The Urban Link

By Glenn Peoples, Nashville

Pandora and Spotify Face Different Issues In Getting Music Rights
Let’s revisit this statement in 10 or 20 years: Streaming music services such as Pandora and Spotify are “not radio substitutes any more than your Walkman, CD collection or iPod ever was,” Lew Dickey, CEO, president and chairman of Cumulus Media, tells AdWeek. Instead, Dickey believes they are threats to CDs and downloads but not free local radio.

Dickey could be right. Only a time machine would help us know for sure. But I’m guessing people not in the traditional radio business would probably wager his statements prove to be wrong in a decade or two. Pandora is radio-like in many ways. It thinks like a radio company. It calls itself a radio company. And it is very open in its desire to displace traditional radio companies.

Actually, Dickey is probably half-right. The clues can be seen in the different ways copyright law treats webcasting like Pandora (the online parallel to radio) and on-demand services like Spotify (the online parallel to the CD collection or iPod). The Digital Performance Right Act of 1995 grants webcasters a compulsory license for the music they stream. That’s a lot like the way a radio station pays for its performances of music. In addition, limitations are placed on how webcasters stream songs. This makes webcasting similar to radio in its level of non-interactivity.

But the DRPA treats on-demand services differently because they have a greater potential to act as a substitute for purchases. So, unlike webcasters, on-demand services don’t get a compulsory license. Instead, they must negotiate with rights owners for use of their catalogs. As a result, it’s more costly to operate an on-demand service — because legislators believed there is a greater chance on-demand listening will cannibalize music purchases. Now, there is not yet evidence of cannibalization. But the law clearly shows people were expecting cannibalization back in 1995. ( AdWeek)

Read the full article at GetItDoneBlog.net

http://getitdoneblog.net/2012/01/16/article-is-internet-radio-a-substitute-for-radio/comment-page-1/#comment-2152 (January 17, 2012)

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