Sweet deals are made of these

Late Thursday afternoon, Representative Jay Inslee (D-WA), Representative Donald A. Manzullo(R-IL) and seven co-sponsors, introduced the Internet Radio Equality Act, H.R. 2060.

If passed, the bill will nullify the vile royalty fees Internet radio stations have been ordered to pay by the Copyright Royalty Board judges.

Ten years ago, without fanfare, a bill known as the Digital Millennium Copyright Act (DMCA) was signed into law.

Never heard of it? Neither did the programmers of most Internet radio stations until the keeper of the keys and one of the DMCA’s sponsors - the Record Industry Association of America (RIAA) – decided the time was right to work the Librarian of Congress into effecting the new royalty collections.

Some feel the DMCA is being used to silence Internet radio stations, the overwhelming majority of which are independently owned – and not making money. The DMCA royalty extort also affects public, college, and other non-commercial terrestrial radio stations that also stream on line. It won’t harm AOL, Yahoo, or the major players – or most of the commercial radio stations streaming on line. They can afford it. The independents can’t.

You’ve heard of the RIAA. They’re the Gestapo…er…organization that does do the dirty…er…lobby work for the big four multinational labels: Sony-BMG, EMI, Universal, and Warner Music. Two of the four are foreign-owned, but let’s not confuse anyone with the facts.

The RIAA claims they’ll evenly split collected royalty revenues from Internet radio stations between the artists and the labels. Riiiiiight!!!!

Got a question for you. Who’s going to police the RIAA?

Artists and the labels the multinationals distribute but do not own can’t get what’s owed to them through existing royalty regulations.

Just ask Steve Popovich of Cleveland-International. He won, Sony, his label’s distributor, lost, and he still hasn’t seen a penny of what the label owes him. Never underestimate the value of an appeal after an appeal after an appeal – designed by the labels and the RIAA whose prime directive is to wear down their indentured servants…er…artists and affiliates. Only the lawyers and labels, who can afford them, get rich. Check out Steve’s blog at http://oneamericanagainstsonymusic2.blogspot.com/. It’ll tell you all you need to know about this racket.

Memo to anyone interested in an accounting career at a record label: They don’t need your resume, just your wanted poster. Don’t bother sending a photo, your mug shot will do. You’ll have to know how to speak the jargon: the plural of you is youse.

The accounting departments at major labels are as clean as untreated raw sewage. It’s a dirty business that’s only gotten dirtier. They engage in a business where a massive transfer of money is made from artists who work hard to label execs who hardly work.

Four major groups control the worldwide music business. They hate being called rogues. They’d rather you accept that they just make money differently than most of us.

How can artists trust they'll ever see a penny from the RIAA's extortive Internet radio royalty demands when the overwhelming majority of their artists are already getting screwed on their sales royalties?

Here’s a beginner's version of how it works.

Royalties are calculated from sales figures of over-the-counter music sales and downloads, which are compiled by the labels. That makes artists dependent on honest accounting from the record companies. Insert lengthy laugh track here.

Promotion and marketing costs (tour support, music video production, etc.) are among the line items deducted from royalties the labels claim they owe their artists. That’s why they employed expensive third-party promoters to set up pay-for-play deals with radio. If that third-party influence peddler had to grease a few palms to guarantee airplay – so be it. The labels don’t care about the price since it’ll all come out of the artist’s hide. Up until the most recent payola scandal, it was costing the labels an average of $500,000 per song to secure airplay at radio.
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If an artist wants to challenge the authenticity of the royalty statement provided by the labels – no problem. They’re permitted an audit. That’ll cost somewhere in the range of $25,000 to $50,000. That’s average. Sometimes it’s more. For that reason few artists can afford to go that route. Those who are wealthy - like Led Zeppelin - took on their label and won. But how about all those rock and rhythm and blues artists in the ‘50s and ‘60s that never received a dime in royalties?
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That’s life. That’s what all the labels say.
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Recently, I talked to Mary Weiss, the former lead singer of the Shangri-las. She told the story of an envelope that arrived in the mail from their label and assumed it was a nice fat first royalty check following the success of two huge hits – “Remember (Walking in the Sand)” and “Leader of the Pack.” Instead, it was a “you owe me” statement, claiming that the group was in debt $190,000 to their record label. That was 1964. That’s $1,209,064.62 in today’s dollars. The label claimed that it cost more to promote the songs than the money that was made from it.
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The RIAA always sides with the labels – because they’re one and the same. They’ll claim that artists – and even their lawyers – aren’t savvy enough to grasp the complexity of their contracts – nor should they bother. The RIAA’s advice to artists about the labels they’re on? Trust us. You’ve heard the joke about what those two words mean.
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Did you ever see a royalty statement from a record label? It’s nearly impossible to decipher. When the legal beagles do get involved, an average of all but 5 percent show that the label cheated the artist.
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If the labels could, they’d steal their artists’ kidneys and sell them on the black market.
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The RIAA will deny, deny, and deny of any wrong doing at the labels they represent and lobby for. They’ll even tell you how they’re under serious government scrutiny these days.

