In a CNET op-ed, Sherwin Sly of Public Knowledge reminds us that the record business is run by idiots bent on destroying Internet radio by enforcing onerous fees and ridiculous DRM restrictions. Call us naive, but we think this scandal will soon go away. Even the most dimwitted music executive knows Web radio provides an important marketing tool for an industry that desperately needs one. And if the labels don’t come to their senses enough to cut a deal, you may even see lawmakers step in.
More important for both sides is figuring out a way to turn Internet radio into a substantial business. As ossified and generally lousy as terrestrial radio is, it still racks up some $21 billion in advertising a year, and Internet radio is producing perhaps $500 million. The challenge: The majority of conventional radio advertising is bought by local marketers, while Internet radio audiences are scattered around the world. NY-based consultants Ronning Lipset Radio have made some progress by selling inventory for online radio’s biggest players (Yahoo, AOL, et al), but until someone figures out how to sell ads for the little guys, the industry will remain small-time.