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Beyond the wild west: government and the future of music radio shut down its last component earlier this year: Turntable Live—a concert version of now gone founder Billy Chasen reflected on the end of the Turntable project in a blog entry posted on Wednesday:

“Ultimately, I didn’t heed the lessons of so many failed music startups. It’s an incredibly expensive venture to pursue and a hard industry to work with. We spent more than a quarter of our cash on lawyers, royalties and services related to supporting music. It’s restrictive. We had to shut down our growth because we couldn’t launch internationally. It’s a long road. It took years to get label deals in place and it also took months of engineering time to properly support them (time which could have been spent on product).”

As I’ve said before, while the actual products that Chasen and his associates created wound up being unsustainable, their online chat room based music sharing concept lives on in services like and Soundrop. That is an enormous achievement, for which they should be proud. I was sometimes disappointed at the level of vituperation that was directed at Turntable by various room developers, as if misjudgment isn’t a given for any venture.

The Internet is sometimes compared to the American frontier. If that comparison is apt, a comment by former Colorado governor Dick Lamm seems appropriate. “Failure,” he once said, “is as American as apple pie.” The quote comes from Patricia Limerick’s book Legacy of Conquest: The Unbroken Path of the American West. “To many Americans, the West promised so much that the promise was almost sure to be broken,” Limerick notes. And no sector of the wild wild ‘Net offers as many breakable promises as online music sharing. Go back to Napster and start making a list. Two hours later you’ll still be working on it.

The reality is that the fate of every major independent online radio service is uncertain. Take Pandora. As we posted last week, a United Kingdom research firm calls the beloved music streamer’s business model a house of cards, largely because of royalty costs.

“Pandora is a really wonderful service, but it is very hard to see anything wonderful about the company’s business model, or even its future prospects if it carries on as it is,” its report concludes.

It’s easy to take a hard line on all this. This is what capitalism is all about, right? Entrepreneurs take risks and reap the rewards, or not. But government plays a huge role in the imagined online “free market” music ecology. Many services, including and now depend on licensing agreements with and SoundCloud for their online content. And like westerners depend on government regulated water systems, these bigger services in turn depend on the Digital Millennium Copyright Act to avoid being sued out of business every time some singleton user uploads an illegal video or music file or two. A nice chunk of the economy of FM music radio is about the fact that Uncle Sam doesn’t require music stations to pay performance royalties to musicians. Meanwhile broadcasters endlessly protest the prospect of Federal Communications Commission public interest “mandates” directed at them, such as localism requirements. But they aren’t above broadly hinting at mandates for other industries—such as a directive that mobile phones include FM tuners.

The truth is that the online music sharing environment is laden with uncertainty, unprofitability, and unsustainability for musicians, developers, and consumers. For developers unequally apportioned royalty costs represent a huge growth barrier. This in turn means that the Internet radio sector continues to stall, shortchanging the possibility of meaningful income for most musicians. It also means that many online music services will never get past the Juke Box tune dispenser phase of their development, denying consumers the rich possibilities inherent in true audience based radio.

That’s why eliminating inconsistent and unfair copyright royalty rules is so important. It’s why protecting nascent services from rent seeking ISP practices is crucial—a potential example would be allowing wireless ISPs to set low data caps and then sell music applications the privilege of exempting their data from a consumer’s data use ceiling. And it is why strengthening public media is critical—greater government support for public music radio in all its forms, listener-supported, college, community, and NPR based.

As demonstrated, the market often accomplishes wonderful things, but only up to a point. If online music radio is indispensable to us, shouldn’t we set aside at least some portion of the Internet/FM landscape as a place where failure is not an option?

We cover social music sharing communities  every Monday in our Internet DJ feature.

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