In case you haven’t already heard about it, I’ve embedded the audio of a prank call involving two Montreal comedians and radio hosts — Sebastien Trudel and Marc-Antoine Audette, who go by the name The Masked Avengers — and the Republican candidate for U.S. vice-president, Sarah Palin. Despite the fact that this prank apparently took four days to put together, and the fact that most political candidates have an elaborate, multi-stage approval process that phone calls and other contacts have to go through, the comedians were able to have a long talk with Palin while doing a bad Parisian accent and pretending to be French President Nicolas Sarkozy. Even assuming that Palin’s command of French is not that great, this is a pretty embarrassing phone conversation. You can also hear some of the interview here, where there are more than 200 comments.

The arcane system by which songwriters, publishers and other rights-holders get compensated when their music is played on the radio in the United States is complicated enough, with quasi-governmental bodies that decide how many pennies each instance will cost, and so on. But at least the fees that are charged aren’t so high that they threaten to make it uneconomic to run a radio station (not yet). Internet radio, by contrast, is almost at that point, according to Tim Westergren, the founder of Pandora (and a former musician), one of the leading Internet streaming-audio services — and one I used to enjoy using until it was forced to cut off access to users outside of the United States.

This danger, which Westergren describes in the Washington Post story linked above, isn’t new. The Pandora founder was warning about it in interviews over a year ago, and so were other Internet audio players. The freight train that is currently bearing down on Pandora and similar services got underway more than six years ago, and since then there has been much frantic lobbying by both sides. Finally, last year, a federal agency boosted the rate that Internet radio stations have to pay — it has already doubled, and by 2010 will have tripled. Westergren says the licensing fees that Pandora has to pay this year will consume about 70 per cent of the company’s revenues of about $25-million.

As many people have pointed out — including Doc Searls, who posted a good overview last year — the music industry clearly sees Internet radio as an opportunity to institute fees that it hasn’t been able to get from regular radio stations (although outside of the United States, payments to artists based on radio play are fairly common). Not surprisingly, the industry has been trying to change that state of affairs as well, in many cases using the Internet radio decisions for leverage, and even going so far as to argue that radio airplay is a “form of piracy.”

Obviously, some of what Westergren is saying — and has been saying for the past year or more — is designed to put pressure on the music industry and get it to agree to lower royalty rates, something the Washington Post says is being promoted by at least one congressman. But all hyperbole and spin aside, if those rates don’t get reduced there appears to be a very real chance that services like Pandora may cease to exist, and I think that would leave us all a little poorer as a result — and not just music listeners, but musicians as well.

“If you drive a car, I’ll tax the street;
If you try to sit, I’ll tax your seat;
If you get too cold, I’ll tax the heat;
If you take a walk, I’ll tax your feet.
‘Cause I’m the taxman;
yeah, I’m the taxman.”

The Beatles, Taxman

We’ve seen the recording industry pull a lot of bizarre stunts in the past few years. And I don’t mean just suing 12-year-old girls for downloading music, but things like suing auto-repair shops for playing the radio too loud (at which point the music apparently becomes a “public performance”), or filing “cease and desist” letters because a tiny portion of a song appeared in the background of a home video on YouTube (okay, that was just Prince, but still). But now, the industry appears to be arguing that the entire radio industry is effectively based on piracy — and no, I am not making this up. I wish I was.

“It’s a form of piracy, if you will, but not in the classic sense as we think of it,” said Martin Machowsky, a musicFirst spokesman.

The argument (if I can call it that) according to musicFirst is that the radio business has pretty much gotten a free ride since the legislation legalizing it was adopted in the 1960s, because it doesn’t have to pay musicians for the right to play their music — around which the radio stations sell advertising, etc. — the way that public venues such as bars and department stores do (radio stations compensate publishers and songwriters, but not artists). The industry is arguing before the U.S. Congress that this historical injustice should be avenged by slapping the radio business with what amounts to a performance-based tax, which it prefers — for obvious reasons — to call a fee.

As Mike Masnick notes at Techdirt, the argument that the radio business has been somehow getting away with murder by playing music for nothing cleverly avoids dealing with the concept of “payola” or “pay to play,” which was systemic in the early days of radio and allegedly still occurs even now. If radio play wasn’t worth anything in terms of driving demand for recorded music or live music, then why would producers and record companies be so eager to pay disc jockeys to play their artists?

