Monday, March 17, 2008

Radio: Really strange bedfellows


This is not meant to be an insult and I don’t believe it will be taken as one.

I applaud the efforts of the Voice of Webcasters (VoW) and, if nothing else, its “Day of Silence” was successful in drawing more attention to Internet radio.

It has also kept the RIAA from forcing their royalty payments schemes on more streaming audio stations.

The problem remains that Internet radio is hampered by having too many foster parents.

It becomes a victim of its own independency.

The result is one medium being spoken for by many mouths.

When everyone’s in charge, no one’s in charge.

It also leads to defectors – like the streaming audio sites that have already cut royalty deals with the RIAA’s SoundExchange division. Those amount to a fully-legal “pay-for-play” system that only major labels and acts can afford.

They call it “direct licensing.” Those that know better call it “dark payola.” Read about it here.

This is why both the terrestrial radio industry and Internet radio should combine forces to answer the RIAA’s attack on streaming media and royalty payments.

You don’t have to get along. Just agree.

And what you must agree on is that the RIAA should not be given one cent in royalty fees – period.

Don’t push for the opposite – threatening to charge the labels to play their music. They’ll call you on that one – and win.

What has worked up to this point for terrestrial radio will work for streaming audio.

Airplay exposes music – regardless of medium.

Mitch Bainwol, the CEO of the RIAA, runs with a shady pack.

He lobbies for and answers to the four major multinational label groups – two of which are foreign owned. He answers to the labels’ bosses, under-bosses, and their consigliore.

Another RIAA subsidiary is the MusicFirst Coalition. They’re out to extort a tariff for streaming music to terrestrial radio.

I’ve spoken with some terrestrial radio people that swear to “inside information” that when the RIAA forces end up in control of Internet radio, they’ll back off terrestrial.

The Easter Rabbit died for your sins, too.

MusicFirst really burns me – and some of the artists they’ve trotted out as mouthpieces should know better.

I’ve heard former Supremes singer Mary Wilson complain that she hasn’t received money owed her from the many million-sellers her group performed.

She has a legitimate complaint. But it’s not radio’s fault.

She should take that one up with her former Motown boss Berry Gordy, Jr.

Of course, Ms. Wilson may have to follow a paper trail – if there is one. Who owns the rights to Motown’s master recordings today? It’s not like the Supremes stopped selling. Just watch one of those half-hour p.i. spots on TV and cable for greatest hits and soul collections. Someone’s making money.

Stations keep running and running and running those p.i.’s because they produce revenue and those carrying them get a taste of every unit sold and those generating the most units get the highest rotation.

Mary, when was the last time you got a check from whatever company’s leasing your masters for those compilation CDs?

Here’s the problem. We need unity. We’re talking strange – really strange bedfellows here. But it’s the only way to defeat the RIAA machine.

If only David “Fumbles” Rehr could concentrate on more than trying to stop XM and Sirius from merging and blindly propping Peter “Sgt. Bilk-o” Ferrara and iBiquity’s HD Radio scam.

He needs to focus on winning the war with the RIAA.

Never underestimate the value of a hot concert ticket. Just ask the RIAA what they do when they need to grease a few palms to see someone who’s impossible to see in Washington.

Arbitron and Edison Media's Infinite Dial Report will be out in a few weeks. What we know so far from its advance hype is that there’s an estimated 33 million U.S. citizens – 12+ total audience – listening to streaming audio at least once per week. That’s up from 29 million listeners a year ago.

Fumbles, hitch your wagon to the one heading in the right direction.

Here’s the scary part and why we need these strange bedfellows. Think of Fumbles and Bainwol in a cage match. Who do you think would come out alive?

Social networks are the future. Terrestrial radio chains should’ve been buying them up instead of blowing money on HD Radio. Sixty three percent of streaming audio users have a profile on a social network site – predominantly MySpace and Facebook. Are we getting through, Fumbles? *
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Appeals, schlameils…the NAB has to agree with and partner with VoW. And they should follow their lead. The Internet radio people have the terrain down.

I know the other side of the story. I’ve talked with station owners that view independent (meaning not connected to a terrestrial radio station license) streamers as competition – even the enemy.

That is not the case.

As Tacitus, the Roman historian said, “In valor there is hope.”

Picture an intersection with four vacant corners. A restaurant moves into one vacancy. For that restaurant to be successful its owner will need one on every corner to drive more traffic to that destination. The same applies to streaming. Safety in numbers.

