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PROBLEMS ANDISSUES INWEBCASTING 683press. Nitschke (1999) conducted a survey regarding TV
stations’ Internet operations, which found about 70%
maintain their own Internet operations with an in-house
staff. Among those 37 stations who answered the survey,
about 30% have streaming media services providing audio
and video files. Only 14% have chat rooms and 27% have a
listserv for e-mail broadcast. Some TV companies, such as
NBC and the Hearst-Argyle television station group, sub-
contract the webcasting operation to special webcasting
service companies such as the Internet Broadcasting Sys-
tems (IBS). IBS develops and hosts the sites, hires and
manages the Web editorial staff, and builds revenues for
the stations. All its sites serve archived and streaming
videos and have a similar design to that of members of
the IBS network. Chan-Olmsted and Ha’s (in press) re-
cent survey of TV station managers show that customer
relation management and collection of audience intelli-
gence are the main goals for TV stations to establish their
online presence. The revenue stream that most broadcast
stations expect from their webcast is advertising (76%).
Barter (24%) and e-commerce (19%) are a distant second
and third.
Transferring their domination on television, the ma-
jor national TV networks’ webcasts are the most popular
among TV webcasts. CNN, MSNBC, and CBS News are
the forerunners in TV webcasts, according to the DFC
Intelligence Research Study (Miles & Sakai, 2001). With
the high demand of bandwidth for video streaming, it
is not surprising that TV webcasting is used much less
than radio webcasting. Arbitron/Edison’s Internet 8 study
(Rose & Rosin, 2002) revealed that only 7% of Internet
users watch a video webcast, which is three and a half
times less than radio webcast numbers. The major obsta-
cle of video webcast is the requirement of a high-speed
Internet connection for Internet users to watch a video
webcast.MAJOR PLAYERS IN THE
WEBCASTING INDUSTRY
Seattle-based software companies such as Microsoft and
Real Networks are important players in the webcasting in-
dustry. According to the Arbitron/Edison’s Internet 8 study
(Rose & Rosin, 2002), the top four streaming media ser-
vice providers to consumers are Real Network’s Real.com,
Yahoo Radio, MSN Music, and Radio@AOL. Microsoft’s
Windows Media Player and Real Network’s RealPlayer are
the most frequently downloaded streaming video players.
According to the January 2002 Nielsen/Netratings, Real
Player is used by 32.9 million U.S. households while Win-
dows Media Player is used by 14.2 million households.
Apple Quicktime, as a latecomer to the webcasting indus-
try, is now a popular multimedia player among people un-
der 21 with 8.1 million home users (Miles & Sakai, 2001;
Olsen, 2002). Real Networks recently launched the Univer-
sal RealOne Player, a multiplatform media player that can
play and cache all media types including Apple Quicktime
and Windows Media.
The International Webcasting Association (IWA) is
the largest worldwide nonprofit trade organization rep-
resenting companies, organizations, and individualsactive or interested in the delivery of multimedia (http://
http://www.webcasters.org). The IWA is headquartered in Wash-
ington, DC, and serves members throughout the United
States, Europe, Asia, Canada, and Australia.PROBLEMS AND ISSUES
IN WEBCASTING
The webcasting industry is facing several problems. The
first problem is the cost of the digital content and copy-
right issues. They have to protect the content from be-
ing stolen or reproduced by other webcasters and users
while securing contents with reasonable fees. Secondly,
webcasters compete for audiences with offline media
such as television and radio. Thirdly, webcasting quality
and delivery efficiency depend on the degree of broad-
band Internet access penetration of the market. Fourthly,
webcasting content development needs to take into ac-
count the bandwidth requirement and downloading time
to users. Lastly, the regulations of the Internet and
on the freedom of speech can greatly affect webcast
contents.Cost of Digital Content and Copyright Issues
The cost of digital content and copyright protection are
currently the larger issues concerning webcasters espe-
cially Web radio, which broadcasts music on the In-
ternet. The report of the Copyright Arbitration Royalty
Panel (CARP) recognizes the sound recording and musical
work performance rights of the sound recording industry
and recommends that webcasters pay the high royalties
charged by the sound recording companies. Specifically,
webcasters must pay for each performance by the num-
ber of listeners. After the Library of Congress revised the
royalty rates, webcasting companies with or without an
offline radio station will pay the same rate of $0.07 per
person. This rate is nearly 10 times higher than the rate
suggested by webcasters and approximately 35% of the
royalty fee requested by the Recording Industry Associa-
tion of America (RIAA). Both the National Association of
Broadcasters and the International Webcasting Associa-
tion protested against the CARP recommendations (IWA).
Many Web radio stations have shut down to protest the
decision and avoid being fined. In a survey of readers
ofStreaming Magazine,who mostly are webcasters and
streaming technology suppliers, 80% think that the CARP-
suggested royalty rates will kill the Internet radio business
(Jeffrey, 2002).
The Small Webcaster Settlement Act (HR5469) was
introduced and passed in the U.S. Congress recently in
November 2002 to help small webcasters. The bill offers a
lower royalty rate to small commercial webcasters by only
charging 8% of the gross revenue or 5% of the webcasters’
expenses for the royalty fee for the retroactive period
before December 2002. Now webcasters with less than
US$50,000 in gross revenue will pay a minimum annual
fee of $2,000. Other webcasters will pay a 10% royalty fee
out of the gross revenue for the first $250,000 and 12%
of the gross revenue when the revenue exceeds $250,000;
or 7% of the operating expenses, whichever is greater.
However, the bill does not apply to college webcasters so