That’s partially true.

Recently, there was new payola scandal in the news. This one was political in nature and designed to elect a governor – but that’s not the real story. While running for the office in New York State, Attorney General Elliot Spitzer needed a hook to get his campaign in high gear and this one fell into his lap. Everyone was complaining about bad radio – and why it wasn’t playing music people wanted to hear. So Spitzer’s AG office investigated the labels and uncovered e-mails and office correspondence, which exposed numerous pay-for-play schemes – directly negotiated between radio employees and the labels.

The investigation nearly fell apart when both industries observed Omertà. Spitzer was about to can the investigation when one of his team, while on a tropical vacation, overheard a drunken label executive, sitting at the bar, boasting of how his company and others got music played on radio. She took notes, connected the dots, and Spitzer closed the deal. Don’t you hate it when the alcohol does the talking?

In fairness to radio – most corporate decision makers were not aware of deals being cut by staff members for trips and merchandise in exchange for airplay. Faced with probable jail time, the caught canaries sang and Spitzer got the labels to pay $50 million to New York State. It was, in some ways, a victory on both sides. $50 million is chump change to the labels. They routinely cheat artists out of that much in a day.
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The RIAA was silent on the matter. Drop it like it’s hot.
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The high profile New York state probe forced the FCC to get involved. Four of the major radio conglomerates, Clear Channel, CBS Radio, Citadel, and Entercom, collectively coughed up $12.5 million to make the problem go away. The companies admitted to no wrongdoing, and promised not to engage in any play-for-pay schemes for the next three years.

Let’s clarify something here. Payola is not about buying airplay on radio. It’s about keeping other music off. The multinational labels can afford to pay the big bucks to secure airplay. Small independent labels can’t and won’t. As a result their music was aced out of any mainstream media exposure until Internet radio came along.

But it took awhile for Internet radio to grow. When the top speed was 28.8 – and your Internet connection was coming from a phone line – you had to deal with poor audio quality and a buffering signal.

Broadband changed that and since then Internet radio listening has grown rapidly and has even surpassed satellite radio as a listening alternative to terrestrial radio. Part of the reason is that the independent stations are programmed and operated as a love of labor or they’re do-it-yourself operations, like Pandora, where they’ll create a station around your musical tastes. They’re passionate about music – and have become the true soundtrack to popular culture.

Understand that the four major labels groups want to control all that you hear –and view the small independent artists and labels getting airplay on Internet radio the same way the big beer companies reacted when they tried in vain to put the microbrews out of business.

And how’s this for a coincidence? The guy that used to run the beer lobby now heads the National Association of Broadcasters – but we’ll save that story for another time.

If the DMCA is left unchallenged, the overwhelming majority of Internet radio stations will fall silent.

Recording artists are on the fence with this one. Some actually believe they’ll see royalties from the RIAA. Others, who’ve had experience with label royalty payments, know better.

How about this as a slogan for the RIAA: What’s mine is mine, and what’s yours is mine too.

One more thing about the RIAA. You’d expect its Maximo Supremo Presidente to be a music maven, right? In reality you’ve got a guy who’s full Red State. This serpent’s name is Mitch Bainwol. He’s been ordering those black bag jobs against unsuspecting citizens accused of illegally downloading music.

According to his official RIAA bio, he used to own the Bainwol Group and was considered “one of the 50 most influential “politicos” in Washington. The Washington Post called him a “top D.C. lobbyist.” He also did time as a senior aide to former Senate Majority leader Bill Frist (R-Tenn), serving as his Chief of Staff and, before that, worked with Frist as Executive Director of the National Republican Senate Committee during the 2002 campaign. He’s also done stints as chief of staff for another George W. Bush coat holder, Senator Connie Mack (R-Fla) and as chief of staff of the Republican National Committee.
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You judge a man by the company he keeps.
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His knowledge of music is extensive. He can name all four Beatles, though occasionally he gets Paul mixed up with Pat. Pat Boone.
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Like any former successful lobbyist, Bainwol lives by the code: If you can’t beat ‘em, bribe ‘em.

