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.