Internet radio – like terrestrial radio – exposes and sells music. And it should be allowed to program music based on merit – not the pre-paid shenanigans the RIAA is trying to pimp.
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What are the odds of such a bizarre coalition ever occurring?
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Zero.
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That’s reality. Independent Internet radio will have to continue the fight on its own against the RIAA’s multi-million dollar label funding and political clout on Capitol Hill.
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For Internet radio, so far, so good – but that isn’t good enough.

Too many Internet radio stations have already gone dark – for absolutely no reason other than the RIAA’s greed.

This time - resist some of the greed. It’ll pay off for years to come.

22 comments:

Anonymous said...

You need to hear the whole story.I was (past tense) an independent radio broadcaster and was shut out from participating with VoW. We have enough people I was told as if to say my station didn't count. These people have overactive egos and I credit them for keeping the RIAA at bay. What they don't realize is that Clear Channel and other congloms are coming down the pike and will run them over by cutting back door deals with the RIAA. Independent internet radio lacks true leadership. Ego is not leadership. Private club is not community. I closed my internet station rather than get socked retroactively. John, you are so far fetched with your idea. It does make sense except that I don't trust anything connected with terrestrial radio.

Anonymous said...

John, There are a number of problems here starting with the RIAA. What most don't know is that Bill Clinton was one of their puppets. The RIAA was behind the DMCA which put internet radio in its quandry. It was a malicious and misleading bill and if you recall the RIAA waited until internet radio developed legs before it launched its attack. This is one tough battle at a time when rights are routinely violated and rules rewritten. I do agree that the VoW has its limitations although I could never see the NAB joining forces with anyone else.

Anonymous said...

i see where you are going with this and wonder if it was on purpose that you did not mention last.fm (owned by cbs) and other quasi-indie sites that are being bought up by majors. if anything i would think that cbs would block any attempt by the nab to discuss mutual concerns with indie webcasters. their job is to buy them out and i believe this is the gist of your blog today. i would hate to see indie independent radio go the way of so many other indie projects. on the other hand the labels cannot seem to crack the indie movement and even major acts like nin and radiohead have left their labels to market their own wares without having to beg for their royalties. so far few if any indie internet stations make money. most are love of labor. that is what terrestrial radio hates. its more competition for them and they are beginning to realize that you cannot buy innovation creativity & passion.

former webcaster said...

The small independent internet radio operator is o-ver. It is either for profit from Radio Paradise, RadioIo or "communities" like Live 365 that control "indie" internet radio. If you were to check the exit strategies of these sites I bet you will see "sell to a broadcast group" as their best case opportunity.

The VoW types ruined it for those trying to make change and create a real alternative to terrestrial radio.

I don't want to be just another community station on live 365 and like the other person who commented I was shunned by the voW when I contacted them about getting active in their organization and they made it clear it was theirs.

Anonymous said...

Great topic. I know it’s fun to enjoy a little schadenfreude while watching HD Radio swirl down the drain, but this is where the real action is taking place in the radio business when it comes to the future. Traditional broadcasters are 1000 percent correct that the independent radio stations are competition for them given their current business model.

Remember the old joke about two guys in the woods who run into a bear. One guy says, we’ll never outrun that bear, and the other says: I don’t have to. I just have to outrun you. The only thing traditional broadcasters need to do is be the least bad station on the dial, which is getting easier by the day.

Web broadcasting is very different. It’s about infinite choice, and offering up programming so appealing that your listener base will choose it over everything else in the universe. To stretch the metaphor, it’s like stumbling into a herd of bears and having to outrun them all.

To compete in that environment will require an enormous culture change that I’m quite certain corporate radio will not manage. While it’s hypothetically possible, it will not happen given the human dynamics. There’s just too much salary invested in the wrong places to reallocate resources to make a station competitive in the Internet world. Radio execs know that, and that’s why their focus will continue to be on trying to avoid the realities of the Internet for as long as they can. That’s why they love their HD fantasy. And that’s why they don’t yet work well with the internet consortiums.

The RIAA on the other hand hasn’t been able to avoid the Internet. Their Internet future has already arrived, and that’s why they’ve thrown their broadcast friends under the bus. In a few more years, as Internet radio takes hold, broadcasters won’t be able to avoid reality any longer. And perhaps then they’ll join forces with the streamers and accept the new terms of competition for listeners. For now they’re still hoping the dead horse their beating will stand up and make a few more turns around the track.

Anonymous said...

I think the one group this story is ignoring is the most important one: The audience.

While radio and record sare looking for ways to make money off each other, the audience has said, "A pox on both your houses," and is ignoring both. They no longer buy CDs and no longer listen to the radio.

