SoundExchange has offered a poison pill to webcasters: add DRM to your streams, get a discount. SoundExchange are the gangsters who control the royalties for Internet radio, and they recently convinced regulators to raise the rates to insane heights, effectively shutting down all Internet music stations.
Now they've offered a dangerous reprieve to the largest webcasters: add DRM to your streams and you can pay a lowered rate. As EFF points out, this won't stop programs like Audio Hijack and Total Recorder from recording these streams, but it will give the entertainment industry the right to dictate technology choices to webcasters. Imagine if the record labels had been able to tell your local radio station that they had to play CDs, and weren't allowed to DJ from their MP3 payers — it's invasive, overreaching and unreasonable.
SoundExchange is a front for the RIAA. It was part of the RIAA until 2003, and even today, each major label has a seat on its board. Independent labels and artists have reported that SoundExchange won't pay them the royalties they're owed — instead, all that money seems to flow straight to the majors.
What's at stake here isn't just the implementation of DRM-laden streaming formats like WMA but also whether the RIAA will get to dictate the sorts of technologies that webcasters use in the future. After all, while DRM would certainly frustrate certain tools that allow users to time-shift, it won't make a lick of difference to software like Total Recorder and Audio Hijack that can record sound as it's outputted in unencrypted form to a sound card. You can bank on the RIAA coming back for more restrictions once it gets DRM in the door, as long as it can hold the threat of ridiculous royalty rates over webcasters' heads.
See also:
SoundExchange won't enforce new royalty rates on Sunday?
Ex-RIAA agency "can't find" artists it owes money to, like Public Enemy
