Letter from Paul E Wright

In my opinion, the new royalty rate structure will not benefit anyone substantially in the long run. While growing in popularity, Internet radio is still a new business and is experiencing a growth of a variety of business models. The % of revenue rate structure allowed for both those models to mature, or fail on their own merits, and content owners to be compensated.

I believe the proposed rate structure is short-sighted and will serve to diminish the increased level of exposure the new artists were able to gain on the independent webcasts that dedicated themselves to the discovery of new music outside of the mainstream. Before crying just for the independent webcasters, however, the larger broadcasters, IO and terrestrial; while most likely able to pay the bills, will suffer in the variety of music they can present.

I especially believe that terrestrial broadcasters, who have largely driven the jump in internet broadcasting usage over the past year, will suffer as the webcasts present a much better grown prospect than HD. Consumers know, understand and love webcasting while HD is still a dream in search of an audience willing to pay for the hardware. Webcasting allows for multiple channels that broadcasters can monetize now and consumers can enjoy it without much barrier to entry.

In the end, the consumers lose because music discovery innovation is dealt ablow. The artists and labels lose because an avenue with a wider aggregate ability to experiment is narrowed and the amount of incremental revenue from higher fees is far less than the indirect revenue they could gain from greater exposure. All webcasters lose for obvious reasons.

If the new rate structure does go through, it is time to turn to podcasting even more for discovery. Let's hope that business has time to develop first as, like webcasting, it holds tremendous value for content owners, advertisers and consumers.

Paul E. Wright, Vice President, Business Development
Mediaguide, Inc.