I trust our new, improved Congress will do the right thing and nullify the RIAA royalty deal. If they don’t, eventually we’ll have artists making inquiries about their piece of those royalties. Stop me if you heard this one before. They’ll be told that the cost of legal fees, Congressional lobbying, accounting, and whatever else they can add to the mix was deducted from the royalties due. Maybe they’ll even get a letter from the RIAA like Mary Weiss did from her label.

You owe us.

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If you want to stop the RIAA from shutting down what it cannot control – and you should – get more info from audiographics.com and savenetradio.org, and please e-mail or call your Congressperson now.

Pride in Product: the sequel - Prophet and Loss

The following review is courtesy of one of Cleveland radio’s best known and most successful air personalities:

"The cost-cutting at CC certainly played out on the air yesterday. In the noon hour WMJI was playing Song Sung Blue by Neil Diamond. It faded out an after about 30 seconds, they played a jingle and nothing. Finally the SAME song comes back on. I had to leave my car for five minutes....came back and the song was STILL tracking. It took about 20 min. to get things back to normal. While that was going on, I switched over to MIX and there was also dead air.”

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Spare me the excuses on competition from the Internet and satellite radio, iPods or anything else the NAB's putting the blame on. Here's the only fact you need to know. Radio done this way is killing itself with friendly fire.

You’ve most likely read – or at least heard about the alleged Clear Channel programming memo that’s been circulating around for the last couple of days. I'm told it's a legit memo. It certainly reads like one that would come from those visionary souls.

Judge for yourself and enjoy.

“What seems to have finally made its way to our market has been in place for some time in other large/major markets. I've streamed & heard the changes so far in LA, NY, CHICAGO, PORTLAND, PHOENIX, DALLAS & PHILLY. 8 sec talk breaks inside a sweep (no beds ever), 20 maximum into breaks. ALL breaks MUST have content that is MUSICALLY related. Also, it is no longer necessary to BEGIN and/or END a break with call letters. All the 'bragging' monikers i.e. #1 hit music station....GONE. We don't brag anymore.

“Absolutely NO HYPE what so ever. No appointment times, ever...anymore. If you have tickets, you just give them away with NO previous mention at all. Also, periodically there will be NO GIVEAWAYS outside of AM Drive on the entire station to let it 'breathe'. Absolutely no jock TOPICS or ? of the day crap. Of course, this is station sensitive and Programmers are expected to tailor and customize new implementations for each station and format. EVERYTHING THERE IS A FACT.

“Now here's my opinion. After soaking it up for awhile, these stations DO sound cleaner and clutter free. The crosstown is playing hype promos that are :48 in length...we're 40% through our stopset already. Quicker imaging (when used, if not a dry, dead segue) transitioning to the next creates a non hype environment for the listener. Any jock that seriously thinks its about them, and station second will be gone within a week...If your an old dog and can't learn these new tricks, you SERIOUSLY better start looking. But what about PERSONALITY you ask? A.) Your AM Drive show IS your station's personality. B.) Your jock page on the website, do your personality there. Don't know web design? Get with it. That's where radio is headed.

“The major purpose of this new programming is to cater to the desires of the normal, non P1 listener. Request line callers, friends & family that pat you on the back, contest participants, interactive bit groupies...are only 8% of our TOTAL audience. Apparantely, the other 92% could care less and want ONE and ONLY ONE thing from the station. MUSIC. If I can remember correctly, this perceptual study was done over a period of 2 years, demo 18-34P, with a sample size of 10,000 people. The number complaint among the study? "The DJ guy never says the name of the song when its over." Hence, BACKSELLING now outranks frontselling. Yes, RULE #1 that we were taught as jocks for YEARS is now thrown out the window. Some markets have it worse than other depending on how corporate they are.”

Reading between the lines....this memo, if real, tells me that they’re suffering from an acute case of connectile dysfunction with realism. Then again, searching for logic at Clear Channel is as easy as finding a burger at a vegan convention.

Here’s my translation:

Clear Channel realizes that their Prophet systems work most efficiently when fewer and briefer elements are input. The less garbage in, the less garbage out.

Their engineers are spread so thin that repairs are limited to temporary cosmetic bandages. Maintenance? That word was expunged from the official Clear Channel dictionary years ago and the lack of it explains why most of those Prophets are malfunctioning.

The new programming regulations must be their latest effort at putting a stop to the continual blunders and bloopers that repeatedly occur during voice-tracked hours. They include wrong call letters, dated giveaways (when they run in the wrong hour, day, or in one case – week!), botched spot breaks and dead air. Am I leaving anything out?

How are all those discrep reports logged when something goes amiss while the lone board op is dealing with crisis in another studio? Do the missed, out-of-date, or bungled spots discrep themselves? Inquiring clients want to know.