Both of these groups need to put their eyes back on the ball and remember what they're in business for. There's a lot of money out there. Quit the litigating and regulating! The only people who win are the lawyers.

Eh said...

Canada used to do things right. Not anymore. Their broadcasters consider the internet as their enemy much the way they do in the states. Maybe its because Canadian radio is dumbing down and deregulating like America. At least they did one thing right. NO HD RADIO. Those in the know now that internet radio is the delivery system of the future.

Anonymous said...

It ain't going to happen. There is too much distrust. The radio stations are beginning to realize that the real future is with the internet and not HD radio. They may not admit it in public. But you should hear what is said in private from engineers to market managers. A folly. Eventually HD will go the way of AM radio and terrestrial will want the biggest piece of internet radio. I can say first hand that most radio groups view independent internet radio as a mosquito trying to suck the blood or in this case revenue from terrestrial. The NAB cannot be trusted. I am surprised youwould even suggest this.

Anonymous said...

The RIAA does nothing for its recording artists. In fact it helped write the rules that indemnify them from paying royalties owed unless artists challenging their payment plan do so with an expensive audit. Most artists can't afford to that. Some deals don't even allow artists to audit the labels after a certain period. Why is it that EVERY artist in the past five years that audited its label(s) found they were underpaid. The artists that called for the audit were the only ones that could afford it. I'll name two--The Beatles and Led Zeppelin. What about Bonnie Raitt or Edwin Starr or Soundgarden? I agree that radio and internet radio should unite against the RIAA. We also know that the NAB would fold in a confrontation with the RIAA. The best thing that could happen is happening and artists like the Eagles, Jimmy Buffett, Paul McCartney and others are releasing their own music on their own labels and eliminating the middleman labels. I beleive we will see more of that.

PocketRadio said...

John,

Thanks for mentioning my blog - of course, I have quoted you, Jerry Del Colliano, and Mark Ramsey (who just recently indirectly referred to HD Radio as a pyramid scheme) throughout my blog. The blog is the culmination of following this farce for two years, and there are about three thousand links to it throughout the Internet, plus on every HD Alliance member site under Google Finance. iBiquity gets what they deserve for trashing the AM band.

Anonymous said...

The RIAA backed Music Coalition front is making a good case for radio to pay royalties along with internet radio. The problem internet radio has and terrestrial radio too is that they have no similar campaigns to show why they should not be made to pay royalties. This is where the NAB should be putting their money instead of propping up HD radio and trying to stop the XM-Sirius merger. Both terrestrial and internet radio needs to defend itself against the RIAA. I don't know why artists like Michelle Shocked, Beck and Sheryl Crow are backing the Music Coalition. You would think they would be wise enough to see how the labels treat their artists and routinely cheat them out of royalties.

Anonymous said...

My dad who is 82 bought a Bose Wave Radio 10 years ago, & the age of 72. it sounds really great and the CD player is even better. I can't say enough good things about Bose's Wave Radio. He also has a computer and is even online too. Not bad for an old guy right! Well at 82 my dad just purchased
a "46" flat screen TV and ordered the high definition package from Direct TV. He loves his music and is a regular user of radio too.

Here's my point. my dad is satisfied with the benefits of his current radio. But recognized the need to upgrade to a high def flat screen TV. Flat screen TVs are selling! HD radio's are
not. consumers are happy with their current radio selection and
see no need to upgrade. The reverse is different for HD TV... Once you'd experience high def TV there's no going back to old technology. Studies have showed most people are aware of HD too. High def TV equals drooling. HD radio equals indifference.

Scooter...

Anonymous said...

I wonder why no one has pointed out that AFTRA, which is supposed to be a union for broadcasters, is actually supporting the corporate record labels in this fight. I think any broadcaster who is a member of AFTRA should point out to the idiots there that 60% of this royalty will go to the fat cats in England, France and Germany, with the remaining 40% divided up by artists and musicians. And since the labels control the money, they decide when the artists get their money. If the labels want to deduct promotion expenses from the royalty, so be it.

I'm not suggesting that AFTRA support the broadcasters on this issue, but they're clearly on the wrong side by supporting labels. This is NOT a labor-management issue. It's one industry vs. another. AFTRA appears too stupid to understand.

Across the pond said...

The last "anonymous" made a good point. Most of the labels making up the state's RIAA are headquartered here and it is a true statement that most of the "royalties" collected will not be distributed in the states. The artists will see very little if any actual dollars from the RIAA and the labels since they take half off the top and pocket miscellaneous fees for other services provided. When all is said and done, the artists' take is less than 5% and of that 5 it will go to artists with the most clout and best management (U2, Sting types). Internet radio is growing and should be allowed to serve as a new source of free airplay for artists without RIAA interference.

