When the Music’s Over…

After a mark-up in advertising fees, Clear Channel Internet Group (CCIG) this week pressed a pause button on its audio Web sites and paved the way for a number of media sites to follow suit.

The Internet arm of San Antonio, Texas-based broadcaster Clear Channel Communications Inc. (CCU) Tuesday said it ceased airing stations such as sports-talk WTEM (980 am), soft rock WASH (97.1), WMZQ (98.7) and Dynamite Talk (570 am), according to the The Washington Post.

At issue is pressure from advertisers, who inked a contract with the American Federation of Television and Radio Artists (AFTRA), the union that represents actors who voice radio commercials, last fall. The contract pays the actors 300 percent of their normal fee if radio stations play their ads on the Internet as well as on the radio.

After these advertisers were reminded of the fees, they asked Clear Channel, an operator of 750 interactive Web sites, to cease airing radio commercials over the Internet.

There is a reason, of course, and it has everything to do with the Internet. Streaming media, which has become wildly successful in airing anything audio from music to Major League baseball games, is the crux of the problem.

In cries of injustice reminiscent of Metallica’s complaint against file-swapping firm Napster Inc., the actors who appear on streaming ads told AFTRA they want to be compensated. Companies such as Clear Channel fear being responsible for additional payments.

But make no mistake — AFTRA said it has no authority to make broadcasters yank streams. AFTRA spokesperson Dick Moore said pulling the programs was not a mandate from AFTRA by any means. Rather, Moore said, it stemmed from the realization that copyright laws may be violated.

“The decision to pull the programs off the Internet was a corporate decision, and may really be driven by concern for potential liability of violating Copyright laws, unrelated to commercials,” Moore told InternetNews.com. “Under the Copyright Act, performers are entitled to half of the royalties paid for the right to Webcast copyrighted sound recordings. AFTRA and a number of its members worked diligently to gain passage of the Digital Performance Right in Sound Recordings Act in 1995 (DPRSA), which provided the first U.S. sound recording performance right of any kind, because most professional singers (AFTRA members), even those with royalty contracts, struggle to make a living from their performances.”

Moore said an easy solution is to pull the plug and point to the need to pay for commercials as the problem, but the liability for infringement of copyright laws would be much greater.

Kevin Mayer, chairman and chief executive officer of CCIG, assured listeners in a public statement Tuesday that CCIG is laboring to resolve the issues, although he does not when the music will begin again.

“It is our intention to put the streams back up when it makes legal and financial sense,” Mayer said.

Mayer offered a bit of insight to the firm’s evolving model going forward when he said CCIG is currently weighing technologies that automatically insert and remove commercial messages to insure the financial and legal viability of the product.

“I expect that the negotiations, some of which are now under way, will be resolved in a manner favorable to all concerned. Once the outstanding issues are resolved, CCIG will move rapidly to evaluate restoring our streams,” Mayer concluded.

The issue seems black and white if you ask Darren Harle, co-founder and chief operating officer of Tacoma, Wash.-based StreamAudio.com, which exists to stream audio for radio stations. From his point of view, the issue is very straightforward — the actors aren’t missing out on sales.

“Everybody still wants a piece of the Internet pie that doesn’t exist yet,” Harle told InternetNews.com. “The fact is that nobody is making additional revenue for on-air ads being rebroadcast over the Internet.”

Harle said the actors’ stance is no difference “than asking the stations to pay one fee for ads that are run over a home stereo system, one fee for ads that are run through your car stereo, and another for ads being broadcast to a portable walkman.”

StreamAudio.com is asking the 735 stations it services to block ads, and to turn to sweepers, promotions and local ads instead of AFTRA-backed ads.

CCIG isn’t the only proprietor of radio sites to tune out streaming audio for the time being, according to the Hollywood Reporter. Emmis Communications, Radio One and ABC/Disney yanked live listening sites this past weekend. And for the most part, these actions were announced the day the sites were removed.

For instance, KFI-AM’s site said: “Due to recent issues regarding additional fees for the playing of radio commercials over the Internet, we have been forced to temporarily disable our streaming of KFI-AM 640. We apologize for the inconvenience, and we are working to find a solution to this problem as quickly as possible so that we can resume our Webcast.”

To be sure, the apologies from radio sites could, and probably should be, legion, as streaming radio sites have come into their own in terms of listeners.

According to the latest figures from Arbitron’s Webcast Ratings, it measured more than 17 million hours of streaming media in the month of January alone, spanning 2,300 audio channels. Beethoven.com ranked number one with 727,400 aggregate tuning hours (ATH) – the sum total of all hours that listeners tune to a given channel.

Folks at Arbitron said a reason for the wild popularity in streaming radio sites is that the Internet, much like Napster with its variety of obscure, rare tunes, offers content that can’t be found on traditional radio.

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