Radio faces challenges in online broadcasts

Kalpana Srinivasan

Monday, April 23, 2001 | 11:14 a.m.

Radio stations have learned to embrace the Internet as an ally capable of carrying their programming all over the world.

But cyberspace is not without its potholes. Major broadcasters, gathered in Las Vegas this week for their annual convention, now find themselves dealing with thorny copyright and performance issues as they bring their content online.

Some matters have proved such a headache that major broadcast companies recently stopped sending their radio signals over the Web -- also known as streaming -- until they sort it out. Clear Channel Communications, for example, took down nearly all of its 318 stations that had been on the Internet.

"We want to get back online as quickly as is feasible because our customers want us online," said Kevin Mayer, chairman and chief executive officer of Clear Channel Internet Group. "I think we've proven that an audience exists."

One dispute has put radio stations in between advertising agencies and the trade groups that represent actors and singers used in commercials.

The American Federation of Television and Radio Artists and other associations have a provision in their contract requiring that ad agencies pay an additional amount to performers if radio commercials are also broadcast on the Internet.

To avoid paying the fees, ad agencies ordered radio stations to delete the commercials when they stream their content on the Web.

Now broadcasters are looking for ways that will enable them to remove ads designed for radio and substitute them with Internet-only commercials. Once that is done, companies such as Emmis Communications Corp., which dropped nearly all of its 13 streaming stations, say they hope to return their broadcasts to the Internet.

A second issue involves royalty payments. Last year, the Copyright Office ruled that stations airing their radio broadcasts on the Web must pay fees to the recording industry. The office is reviewing recommendations about compensation.

"We obviously want the music to be out there and for consumers to have access to it," said Steve Marks, a senior vice president of business affairs at the Recording Industry Association of America.

Broadcasters, who have sued to overturn the ruling, do not believe they should pay anything.

But some worry those questions could extend beyond U.S. borders. Because of the Internet's global reach, webcasting could raise international rights issues, said Geoff Rich, executive vice president for new media at ABC's radio division, which in the past month pulled from the Internet the 25 stations it had online.

Also last month, some local stations lost a major online radio draw -- the ability to broadcast baseball games on the Web for free. Major league baseball decided it would require fans to pay for Internet feeds of their game broadcasts. A subscription costs $9.95 for the season.

Web radio sites that are not run by brick-and-mortar stations have tried to sidestep these issues by using unsigned artists or original commentary.

The Houston Independent Online Radio Station, which recently went up, shows off local performers.

"I had to create something where people can listen to independent music," said music promoter Anthoney Grigsby, who runs the site.

Unsigned artists agree to specific terms and receive a percentage of the profits from the site's ad revenue.

Experts predict that traditional broadcasters will work through copyright matters and create business plans so they can stream content from their radio stations.

"I think we are going to see this all sort out," said Roberta McConochie of The Arbitron Co.

Research suggests the audience is there and growing. The percentage of Americans who listened to online radio in the last month has increased from 5.3 percent to 7.3 percent in the past year, according to a study by the Arbitron Co./Edison Media Research.

Not everybody is convinced. Major radio station group Infinity Broadcasting, a subsidiary of Viacom Inc., has held off from streaming its content on the Web until it makes financial sense.

"We are well-positioned to be leaders in that area," said company spokesman Dana McClintock. "But at this time that business model has not exhibited itself."