It’s possible that the record industry’s argument — albeit unstated — is that radio is no longer any good for driving demand for recorded music or live music (which is absurd, but let’s play along) and therefore broadcasters should have to pay because they are getting something for nothing. But whose fault is that? If the record industry can’t find a way to turn a profit from the kind of free promotion that radio airplay provides, that’s hardly the fault of broadcasters.

Does the “social radio” market — which features well-established players like Pandora and Last.fm — need another entrant? The gang behind Jango seem to think so. The site, which has been in beta for the past few months, opened up for full access Monday, and says it has 70,000 users already. Co-founder and CEO Dan Kaufman is the former CEO of Dash, a mobile-shopping startup that flamed out in 2001 (not that we should hold that against him, of course).

I have to say one thing about Jango.com: it’s pretty simple to use. When you hit the site you get a search box and a list of “stations.” You can choose a station, which is a pre-mixed selection of artists, or you can type in an artist’s name — at which point you are taken to a user page, without even having to sign up (you can create an account from the user page by just typing in your email and a password). My page is here. By choosing an artist’s name you effectively create a “station” based around them, which can made up solely of that artist, or artists that are similar. Jango suggests musicians and bands that it thinks you might like based on your choice, and then you get to choose from Jango’s list and add that artist to your station — or you can type in your own choice and add that. And that’s about it. You can click to buy a track through Amazon, and you can see who else is listening to a particular artist or station.

The site doesn’t have some things that Last.fm and Pandora do. It doesn’t have a widget, for example (like the one I have in my sidebar), although the company said that’s coming. But it is far easier to figure out and use than Last.fm, I think, which I find confusing and non-intuitive. And when it gets right down to it, one of the keys to such a site is the music recommendation part: in other words, how does it do in terms of suggesting related songs or artists you might want to listen to?

Like others, I’ve found Last.fm and Pandora to be sketchy on that front, particularly with some artists. Jango did not too badly with the few I gave it, although it remains to be seen how it performs over the long term. And when it comes to competing with Pandora at least, Jango has one killer feature: it’s available to Canadians, whereas Pandora is not — it cut off access to Canuck users earlier this year because it hadn’t acquired the appropriate licenses.

Although I hate to jump on the whole “Day The Music Died” thing — which I think is a little over the top — I find it interesting that while a whole bunch of Web radio companies, including Yahoo Music and Pandora, are turning off their streams in order to protest the increase in licensing fees for Web broadcasting, Last.fm has decided not to, which has caused some consternation in the blogosphere, including this post at TechCrunch by Duncan Riley.

Riley says that the Last.fm decision could risk a backlash from users, and in a follow-up post at TechCrunch, Mike Arrington raises the issue of whether the company’s decision has something to do with it having become part of CBS, the media conglomerate that bought it for $280-million not too long ago. Last.fm, in a blog post in its defence, says: “We do not want to punish our listeners for our problems, period.” The company argues that royalty rates are a fact of life, and that because it is based in the UK it has had to deal with them for a long time, etc. It says the industry should fight for fairness, but that turning off Internet radio even for a day “is just plain wrong.”

While the idea that users should come first is an appealing one — and companies like craigslist.org have certainly prospered by making it a mantra — Last.fm’s argument seems a little disingenuous. If the doubling of radio royalty rates takes effect (Stan Schroeder at Frantic Industries has a nice overview of the issues, as does the SaveNetRadio site), small streaming companies could go under. That would obviously leave Last.fm in a pretty sweet position.

I’m not saying that’s why Last.fm made the decision it did. I don’t know the company or the founders, so I can’t judge. I’m just saying it looks kind of fishy — especially when Yahoo and RealNetworks and others have joined the protest. Turning off the stream for a single day doesn’t seem like a huge issue to make a point, and I would bet that Last.fm’s users would probably support the move.

(Incidentally, Pandora has been inaccessible to Canadians for more than a month, after the company turned off access to Canadian IP addresses because it couldn’t afford to reach licensing deals with all the record labels for Canada as well as the U.S.)