The Librarian of Congress eventually suspended these reporting requirements, pending further study. And he also changed the original rates set by the arbitration panel charged with setting rates. But the basic difference between Internet radio and terrestrial radio remains: Internet radio has to pay a type of copyright fee that terrestrial radio does not.

Why? What justifies this difference? Was there any study of the economic consequences from Internet radio that would justify these differences? Was the motive to protect artists against piracy?

In a rare bit of candor, one RIAA expert admitted what seemed obvious to everyone at the time. As Alex Alben, vice president for Public Policy at Real Networks, told me,

The RIAA, which was representing the record labels, presented some testimony about what they thought a willing buyer would pay to a willing seller, and it was much higher. It was ten times higher than what radio stations pay to perform the same songs for the same period of time. And so the attorneys representing the webcasters asked the RIAA, . . . “How do you come up with a rate that’s so much higher? Why is it worth more than radio? Because here we have hundreds of thousands of webcasters who want to pay, and that should establish the market rate, and if you set the rate so high, you’re going to drive the small webcasters out of business. . . .”

And the RIAA experts said, “Well, we don’t really model this as an industry with thousands of webcasters, we think it should be an industry with, you know, five or seven big players who can pay a high rate and it’s a stable, predictable market.” (Emphasis added.)

Translation: The aim is to use the law to eliminate competition, so that this platform of potentially immense competition, which would cause the diversity and range of content available to explode, would not cause pain to the dinosaurs of old. There is no one, on either the right or the left, who should endorse this use of the law. And yet there is practically no one, on either the right or the left, who is doing anything effective to prevent it.

Voice of Reason, we interviewed Tim Westergren of Pandora and he explained that the RIAA “speaks” for everyone, even the kids in a garage band, whether they like it or not. It isn’t opt-in. Pandora, in fact, plays a ton of indie bands. However, the RIAA has pushed this issue, and according to the ruling, this simply counts for EVERY song being played. It has nothing to do with fairness or justice or sound economic sense. It has to do with the RIAA mafia protecting their turf. So you pay to play, no matter who you play.

Chalk up another pyhrric victory for the recording industry. They’d rather sue us all to the stone ages than actually modify their own business model. Great for economy, huh?