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Premature Eradication

NMC/Radio and Records eChart main column as published in the 3/15/02 issue of R&R A couple of weeks ago, I gave you a mathematical analysis of what it would mean to a successful online streaming outlet to comply with the CARP ruling on the fees that those netcasters will pay to the labels and to the artists.

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Those numbers, frightening to some, has claimed its first victim. City Internet Radio, one of the first online streaming services and an NMC reporter, already challenged to find a path to success on a consistent basis, has decided that this is all a bit too much to swallow. Even before the ruling is commented on, challenged, litigated, ruled and finalized, the City Internet Radio powers that be have thrown in the towel and said they will cease streaming as of this coming week.

This swift reaction and the chilling of other initiatives for online streaming indicate that sites don't have any faith that the sum and substance of the ruling would be any different after the comment period ends. City's situation is unfortunate, but indicative of what almost every other player in this space, including us with our NMC streams, are thinking - does the math work?

There's really no upside, right? Hiwire and others in the online spot insertion space will tell you that they can sell advertisers, but no one is making a business of this yet. One company that contacted me about handling ad insertion for our streams confided that his company sold a grand total of a few hundred thousand dollars for the entire year of 2001. That's all of their advertisers (a few dozen), all of their clients (some major players), all year long. Nothing at all to write home about, and the disastrous effects of the terrorist attacks on September 11th didn't help at all.

But are we jumping the gun? Are we heading for the hills screaming before we find out if the aliens are friendly? If the contentious history of the RIAA and anything online is any indication, probably not. There are few companies that can, on the one hand, generate any serious cash from low streaming numbers (that are more affordable to deliver), and would be hamstrung with higher fees and bandwidth costs should they become more popular. Is there a point of diminishing returns? We don't have enough information to know yet. JazzFM, the most popular online radio station according to Measurecast, has lost another huge bundle of cash - around $300,000 in their interim report.

Will sites go offshore or underground to stay alive? It's possible. There are already rumblings about randomizing IP addresses, the online equivalent of pirate radio stations, and closed-circle, warez-type sites that move around, only to be found by those invited to partake. Criminalizing this space is a horrible result to what should ultimately be an beautiful relationship between the music and online fans.

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