Online and on the Edge

Online and on the Edge

Published: September 23, 2007


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Sandra L. Dyas for The New York Times

John Draper at his home in Iowa, which is also his Internet radio studio. Proposed changes in the royalty system could make it hard for him to stay on the air.

LATE last year John Draper, a 41-year-old computer programmer, awoke in his house here with a stomach-churning problem. A Paris outfit he had hired to help run his Internet radio station, Atlantic Sound Factory, was in trouble. The server it used to connect him to roughly 1,500 listeners daily was perilously overloaded. If it became unstable — reducing the quality of his stream or, worse, shutting down entirely — he’d be in trouble.

This was not just a matter of simple pride. Mr. Draper’s gift for mixing Cat Stevens with Collective Soul, not to mention Keane with Kansas, had won his two-year-old station a spot in Apple’s iTunes radio library. To keep that coveted piece of Internet real estate, he had to keep running at all times. So he lurched out of bed, threw on his slippers and rushed to his basement computer to check on the strength of his Paris signal.

It was holding. But just barely.

About 55 million Americans listen to Internet radio every week (compared with the 279 million who listen to terrestrial radio), a jump of 26 percent in the past year, according to Bridge Ratings, a survey firm in Glendale, Calif. Many of them tune in at work, where they don’t get regular radio reception. Yahoo and AOL are the titans of this world, with portals that feature videos, music news and millions of song choices. There is also a layer of NPR and college radio, as well as commercial stations and satellite radio. But beyond that lies a quirkier landscape, populated by a diverse subculture of aspiring moguls, music geeks and people like Mr. Draper, who considers himself a hobbyist.

Together they are spurring a new golden age in radio. For those who remember the heyday of the D.J. as a cultural curator, it’s a return to a past where the airwaves were filled with personalities who mattered as much as the tunes they were spinning.

But there is a shadow looming over this renaissance. Although Internet radio is a relatively new form — listeners have started tuning in to it in significant numbers only within the last five years — the looming inevitability of a time when almost all radio will emanate from the Internet has created a sense of both panic and opportunity in the music business. On one hand, virtually anyone can start broadcasting songs online; on the other, if regulations are set up early enough, these new broadcasters present a much-needed revenue stream.

Under a deal that has been in effect since 2003 Webcasters with annual revenues of less than $1.25 million pay 10 percent of their revenues or 7 percent of expenses to satisfy copyright laws. Larger radio portals like the ones operated by Yahoo and AOL have to pay per song.

But in March the Copyright Royalty Board, a federal panel, issued a ruling allowing SoundExchange, the industry arm that collects royalties for 90 percent of all songwriters, to charge all Webcasters on a per-song basis and raise the cost of playing a song from $.0008 to $.0019 by 2010. For Mr. Draper this meant that his royalty payments would go from $120 a month to $6,500.

Thanks to a huge fan-driven protest, and the intervention of a handful of influential lawmakers in the House and Senate, SoundExchange backed down. On Aug. 21 it offered to extend much of the current rate structure until 2010, and on Tuesday it announced that about two dozen small Webcasters had agreed to this deal. Others, like Mr. Draper, are holding out, hoping for a long-term solution that will ensure that their hobby will always be affordable.

“There is more drama in this hobby than I ever imagined,” Mr. Draper said.

The whole idea for Atlantic Sound Factory came to Mr. Draper in February 2005. As he recalled, he was sitting in bed with the woman he lives with and announced, “I wonder what it would be like to own a radio station.” After a few days of research it became obvious that buying a terrestrial outlet was ridiculously expensive. But the Web was different. He imported his 200 CDs into his iTunes folder, loaded some inexpensive software to help keep it running for hours and connected it to his home DSL line. Then he went live.

Apart from a strikingly lanky 6-foot-4, 165-pound frame, the only thing that causes Mr. Draper to stand out in his Cedar Rapids neighborhood is an English accent left over from a boyhood bouncing between High Wycombe, Norfolk and Newcastle. After moving to Ames with his family as a teenager, he enrolled in the University of Iowa, where he says he “got sidetracked partying.” In the late ’90s he taught himself enough about writing computer code to enable him to start designing software. In his current work-at-home job he designs inventory programs for cafeterias in about 75 school districts.

In the beginning expenses for ASF were $20 a month paid to Loud City, a company in Somerville, Mass., that collects royalties for Sound Exchange on behalf of Webcasters. “I was lucky if I had one listener at a time for the first month,” he said.

In May 2005 Mr. Draper discovered that he had reached the seven-listener limit of his home connection, so he found a company in Houston to rent him space on its server. (Server space is sold by slots, with one slot equaling one listener. Depending on connection speed and reliability, the rental price of a single slot ranges from 50 cents to $3.75 a month.)

With 25 slots his operating cost rose to $95 a month, including royalty fees, a still manageable addition to his household budget. By fall, when his lunchtime audience peaked at 30 listeners, he bought 50 more. New cost: $170 a month.

Mr. Draper’s turning point came in early January 2006, when he applied for a listing on iTunes and was accepted. (Most listeners discover an Internet station through one of a variety of portals, like iTunes or Yahoo Music, each of which list hundreds of stations.) Excitedly, he bought 50 more slots in Texas, bringing his capacity to 100 listeners. Then he settled into his basement to monitor its debut.

