From Radio & Internet Newsletter:

In a column today about the ongoing judicial appeal of the 2006-10 CRB royalty decision, San Francisco-based MarketWatch columnist Therese Poletti writes, "The dysfunctional music industry suffers from a classic case of biting the hand that feeds it.

"Over the last two years," she notes, "record companies have tried to squeeze excessive royalties from Internet-radio stations — the very stations that can help fuel future digital-music sales — and it's endangering some Web-based radio firms." Poletti argues that the exposure and sales Internet radio affords and generates are benefits, not challenges to the embattled industry.

Most who are close to negotiations seem to want to stay mum about the situation; Poletti says reps of Pandora and SoundExchange didn't want to talk to her.

But Michael Spiegelman, head of Yahoo Music, is somewhat more removed, as his company recently turned over its webcasting business to CBS Radio (as has AOL, both companies citing the rising costs of licensing as a major impetus). Spiegelman told MarketWatch, "Internet radio facilitated discovery while compensating artists and labels for their effort. They may feel in the short term (the high royalty rate) gets them a better revenue stream. But in the short term, it's driving the Webcasters out of business."

Closer to the action is Jon Potter, head of DiMA (Digital Media Association, which represents large company webcasters). He says the record industry isn't even actually negotiating. "We were presented with a take-it-or-leave-it offer from SoundExchange. It was unacceptable."

Poletti, a senior columnist for MarketWatch, concludes, "I hope the appellate court is more sympathetic to the young Webcasting firms than the CRB. But the music industry never should have let their negotiations derail this badly. Once again, the industry seems to be using artists as a cover for incessant greed. Instead, they should encourage as much legal digital music as possible."

Read the entire MarketWatch story here.