Based on this memo, I predict Clear Channel will....

...boost the number of voice-tracked hours on most stations. Who needs personality? Who needs to payout benefits when you can hire button-pushers right out of broadcast school for an hourly wage.

...increase spot loads. Less is no more.

...reduce the number of voice-tracker announcers and increase the number of stations for those that remain.

...rerun breaks or full shows - another reason to remain non-topical.

...cut back on IT and web design.

...not renew most production content contracts.

...hack promotion and marketing. Fewer giveaways, less follow-through. The stink of human in those departments can be eliminated.

…do another round of playlist tightening. Bring back the viewpoint that you’ll never get hurt by what you’re not playing.

And what did we learn?

The brain trust at Clear Channel is doing everything the opposite of what they should be doing to save their sorry-ass music stations.

If being out of touch with reality is a prerequisite for working at Clear Channel, this memo writer is in line to be its next national music format programmer. Then, again, maybe Clear Channel’s on to something by hiring programmers like the one that wrote this.

Evidence disappears when you destroy it.

One more thing. If this memo proves to be a hoax - I'll still stick with my predictions.

Pride in Product?

Clear Channel and pride in product in the same sentence? Not a chance.

In the interest of truth and accuracy, I must inform you of Clear Channel’s latest downsizing decree. A few weeks back the Cleveland cluster slashed its board operators. Yes, board ops.

You could see this broom job coming. Last year, the state of Ohio voted for an increase in the state’s minimum wage from $5.15 an hour to $6.85. That additional buck-seventy per hour was just too weighty for the frail Clear Channel budgets to bear.

The budget slash calls for one board op to cover all six Cleveland market stations. Since most stations are in syndication or voice-tracking on Clear Channel stations in this market during “at work listening” middays, mistakes and bloopers have become acceptable standard operating procedure.

It’s worse on Saturday and Sundays when you won’t find a living soul on the premises during most hours. Take last weekend when we were hit with a freak major lake effect storm that dumped far more snow in the region than any forecast predicted. You didn’t hear a single weather update on any Clear Channel station. Easter weekend travelers had to seek out other media to get weather and traffic updates.

I’m not sure what value the local Clear Channel decision makers put on contests and giveaways, a weekend staple for most of the CC stations here. The giveaways are prerecorded but – often - there’s no one to take the calls. Try it yourself. I’m not sure what they do with all those unanswered giveaway items – but if I were a client, I’d be concerned. Apparently, it’s not an issue that listeners calling to win will likely hear the ringing of an unanswered phone. In the old days, we’d call that listener deception.

My favorite example of Clear Channel quality control is when their spots go out of whack. You’ll hear music or promos running over spots. I’d consider it a bonus blooper to hear an out-of-date spot, except that it happens all the time – even during hours when the stink of human flesh is wafting in a studio. To paraphrase an old saying: If something goes wrong with a spot and no one hears it did it really get discrep’ed?

Maybe the media mastodons at Clear Channel’s figured out that music radio has become a collection of formats for those who don’t like music. That’s the only explanation I can come up with for those notorious glitches where you’ll hear Sugarland on the country station followed by Korn. Makes me wonder if the rock station is playing Tim McGraw at the same time. Maybe they consider it cross-promotion?

What makes me doubt that these incessant bloopers are unique to their Cleveland cluster?

I’m convinced that if Clear Channel could figure out how to import their entire airstaff via phone lines from Bangalore they would. I just hope I didn’t give them any ideas.

Happy Birthday, Telecom Bill

With all those distrations from the Mitt Romney-created BainCapital attempting to unload worthless Clear Channel properties to the sunset ride and obliteration of that stiff in a Stetson known as Don Imus, we must not forget to wish a Happy 10th Birthday greeting to the 1997 Telecommunications Bill.

It seems like only yesterday when former President Bill Clinton signed you into law.

True, you were the much-needed rewrite of dated rules governing the communications industry and you followed the obligatory public hearings on how the bill would address new technology.

No problem there.

What you didn't get were comparable public hearings on your radio industry revisions - and with good reason. Those were tacked on as a ‘midnight rider” by Senator Bob Dole, under the influence of lobbyists employed by the National Association of Broadcasters, while you sailed through Congress.

That happened back when the NAB joked that they were armed enough lobbyists to provide gifts and junkets for every single member of Congress. It was hard to keep track of who was where with all the purported fact finding trips to distant lands that were passed out and paid for by the NAB.

