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New hiccup in webcasting talks

Soundexchange Just when peace was starting to break out between commercial webcasters and SoundExchange, the talks have been roiled by a dispute over protecting copyrighted works. An agreement to cap the minimum annual fee at $50,000 per webcasting company is temporarily on hold. Webcasters balked at SoundExchange's demand that they implement technology to stop webcasts from being recorded, provided that the technology "is feasible and is available on reasonable terms." (Download the letter from SoundExchange to the Digital Media Assn. here; DiMA's press release and miffed reply here; and SoundExchange's retort here.)

Streamripping has long been a thorn in the major record labels' sides, although its impact on music sales isn't clear. There are a number of programs available to turn streams from the Web into MP3 files, enabling people to amass songs for free. Of course, they can only record from webcasters what the latter chooses to play, so it's next to impossible to amass every track off of a CD -- something that fans would care about, and fans are, after all, the ones who actually buy music. But I digress.

Large webcasters have already agreed to work on the problem with SoundExchange, but they resent having the minimum-fee gun held to their head. Those fees are intended to cover the cost of collecting and distributing royalties, which isn't related to the issue of copy protection. Nevertheless, the minimum fees would exact such a toll -- according to DiMA, Pandora, Yahoo and RealNetworks alone would owe more than $1 billion -- that they give SoundExchange tremendous negotiating leverage.

My guess is that the bickering over this issue will cease and the two sides will settle down into serious discussions about the available technology to combat streamripping. The RIAA's favorite solution comes from Media Rights Technologies of Santa Cruz, whose software tries to plug the holes in a computer's operating system that streamripping programs exploit. (MRT hasn't found many takers for its anti-copying products,  but it has pushed the edge of the envelope when it comes to creative litigation and administrative appeals. Princeton University's Ed Felten, an expert on copy protection techniques, is no fan.) Webcasters would have to modify their broadcasts to trigger MRT's protection, as well as to require listeners to use media players that are compatible with MRT's technology.

Whether anyone can really stop streamripping remains to be seen. It's no mean feat. No matter how many electronic locks to put on a song file, at some point those locks have to be removed and the bits that make up the song strung together in their proper sequence in order for it to be heard. Streamripping software works by finding a point where the song's bits are unprotected, then copying them. Technology such as MRT's tries to hide or block those points; hackers typically try to defeat such measures by finding and removing the software that blocks their way.

This tit-for-tat has led other tech companies to try increasingly extreme measures to hide their anti-copying software from the consumers who load it (knowingly or not) onto their PCs. That's what produced the Sony BMG rootkit fiasco. That experience was so searing it seems unlikely to be repeated, but then, desperate times can lead to desperate measures. DiMA, for its part, is promising not to foist any nasty surprises onto its members' listeners.  Said Executive Director Jon Potter, "DiMA companies are not going to install secret software, rootkits, or anything on the client PC without full disclosure."

And to think, just a few weeks ago the CEO of RealNetworks was touting the built-in streamripping capabilities of RealPlayer 11, his company's latest software offering....

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Times editorial writer Jon Healey pens opinion pieces about a variety of business issues, and blogs about technologies that are changing the entertainment industry's business model.

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