Last.fm makes deal with Sony BMG to stream their catalog. In light of this news, some in the internet radio industry are asking, is the whole point of the new internet royalty rates to kill compulsory licensing and force companies to make deals with the major labels?

I tend to think the new rates are simply the result of blind greed, but at the very least, giving more power to major labels to control their digital destiny may be an unintended by-product. Of course, another unintended by-product might be to strengthen indie labels' position, as I am skeptical of the claim that this new situation will force indies to give up on licensing and give internet radio blanket waivers of royalties. Indies will just be forced to join together to form groups to manage such licensing issues, just as I believe quite a few do now. It'd be a natural outgrowth of CD Baby's business, for instance. And I assume in the indie business plan, the artists will see a chunk of that money; the disparity in such deals from major to indie might make more big names wonder just what the hell a record label does for them.

In any event, if the end result is to cut SoundExchange out of the equation, it almost seems worth it. And as for concerns of lower royalties in exchange for airplay as a form of payola, I don't think the market would stand it, and I also think lots of people would come running to the various attorneys general who are still wrapping up the last payola investigation.