Just to be certain that the Democrats were on the same page at the radio deregulation craving Republicans – Vernon Jordan, wearing his presidential advisor fedora, whispered in Clinton’s ear, “This is a good thing, Bill. Tell our boys in Congress that it has your seal of approval.” Vernon needed the deal done since he was also on the Chancellor Media board. That’s the same Chancellor, which later renamed itself AMFM and through another deal, brought in Hicks, Muse, Tate & Furst to merge it with Clear Channel.

The next time you see Vernon; ask him when he cashed in his chips.

The radio revision seeds were sown in the mid-1980s when the NAB worked another former president, Ronald Reagan, to embark on a course to free broadcasters from the shackles of ownership regulations.

Reagan, whose career started in radio at WHO-AM in Des Moines (now owned by Clear Channel), was an easy mark for the NAB boys. The pitch was that a single company should be able to own and programming multiple stations in any market.

It went like this. By having fewer owners per market, the existing ones would create formats that would complement one other. They’d offer listeners highly defined formats since they would no longer have to deal with that pesky problem of competition from multiple owners.

They should’ve called it privatized socialism.

Clear Channel ended up owning everything or so it seemed in most markets. And in those ten years a sizeable slice of format diversity and localism on radio vanished.

There were two distinct forces at work in radio consolidation -- those who wanted to control as much of the medium as possible and those that wanted to cash in. The latter followed the Greater Fool Theory, accepting the premise that there'd always be someone foolish enough to pay even more than they did for product they overpaid for. The former cashed in by selling their stations for massive profits - more than 30 times cash-flow in some cases - have been living la Vida loca.

A couple of buyers were in such a rush to acquire and close deals that they neglected to read the fine print on whether or not the stations they were buying owned or leased the transmitter site land. As a result, some stations got stuck with the previous owner as their leasing agent.

Those buying in had a business plan that read “buy ‘em now and figure out what to do with ‘em later.” You have to give credit the smart ones at the top who are preparing their golden parachutes to jump before the radio industry implodes.

Some believe radio’s woes are a form of karmatic retribution. Its decade of arrogance drove listeners and clients away in droves with tight music play lists controlled by influence peddlers, heavy commercial loads, and a reduction of local programming. They believed you would have to listen to radio no matter what they did to it.

Here’s math the radio industry propagandists want you to believe. There are roughly 100 million terrestrial radio receivers in America, an average four per household.

That doesn’t mean they’re turned on.

Radio was the original interactive media long before that idiom was part of our lingua franca. Radio was the entertainment. It had personality and provided news, information, music, and served as your own personal soundtrack. Your favorite radio station was part of your social identity. Its formats lived in real time and being live and local was its utmost advantage.

There are two intertwined factors here. Produce an inferior product and few will use it. The audience loss translates to a revenue loss. It’s too expensive to buy media with a diminishing return, especially when it’s no longer serves as the first destination for news, information, and entertainment.

Radio ad revenues are down from a year ago at this time and those numbers are down from the year before. Are you detecting a pattern here?

The radio industry was never meant to be that large.

Old media are losing ad dollars that are migrating to the Internet. Television and print are beginning to get it by learning effective ways to marry their old with the new while, in this past decade, radio remains firmly wedged in its denial mode.

New technology isn’t putting radio out of business. Radio is putting itself out of business.

Instead of listening to their regional sales managers and programmers who are on the front lines, it continues to put all of its trust with the corporate mentality of their hacks at the helm.

Most radio chieftains fail to understand human nature. Everything has an expiration date. The longer you go without something you once had, the less you miss it. You adapt. You change. You find alternatives.

Since radio is considered a risky investment on Wall Street, the industry is placing its bets on HD Radio, claiming it has doubled and tripled the number of stations they own.

Forget the propaganda – just give me real numbers.

How many HD radios have been sold? Seriously.

I visited three Radio Shacks. The first two never had stock while the third had one in back that was re-boxed when they couldn’t get it to work.

The clerk at Wal-Mart didn’t have a clue and tried in vain to correct me, “You mean HD TV?”

The only piece of business the radio industry has done to improve its bottom line is to sell off many of the stations bought during the gold rush frenzy that followed the Telecom Bill signing.

The shame of it all. Thanks in part to the 1996 Telecommunications Bill along with the few - but all too visible sleazeballs and reprobates (you know who you are )- that give the radio industry a bad name, investing in radio’s future is like buying a vehicle from a shady used car lot. Always check under the hood.

There is a probable upside to this decade of mismanagement. As companies are forced to shed the excess properties they were in no condition to control, we will see a homecoming of creative and innovative radio people that know how to marry old media with new – and eradicate the paralysis-by-analysis programming and marketing and uncreative accounting that has crippled our business for the past decade.

Happy Birthday, Telcom Bill.