Today, July 16, is the day that the new Internet radio royalty rates were supposed to take effect. It is the day, too, on which thousands, perhaps tens of thousands, of U.S.- based Internet radio stations would go silent, as a result of dramatically increased license fees. That didn't happen. So, what did?

I think two thing intervened: First, as Findlaw points out, the RIAA was handed two victories, one from the Copyright Board setting the huge increase in royalties and another by the appeals court, which rejected an attempt to hold back the rate increase. Why did the RIAA compromise? SoundExchange, the radio royalty monitoring and collection arm of the RIAA has a staff of fewer than 30. They just don't have the staff or technology to monitor and collect from the thousands of net radio broadcasters. SoundExchange doesn't seem to be preparing to take advantage of the greatest windfall in copyright history. SoundExchange must have known, too, that if today came and went with little or no change it would weaken their position in future negotiations.

Secondly, the RIAA knows that net radio is small potatoes financially now, but it will be big in the near future. They don't want the royalties as much as they want control of all music distribution. Ars Technica points out that the net radio "compromise" hinges on DRM adoption by net radio. This will be the real win for the RIAA. They will have control of the future of web music broadcasting because they will be able to limit where, how, and when you are able to listen. Of course, it will be a big loss to music fans, but Big Entertainent, just sees us as sheep to be fleeced anyway.