In 20 minutes, he said, he was at 70 percent of capacity; by 10:30 p.m. his limit was reached. “That was when I knew I was in big trouble,” he said.

Unable to sleep, he desperately tried finding available server space. “I was spending like a drunken sailor to buy capacity from anyone who was open,” he recalled. After adding another 150 slots from a host in Germany, he passed out. When he awoke, those slots were already maxed out too.

Mr. Draper worked message boards dedicated to Webcasting, pleading for help, and was befriended by the host of a British server who agreed to give him 400 more slots temporarily at no cost. But by late January, with an average listener base that was now up to 650 people, even that wasn’t enough. “At some point I needed to see how high this could go,” he said.

So he rolled the dice and committed to 1,400 slots with a broker in Paris. This raised his operating costs to roughly $1,000 a month.

“It also made for a lot of dirty looks across the dinner table,” recalled Mr. Draper, who lives with his companion, her 13-year-old daughter and his 13-year-old son. “I had no idea how to pay for it.”

So he did something that “my parents raised me never to do”: he asked his audience for money. “I’m a family man,” he began. “I work full time. I don’t need to make a profit. But if I’m going to stay on iTunes, I need your help.”

Five minutes after shutting off his microphone, he had a half-dozen donations of between $10 and $20. Then came the e-mail messages. There was the singer from the defunct band he was playing, Naked Eyes. The janitor who mopped floors while listening to him every Friday night. The man from the veterans hospital. Mr. Draper, it seems, had built a village.

Last December, when his French host server went down without warning and the station was de-listed from iTunes, he was forced to beg again. In a few hours those listeners who were still tuned in provided $900, enough to buy emergency slots in California. Two days after pulling his station, Apple returned it to the classic rock section of iTunes.

But dodging that bullet meant that Mr. Draper lived to face the Sound Exchange firing squad. And again he has managed to stay on the air. After the favorable ruling for Sound Exchange in March, he bought the Internet domain name and offered it to colleagues as a rallying point to fight back.

“It’s the first time I’ve ever been part of a grass-roots movement,” he said.

The music industry doesn’t see anything small-time about the amount of money at stake. According to John Simson, the executive director of Sound Exchange, only 50 companies applied for small Webcasting licenses last year. But those included groups like Loud City. Even though Loud City earns less than $1.25 million in revenues, its single license covers about 500 programmers.

For Mr. Simson that math means millions of songs a day are being given away at a discount.

“Our research shows that there is scant evidence they are getting people to buy music,” he said. “If our artists aren’t making money from CD sales, we think they should make money from those listens. There’s not enough people hitting that ‘buy’ button to make me want to give them a sweetheart deal.”

Mr. Simson suggested that “we have some momentum” now that roughly half of the small Webcasters with licenses have agreed to his offer. But Loud City — and thus Mr. Draper — is not among them.

The reason, said Brandon Casci, Loud City’s co-founder, is that Sound Exchange has added a new cap for small Webcasters: A station cannot exceed five million listener hours a month. “That may sound like a lot,” he said, “but it equals about 7,000 people tuning in simultaneously 24/7. How are we supposed to sell advertising with numbers like that? The ceiling is just too low.” Mr. Casci said he was holding out for a middle ground that will let companies like his grow.

On a recent Friday night Mr. Draper’s computer revealed a charcoal-gray map of the United States, with orange dots representing each of the 200 people listening at that moment. As he dragged a mouse over each dot, the map zoomed, à la Google Earth, to the location of their computers’ modem signal. A listener in Greenwich, Conn., seemed to have been tuned in for 32 hours. Mr. Draper frowned. The odds are that someone left a computer on at work.

Under the current system that only matters insofar as it might prevent a new ASF listener (and potential donor) from connecting to his rented server during peak hours. But under a pay-per-play system he will have to pay royalties on every song that echoes across the empty office where that computer is turned on.

“It’s enough to drive you crazy,” he said.

Not long ago I was in Shanghai and tuned in ASF from my hotel room. As tugboats steamed up and down the Huangpu River, lugging futuristic video screens that played high-definition commercials, Mr. Draper’s voice came through my laptop, clear as a bell. A Mark Knopfler song had just faded, and he was cuing up a version of David Bowie’s “Young Americans.”

There was something comforting in hearing a familiar voice halfway around the world, but also something thoroughly astounding about the connection Mr. Draper had made. An Englishman was sitting in Cedar Rapids, having his hobby heard by a New Yorker sitting alone in a hotel in China.

That connection, powered by the reach of the Web, is giving hobbyist D.J.’s like Mr. Draper the satisfaction of knowing their song choices can be heard around the world.

“The recording industry said that it is trying to protect the rights of artists,” Mr. Draper said. “And I want to see that artists get paid, I really do. But as much as my station matters to my listeners, it matters to me. I feel like I’m an artist, too.”

One Response to “Online and on the Edge”

  1. […] Tim wrote an interesting post today onHere’s a quick excerpt […]

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