The International edition of Newsweek has an article about MotorFM, a German radio and webcastion operation that eschews Digital Rights Management for their webcasts.
In this age of iPods and peer-to-peer networking, radio was long ago relegated to the status of has-been. But MotorFM isn't your parents' radio station. Ever since it started broadcasting over the airwaves and on the Internet on Feb. 1, from a cramped studio in a factory building along Berlin's Spree River, MotorFM has become the first radio station to make most of its playlist available for listeners to download legally. MotorFM also allows little-known artists to distribute their music directly to consumers.
MotorFM's founders are betting that this blend of radio and retail is just what the medium needs. They think the growth of broadband access and an insatiable thirst for new music could give radio an opportunity to move beyond its mainstream diet. "Radio only has a chance when it can still surprise people and when it can find a way to finance itself by being a retailer," says co-founder Tim Renner, former president of Universal Music.
The key to MotorFM's business model is a new music-delivery system called Potatosystem. The system is integrated into an artist's Web site and connects him with the buyer over a server. It's the brainchild of programmer Jurgen Nutzel, who worked with the Fraunhofer Institute, a state-supported research lab that invented the MP3 digital music format. Potatosystem, named after the restaurant in which Nutzel and some colleagues conceived the idea, offers independent artists and smaller labels a platform on which to sell their music. Musicians register their songs and an asking price—typically between 70 and 99 euro cents—and listeners buy directly from them, through a network of servers. The difference between Potatosystem and commercial music-delivery systems like iTunes is that there's no middleman: musicians receive up to 78 percent of their asking price the first time their song is sold, compared with about 2 percent with iTunes, says Kuhn. Potato then engages in an interesting bit of promotion, giving subsequent re-sellers a 20 percent cut of the original price, if they make the song available for others to buy. In this respect, Potatosystem resembles peer-to-peer systems like Napster and Kazaa. Says the Potatosystem Web site: "We're making salespeople out of thieves."
Better-known artists who have contracts with major labels aren't available through Potato, because it doesn't accept the digital-rights-management software that labels require to limit music piracy. But that isn't of much interest to MotorFM, which sees itself as a champion for undiscovered talent. When unknown artists register at Potato, MotorFM buys their songs. This gives the station first crack at selling the songs, and the unprecedented amount of interactivity with listeners that comes with it.