radio has been the primary means by which American consumers have discovered new music. For example, in my case, radio airplay is how I first discovered the Royal Guardsmen, Blood Sweat & Tears, the Fifth Dimension, and, later, Steely Dan, the Eagles, and Jackson Browne—artists I've subsequently purchased hundreds of dollars' worth of releases from. (Full disclosure: I actually only spent about $1.90 on the Royal Guardsmen; they lost me at "Snoopy's Christmas.") You could probably tell the same story about how you discovered music, too.

Even today, it's radio airplay that's the primary driver behind hit artists like Britney Spears, Maroon 5, and Akon. Radio airplay is the lifeblood of the U.S. record business—and the primary driver behind its most profitable releases.

But one limitation of broadcast radio has always been its "bandwidth." There's only enough spectrum allocated to the FM band to squeeze in about 20 radio stations in a typical U.S. city, which means that there's only enough room for about the 20 most popular music formats—country, top 40, R&B hits, '60s oldies, smooth jazz, alternative rock, classic rock, adult contemporary, Christian contemporary, and so forth.

Musical genres that aren't one of the 20 or so most popular don't make the cut. Thus, in virutally all U.S. cities there isn't a full-time blues radio station, or mainstream jazz, or Broadway, or '50s oldies, or indie rock, or Celtic, or cabaret music, or electronica. And in fact, in most U.S. cities there's no room for classical music, or pop standards, or singer-songwriters, or in some cases (e.g., New York City) even '60s oldies!

Satellite and Internet radio, fortunately, have come along to provide a solution to this problem of limited bandwidth for both the fans of these styles of music and the musicians and record labels who specialize in these genres.

In the cases of XM or Sirius, there's enough "bandwidth" on the satellites for about 60 music channels. Thus, pop standards, Broadway, and mainstream jazz make the cut... but Celtic, cabaret, and opera don't. The rules are the same as for FM; it's just that "20" has become "60."

In the special case of Internet radio, however, it's a whole new world, because "bandwidth" is essentially unlimited.

Thus, there's room on my company's service, AccuRadio.com, not just for a Broadway channel, but for an all-'60s Broadway channel, a "Now Playing" Broadway channel, and even an all-Sondheim Broadway channel. Internet-based delivery also gives us the freedom to offer a Guitar Jazz channel, a Native American music channel, a Pop Standards channel featuring only rock artists (e.g., Brian Ferry covering a Cole Porter song), and, surprisingly (in that it actually has some audience), an all-oboe Classical channel!

In all of these cases, we are helping make fans of those styles of music aware of artists and CDs that they didn't know existed. Plus, we offer convenient links on our media player to Amazon, so as to make the purchase of the CD that's playing a simple two-click process. Our listeners tell us that they're buying more CDs than ever before, because they're discovering things they never could have discovered before.

This, in a nutshell, is how Internet radio operates. If you'd like to read the comments of over 63,000 Internet radio listeners explaining the relationship between Internet radio listening and CD purchase behavior, click here.

And what I've described in terms of AccuRadio is not the "long tail" of Internet radio formats by any means. On services like Live365 and Shoutcast, you'll find webcasters offering such obscure formats as Christian bluegrass, barbershop quartets, videogame soundtracks, dancehall reggae, Japanese pop, French chansons, and much, much, much more.

So, Jay, the question posed for today's Dust-Up is this: If you're a commercial operation streaming an all-oboe Classical channel, there's no question that it's appropriate under current copyright law to pay certain rights fees to copyright owners as one of your business expenses. But if you're a hobbyist who wants to stream, say, a barbershop quartet radio station, with no desire to turn it into an income-generating business, is it necessary and appropriate to pay such fees?

On a philosophical level, I believe I would argue: Yes, it is; you should. After all, a record label went to the time and expense to produce the CD you're playing. It's copyrighted material. And, rightly or wrongly, the Digital Millennium Copyright Act says that a royalty should be paid on top of whatever promotional value the label and musician get when you expose that CD to new listeners. And the minimum royalty payment of $500 per year works out to only $9.61 per week, which is not a wildly-unreasonable expense for a hobby.

On a practical level, though, I think it might be appropriate to have some sort of de minimis cutoff. Many of the stations you'll find on Live365, for example, rack up less than 700 hours of listening per month, meaning that they have, at the average moment, only one listener (or less). Is such a hobbyist—who is expressing his love of a certain genre of music—harming the label, or the musician, or other webcasters, or the principles of copyright law by his efforts? I can't imagine so. Is it really necessary to make him hire a lawyer to review legal documents and send filings and reports to SoundExchange, while also taking $500 from him? I would think not.