After the Librarian of Congress set Webcasting fees on June 20, Yahoo was assailed as being responsible, since the fees were based on a Webcasting deal Yahoo made with the Recording Industry
Association of America. Then Mark Cuban, owner of the Dallas Mavericks and founder of Broadcast.com, which Yahoo purchased, said the Yahoo/RIAA deal was made to "shut out small Webcasters and decrease
competition."
If this is true, then why did Yahoo, after getting what it wanted, decide to cease Webcasting last week?
First of all, Yahoo hasn't completely stopped Webcasting. It is phasing
out streaming terrestrial stations but will continue to stream its own Internet-only radio channel, Launchcast. The decision to phase out the transmission of 250 terrestrial stations "didn't have to
do with the fees," according to Bob Roback, Yahoo's general music manager. "Our Internet only offering is compelling and in the long run terrestrial stations are our competitor, so retransmission is
no longer an attractive business for us." He also says the move transforms Yahoo from "an agent in the middle to a principle player."
Yahoo refuses to comment on the Cuban statement, which was
first reported by RAIN (Radio and Interactive Newsletter), and sent shockwaves through the Webcasting industry. Crippled by unusually high fees, the industry has lashed out at Yahoo for its purported
role in establishing them. It has been attacked as a large Webcaster eager to eliminate the competition.
What's also been attacked is the Yahoo/RIAA deal that was used to set the fees. The
Copyright Arbitration Royalty panel, which proposed the fees, based them on an actual deal that had been made so it could determine the rates. The problem is that the Yahoo/RIAA deal doesn't really
reflect the marketplace of actual buyers and sellers, since Yahoo isn't a terrestrial radio broadcaster or a typical Webcaster. Plus, the Yahoo/RIAA deal was made two years ago, "in the heat of the
dot-com craziness," according to RAIN, which may have inflated it.
But it's not just Yahoo that's being attacked for the fees. Like Yahoo, the RIAA may have its own reason for wanting the fees.
According to John Schneider, founder and president of Radiopoly.com, an Internet radio site, the "immediate bankruptcy of small Webcasters is precisely the goal of the recording industry. If there are
no independent webcasters, there will be no broadcast distribution outlet for independent artists, other than the virtual impossibility of getting their songs added on terrestrial radio. Artists will
be forced to deal with record companies to have any hope of mainstream market success, and the RIAA will be able to drop their expensive battle against the 'Napsterization' of their industry."