Anonymous said...

Well where do you think the RIAA gets its funding from? Mostly the European labels. It is a complete scam. We have had a system in place for decades and it works. Airplay sells music. Internet radio exposes more music than terrestrial so it becomes double jeopardy. Radio hates them and the labels want their money and to control their playlists. Thank you to all of the politicans for opening the flood gates. You hurt your own constituency. Then again we can't pay you off like the RIAA can.

Anonymous said...

Old media (radio, record labels) will keep making the same mistakes of isolating themselves from the present and future. New media cannot afford to fall into that trap. It is easy to do. Look at Microsoft. As much as your suggestion for both parties to work together is practical it is not workable. Terrestrial radio may be putting its streams on the internet. That does not mean the product becomes better. It is still the same crap as they put over the conventional airwaves and even worse, most lack a method to hold listeners during spot breaks.
I say let them put themselves out of business and internet radio operators should find ONE leader and speak with ONE non-egotistical voice. I agree with you that there are too many players on the field and internet radio penalizes itself for it.

Cat said...

I believe artists should be compensated for their work and I already believe they are through radio's payment to ASCAP, BMI and SESAC. Why is the RIAA trying to force Congress into another payment for radio to pay and how did that digital millennium copyright act ever get by the National Association of Broadcasters let alone internet radio providers? Was this another sneak like the radio revisions in the Telecommunications Bill? IT seems to me that Bill Clinton was definitely on the take from radio to the record industry even when they were at odds with one another.What is Hillary's stand on this? Obamas too?

Anonymous said...

I agree with the poster that said it is a good idea but totally impractical. If anything those that know about internet radio on the terrestrial sideit is their want to wipe independent internet radio from cyberspace. They believe terrestrial radio can absorb the DMCA costs which is something independents cannot do. The internet radio movement lacks leadership. Some involved in the VOW ended up cutting those dark payola deals to stay afloat. I do not know what the answer is. I do agree that the indie internet radio operators have to organize and speak from one mouth and we can't afford to have the 'haves' and 'have nots' as chosen by an ad hoc committee as to what stations are important and which ones are not. I think the best way to go is to find legal advisors who are familiar with internet radio and willing to do some pro bono research. Other than that I believe if something isn't done it will be the same cast of conglomorates that own terrestrial radio conquring internet radio and destroying the product.

Anonymous said...

The radio bubble burst!

Interep, facing repayment of $100 million in bonds, is expected to file for bankruptcy within a month. The move causes one question the viability of radio's current business model and how long it can last before it has to die or completely transform itself into something new and different.

Dr. Paul Vincent Zecchino said...

Among the hottest selling radios today are Sony's 'ultralights'. These miniature tuneable AM/FM Walkmen run for days on one AA battery. They feature good fidelity and high dynamic range. The SRF-59 and SRF-39FP radios hear stations hundreds and thousands of miles distant.

Doesn't that demolish BigRadio's sleazy pro-HD lie that listeners don't listen to distant stations and have no business doing so?

Just who appointed these blowhards to tell us what to listen to? Is that why listeners rejected HD and told BigRadio to take a hike?


BigRadio and its corkscrew-tailed product of selective miscegenation, HD, is a greedy-gut, bloated carcass. Stinking of deception, exsanguinated of creativity, BigRadio is a collagenous pile of noisy digital dog droppings glutted with maggots which wriggle about on sun-splashed desert rocks, exposed for all to see as emporers sans clothes, in wait of dessication.

Dr. Paul Vincent Zecchino
Manasota Key, Florida
19 March, 2008

"Best to stay away from a man
when his blood is up."
- Det. Cpt. Dudley Smith, LA PD
"L.A. Confidential"
c. 1997

Rusty Hodge said...

If you want to see dark payola in action, look at Last.FM or iMeem. Rather than pay the ridiculous DMCA/CRB rates, they signed deals with all the majors and many of the larger indies. We don't know the details of all those deals, but you can see a sudden increase in promoting major label content on their front pages.

Most small webcasters aren't doing this. But some are. I won't name names, but there is one Smooth Jazz station that only plays material that labels - small or large - pay them to play. (They did this as an extension to getting waivers from artists to allow royalty-free streaming in response to the CARP rates years ago).

If you want to stop this kind of thing from happening, you have to have affordable CRB rates. When I was visiting congress last summer, this is one of the issues I kept reminding congress people about, and one which they were surprisingly not really aware of.

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