This comes from the broadcasters forum at Live365. It is probably the best post I have ever seen about the current state of the music industry and why they want to control Internet Radio and to some degree, the very music you can hear.
The problem for the RIAA labels is, even if they had gotten on such a bandwagon, they simply cannot compete and survive in a niche dominated digital world in their present form. That is why I think they have resisted from the very beginning and attempted to, in essence, find ways to choke off emerging competitors by means of legislation rather than the marketplace.
The reason they cannot survive is this: thanks to the wonderful technological advancements of the past decade or so, ANYBODY who wants to can get into the business of producing and distributing music. Back in the days when it required very large amounts of capital in order to record, manufacture and distribute a sound recording, would-be competitors were kept at bay by the very high financial barriers to entry. Today, there are artists out there who are producing recordings and giving them away for FREE as a means of publicity.
An artist or a mom and pop label can make money off a recording that only sells a few thousand copies. The RIAA labels cannot. They make their money on mass market hits and their entire marketing and distribution systems are set up for the purpose of creating and selling such hits. That is what they are good at - and it is something that mom and pop labels and independent artists are simply not able to do on their own.
As the market for music continues to splinter into niches, the RIAA labels are increasingly at a DISADVANTAGE. Up to now, their formula for promoting music was to fork over large amounts of payola, prostitutes and plane trips to woo the program directors of key major market FM stations for airplay - stations where independents never got past the door. As the Internet becomes increasingly influential in introducing audiences to new music - well, that dooms the RIAA labels. Even the big RIAA labels do not have the sort of budgets necessary to market themselves to thousands and thousands of Internet stations and websites in the same manner they had the FM stations. Most Internet stations do not have a large enough audience to make it worth their while. About the most one can afford to spend on promoting recordings to a given Internet station out of many thousands is perhaps free CDs and maybe a snail mail. But that is the sort of marketing that mom and pop players are just as capable of engaging in. And, if that is the case, why should an artist even bother to sign up with an RIAA label if they are no longer able to generate large amounts of airplay? Plus, unlike the RIAA labels, the mom and pop players do not have clunky global bureaucracies that have to be supported and are thus able to be more efficient and cost effective.
That's why I think the RIAA fears Internet radio even more than it does the illegal downloaders. In a few years, when enough people have discovered the WONDERFUL world of music that exists outside the lowest common denominator mainstream of mass market hits and cease to behave like good little sheep and start exploring that glorious new world - well, the RIAA labels will be lucky to have people who even WANT to steal their music. When music audiences splinter into hundreds and thousands of little niches the RIAA labels will die a death of thousands and thousands of ant bites. And Live 365 has to be their worst possible nightmare - I don't think there is anyplace else on the Internet where one can find the sort of musical diversity as exists here.
The purpose of the CRB rates is to create a needless, artificial barrier to entry on the Internet necessary to eliminate would-be competitors to the major labels mass market hit generating machine. The RIAA wants to create a world where the ONLY recordings that will get airplay on the Internet are recordings that have an economic value of .019 cents per listener - i.e., those recordings that appeal to the widest and lowest common denominators. Of course, even if they get their CRB rates, the only thing it will do for them is buy them a little extra time. It will kill Internet radio - for a while. Eventually, all of the mom and pops and niche genres who will be locked out at .019 cents will find some way to make it easy for Internet stations to play their material and Internet radio will come back with a vengeance.
The big RIAA labels are basically expensive middlemen between artists and audiences that no longer have any reason to exist either technologically or economically.. When what remains of their influence in terms of promoting goes away - well, they will go away too. For that reason, I don't think that there is anything that the major labels CAN do or COULD have done in order to save themselves. I think the people in the highest positions at major labels have been aware of this fact since the get-go and they have been almost entirely focused on trying to kill off the world of the future rather than undertake the losing battle of finding a way to compete in it.
I am not aware of any industry in history threatened by technological obsolescence which was able to put the genie back in the bottle in the long run. Eventually, a tipping point will be reached and the major labels and the RIAA will simply implode in on themselves - much like what happened in the old USSR when it was no longer and the money and might to excercise its absolute control over wide areas filled with discontented populations. Let's hope that this happens sooner and not later. If the Christmas prediction in the article holds true, music fans everywhere might be able to say: "The music industry is dead; long live the music industry!"