Radio and the labels: Outlandish accusations and propositions

There’s money in chaos. That’s what the Record Industry Association of America (RIAA) is counting on.

Here’s a quick explanation for those not in the business.

Radio stations that play new and current music have only so many slots open each week to add new music.

Added value tacked on to a title can provide more influence and weight than, let’s say a decision maker’s professional opinion.

The clean version used to be offering a station a promotion – like a free show or a trip to see the artist in concert –in exchange for an add.

Elliot Spitzer may disagree with the process but we’ll let him duke that one out with Ayn Rand disciples.

The dirty version is, of course, payola, where the only winner is the designated hitter.

Blame the music business for payola - not radio. Radio’s only guilt is buying into it.

Following 1996’s radio deregulation, the radio chains – those that bought up everyone else – required non-traditional revenue (NTR) to meet the bottom line and service debt. Deals were cut with independent record promoters to offer them the inside track – the ultimate influence – for labels to get their music added at radio.

The radio industry went full-tilt boogie pay-for-play.

Money talks, good music that can’t afford the payoffs, walks.

The label promotion chieftains – those in charge of working radio for adds – are pressure- cooked to get their music on radio. Radio airplay still translates to sales and influence on other media – including music video channels - and song charts.

Indie promotion afforded an easy way out for labels, allowing its salespeople solid radio airplay guarantees on pay-for-play titles. The labels hired the indies with a “don’t ask, don’t tell” premise.

The labels created and recreated payola many times over the last fifty years – maybe more.

It was profitable for radio during the “legal payola” years since it had the upfront on the deal. Based on market size, indies doing rep for the labels charged, $75,000 to well into the six figures per year in a lump sum – paid in advance - for control of radio playlists.

Call it the path of least resistance.

Labels never spend their own money on anything. They spend their artists’ royalties. That’s where their wrath should be directed. Lunches, dinners, parties, giveaways, contest costs are charged against an artist’s royalties.

To the labels, honor is an archaic notion at best and sardonic naiveté at worst.

The pay-for-play deals came to an abrupt halt when the FCC defined “legal payola” as illegal.

With that plug pulled, radio and the labels started snarling at each other like rabid dogs.

Just like radio, the labels have gone through their own expensive consolidation and the pay-for-play costs started hurting their bottom line when the teen acts pool they depended on went dry. With fewer royalties to extract – the labels need their own version of NTR.

The labels struck first by telling radio its free ride was over, insisting that if radio wants to play music, they’ll have to pay the RIAA through its SoundExchange collection agency for the privilege. And that includes any music – new or old.

Call it payola in reverse or Revenge of the Weasels.

There aren’t any laws on the books requiring radio to do so – but the RIAA is targeting easy-to-sway lawmakers to change the rules and make it official.

The National Association of Broadcasters (NAB) is trying to fight back – but, like a drunken brawler on a Friday night, David Rehr hasn’t been able to land a punch on the RIAA. Instead, he took a few on the chin and a couple in the gut when the RIAA in its MusicFIRST Coalition disguise came a’callin’ on the House Judiciary subcommittee hearings a few weeks back. Their goal is to establish and make law a sound recordings performance royalty for broadcast radio.

The RIAA tries to pawn the MusicFIRST Coalition as a true coalition of recording artists.

It’s not.

They armed themselves with folk singer Judy Collins and singer Sam Moore, formerly of Sam and Dave.

Why Judy Collins? We haven’t heard much from her since the Clinton era. Turns out she’s released a new album, Judy Collins Sings Lennon & McCartney– and this hearing made for a great opportunity to get in a few plugs for it.

Moore, who still gets airplay on stations that haven’t switched from oldies to classic hits, did his sordid saga on the free ride radio has by freely playing his music without offering compensation.

Sam, you’re targeting the wrong enemy. Stax, your Sam and Dave days label got slicked out of owning your music masters some thirty-plus years ago by Atlantic Records. It was legit. Someone on the Stax side neglected to read the fine print.

Since then Atlantic has become part of Warner Bros. and now that company is run by the aging kid who bought his way into the biz by liquidating his family’s booze bank, Edgar Bronfman, Jr.

Memo to Sam: I was the only one in a Borders record department the other day. While scanning the R&B compilation CDs, I found six R&B “greatest hits” albums that had Sam and Dave tracks. I also noticed that all your old Stax albums were on CD, too. Now tell me - when was the last time you got a royalty check from Edgar?

Moore also dropped Bo Diddley’s name as another artist, in ill health, and forced to tour to make ends meet. He continued to do shows even after his left foot was amputated. A few months later Bo nearly shed this mortal coil when he suffered a stroke.

I scanned the record store for Bo’s music, too, and also found tracks he recorded in a half dozen R&B compilations as well as a CD copy of Bo Diddley – The London Sessions.

Who owns Bo Diddley’s long-time label Chess these days? Glad you asked.

Following a paper trail, I learned that in 1969, Chess Records, always notorious for not paying royalties to its performers, sold the company to GRT records. GRT dumped the Chess catalog in 1975 to a company called All-Platinum Records. All-Platinum turned out to be tin-plated and went belly-up with the Chess masters ending up with MCA in a liquidation deal. MCA is now the Universal Music Group.

My question. When was the last time Bo got a royalty check from Universal?

What the RIAA is doing is trying to circumvent labels from paying royalties owed to its artists by putting the culpability on radio.

Collins and Moore represented “semi-retired recording artists” under the RIAA’s MusicFIRST Coalition banner.

