The Day the Music Dies

 Elise Nordling answers the door to SomaFM's warehouse headquarters in the Mission District wearing blue hair, a studded belt, blue jeans, and black slip-on flats. She glides up three flights of stairs and into an art-filled workspace the Internet radio station rents for $600. Near the east-facing windows, natural light streams in through big, gridded panes and ignites her business partner Rusty Hodge's frizzy, fiery-red, shoulder-length hair and scruffy beard.

The 44-year-old Hodge is a big dude who obviously likes beer. He sits at his desk and wears a kid's smile, Hawaiian shirt, brown stone-washed jeans, running sneakers, and red tortoise-shell glasses. Beneath his manly gut, a MacBook Pro operates SomaFM's 11 stations. Red and black T-shirts, banners, and stickers for the 500,000-listeners-a-month station flank him like some schwag sweatshop.

Though you wouldn't guess it to look at them or their surroundings, Nordling and Hodge are media moguls — Internet-style.

They spend a huge amount of their lives just listening to what people send them and buying rarities, then needle dropping (playing few-second samples) to see if it's any good. "It drives my roommate crazy," says Elise. "I'll tell him, I'm going to be listening to CDs tonight and he goes ... " — she drops her voice to imitate someone sounding sullen — "'Oh.'"

"My neighbors always say, 'Can you play the whole song, please?'" says Rusty with his smile.

Rusty has built his audience from scratch since 1996, and the rise of SomaFM roughly corresponds with the rise of Net radio. Currently capturing 72 million listeners per month — versus 280 million for terrestrial radio — Net radio has hijacked the authority of terrestrial radio with one-billionth the resources over the last 15 years.

"Big radio's least-common-denominator approach creates playlists that the least amount of people will ever turn off. There's no personality, no edge," says Hodge. "The challenge here is to do a lot with a little."

Webcasters like Seattle's KEXP and San Francisco's SomaFM are the de facto curators of America's most avant-garde electric art galleries. Their playlists read like Next Big Thing cheat sheets for mainstream DJs, college radio stations, marketers, and advertisers. What was once a cult of hobbyists now encompasses major players like Clear Channel, which simulcasts existing holdings and compete against offerings from National Public Radio, AOL, and Yahoo.

Now this weird radio empire could all come crashing down in less than a month on what people in the industry are calling D-Day, or "the day the music dies."

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On July 15, the bill comes due for a whole new set of royalties that will wipe out Net radio as we know it. No more KEXP, no more SomaFM, you name it.

A ruling by the Copyright Royalty Board back in March hiked SomaFM's royalty bill from $10,000 in 2006 to $600,000, retroactively — even though the little radio company's gross revenues were only $125,000 last year.

But SomaFM and other Webcasters are fighting back.

Within three weeks of the CRB's decision, a fan of Pandora radio — a site that uses a "music genome" to tailor what it plays to each individual listener's taste (see sidebar on Pandora) — created a SaveNetRadio.org Web site. Similar sites kept springing up, and many in the community saw the need for a unified front.

Around that time, SomaFM's Nordling and Hodge, Pandora founder Tim Westergren, and Ted Leibowitz from Bagel Radio met at a Starbucks in the Mission and planned an assault. They decided to ally themselves with their much bigger brothers at the Digital Media Association — which represents AOL, Yahoo, and terrestrial radio conglomerates like Clear Channel. SaveNetRadio is now more than just a Web site — it's a coalition.

"In an insane way, the best thing is rates are so insanely bad that everyone agrees," says Westergren with a laugh. "There's no disagreement on the margins where one player's saying, 'I think I can make this work.' They've unified everyone from the smallest players to the largest."

"Remember how in the Net neutrality debate, MoveOn.org and the Christian Coalition stood side by side on Capitol Hill, shook hands, and said, 'We support this?' It's like that," says Jake Ward, SaveNetRadio's lobbyist in Washington, D.C. "SoundExchange asked for it, and they got it. It's like the old saying, 'When God seeks to punish us, he answers our prayers.'"

The bad guy in all this is something called SoundExchange, a spinoff of the Recording Industry Association of America (RIAA) empowered by Congress to collect performance royalties on behalf of musicians. SoundExchange says artists need higher royalties to make a living and create music, and Web sites have to get a lot better at making money for artists.

But SaveNetRadio says SoundExchange just fronts for RIAA and the big four major labels — Sony, EMI, Universal, and Warner — who control 80 percent of all copyrighted music. RIAA doesn't like threats to its dying hegemony, SaveNetRadio's members say.