I couldn’t find Sam Moore’s concert schedule but Collins is good for fifty to eighty concerts a year - hardly what one would call a semi-retirement itinerary.

As the Internet radio on-line trade RAIN pointed out earlier this month, following the Sam and Judy show, “a statistical analysis (based on terrestrial radio airplay) reveals that the largest individual beneficiaries would be the major record labels... by several orders of magnitude.”Best case scenario? Moore’s all-things-are-perfect best shot would be an annual check of $12,000. The RIAA would take the rest - $50 million - and split it four ways with the multinational labels it represents. Collins’ take would be top out at $900. She spends more than that on a case of wine.

Still, if tertiary artists like Sam and Judy could bring down the House that effortlessly – imagine what’ll happen if the RIAA calls in the Eagles.

Most artists feel that radio has more coats of slime than the labels.

Why?

Take U2. They paid a king’s ransom for radio airplay following the disappointing response and sales of the album Pop. Except for classic rock stations, they were over at commercial radio.
In 2000 "The Ground Beneath Her Feet" from the Million Dollar Hotel soundtrack, garnered zero airplay in the U.S. since there was no money attached to it because the band’s management chose not to free up some earmarked U2 royalties for pay-for-play. A promo single was released but it wasn’t worked – nor played - at radio.

Later that year, when the album All That You Can’t Leave Behind was released, U2’s management authorized the label to dip into the U2 royalty bank to work “Beautiful Day,” its first single.

It became one of the biggest, most played radio hits of that year – and the band was back in action.

The band covered all bases and even stroked one of the indies working All That You Can’t Leave Behind in its album credits.

In 2002, U2’s management declined to authorize pay-for-play dollars for the single release of “Electrical Storm.” It hit number four on the charts in the UK, number five in Australia – but died at number seventy-seven in the U.S. – and received no commercial radio airplay.
In 2004, big bucks were put on “Vertigo,” the first single from the album How to Dismantle an Atomic Bomb – and like “Beautiful Day,” it was all over radio.

And you were under the impression that radio plays U2 because they’re talented?

Right about now, if you’re not directly involved in the radio or record business, you have to wonder if the rationale of our media and culture industries - beyond the need to make money and entertain people - is to discover, cultivate, and reward talent.

Sadly, no. It’s more like that biker bumper sticker that reads, “Gas, grass or ass – no one rides for free.”

To the multinational labels, honor is an archaic notion at best and sardonic naiveté at worst.

A few weeks back I intentionally ducked the mob mentality that surrounded the release of a 40-page study titled, titled Don't Play It Again Sam: Radio Play, Record Sales and Property Rights. It was written by a University of Texas, Dallas professor - Stan Liebowitz. Among other things, it implied that radio airplay actually hurts record sales.

I refused to feed into it.

Regrettably, others did and the radio industry’s brusque protests put it on the front page of every trade paper and music industry web site. That provided the RIAA the opportunity to paraphrase Shakespeare: Radio doth protest too much.

When some trade magazines and music web sites asked for my response – I gave a three-word answer, “Liebowitz is misinformed.” Period.

In all fairness, maybe radio doesn’t have the clout it once did when it comes to exposing new music – but it continues to have a notable influence on sales and other media.

The subculture radio flouts is from the world of small, independently owned and operated labels and their artists who are not represented by the RIAA. Their exposure comes from Internet radio, downloading, street buzz, and airplay on a few public and college stations.

The labels already have an in to put down Internet radio should they so desire: the Digital Millennium Copyright Act (DMCA), which was signed into law in 1997. The RIAA intentionally concealed the law from Internet radio until they showed an influence on sales.

The RIAA holds the cards since other digitally-delivered media, like MusicChoice cable and Sirius and XM satellite radio have been paying the freight to the RIAA for the DMCA since its inception.

Unlike Internet radio, their royalty fees were built in to the cost of doing business at satellite and cable. Internet radio, where far less than one percent of its operators show profit, was initially led to believe they were exempt.

Eventually, it’ll come down to one resolution: never underestimate the value of a cash bribe.

Did you read where Clear Channel doled out $1.2 million in the first half of 2007 for lobbying on Capitol Hill while the RIAA funneled a little less than half that amount - $658,000 to be exact - during the same time? Of course, one will never know if a few close-to-the-stage Police tickets exchanged hands as an unregistered bonus. Like cash bribes, there’s prodigious value in a primo ducat. And no one knows that better than the RIAA.

Clear Channel’s lobby payments were for securing private equity firm issues – but a few dollars were set aside to fight the RIAA.

Read that carefully. That’s for the first half of 2007. If Clear Channel continues to rain money on Capitol Hill at that clip, we’re talking $2.4 mil worth of influence peddling by year’s end. If the RIAA matches their first half, their lobby bill will top out at $1.3 million.

It’s not a done deal for the RIAA but the NAB had better start writing some mega-sized checks to their own lobbyists to stay in the race for radio.

The one good piece of news for the radio side came from Nashville entertainment business attorney Fred Wilhelms who’s noting some shell game improprieties with the RIAA, Sound Exchange, and the MusicFIRST Coalition triumvirate. Wilhelm’s been wise to – and on the label’s inefficiencies and crafty deceptions for years.

If you’re the gambling type, bet on the side that pulls off the best pay-for-play job at the Congressional level for the remainder of 2007.

What’s the difference between an indie and a lobbyist? Not much.

And if the RIAA didn’t invent Dr. Liebowitz, they should’ve.