Radio: The royal scam

At this point, I can’t see how radio can avoid paying that wrongful Performance Royalty Fee.

The inefficient chairman of the National Association of Broadcasters (NAB) David “Fumbles” Rehr, believes the only solution to a problem is to write long letters about it to all the wrong people. While he was composing, the labels successfully positioned themselves as the lesser of the two evils.

You do understand why Congress will not get directly involved in the matter.

Two wrongs don't make it right.

The NAB even allowed the Record Industry Association of America (RIAA) to depict radio as being more disreputable than the labels.

Congress knows the labels are far from squeaky clean – but at least the RIAA's chairman Mitch Bainwol knows what hot buttons need to be pushed on Capitol Hill and when.

Bainwol is a skilled lobbyist. Fumbles is a skilled….er….you get my point.

Meanwhile, back at NAB radio ranch, when Fumbles ran out of letters to write, he sent stuffed duck toys to Congress to, for some reason known only to him, illustrate that most of the labels represented by the RIAA are foreign-owned.

You know, “if it walks like a duck….”

The NAB would’ve been better off being represented by the agitated Aflac duck. At least it would’ve gotten some attention.

This isn’t a first for you, Fumbles. You left the National Beer Wholesalers Association in similar shape when vacating your headship post there for the NAB in 2005.

The truth is that NAB is a pot-holed boulevard of broken schemes. It’s an organization that has outlived its effectiveness – at least under its present administration. It’s a haven for those who could never get work anywhere else in this industry.

The NAB was playing softball while the RIAA was playing hard.

Is there an industry other than the newspapers that has its priorities so scrambled that they routinely set themselves up to fail?

Some of our largest radio groups are on the brink of financial collapse and were teetering toward disaster long before the economy went south.

Fumbles, let’s take your shady campaign with iBiquity for HD Radio. Answer the question, Mr. Rehr. How many HD Radios have been sold to consumers? The word, Fumbles, is sold – not manufactured. And we’re talking completed radio units – not chips.

How about your “Radio Heard Here?” Never mind here, let’s try where. Have you seen that campaign anywhere?

There’s your push for even more radio deregulation? Isn’t that what got this industry into this chaotic state?

You even launch campaigns against issues that don’t even exist! Take the Fairness Doctrine. That was abolished twenty-two years ago. President Barack Obama doesn’t support its revival. It’s not an issue. But that doesn’t stop you from wasting time and NAB dollars to campaign against its return.

Fumbles is the like the boy who cried wolf. Now, there’s a real wolf at his door. Its name is the Performance Royalty Fee, and Washington is ignoring his terrified weeps and wails.

The Subcommittee reviewing the proposed royalty fee suggested leaving it up to the labels and radio to work out – and working it out means for both sides to come up with a number that’ll be acceptable to both sides.

Do you need a translator, Fumbles? That suggestion means radio will be paying a fee. The question now is “How much?”

Fumbles, you blew it. You lost. You couldn’t even argue that the labels have a history of gypping artists out of royalties – a well-documented on-going practice that goes back decades.

When the RIAA began strong-arming Internet radio, Fumbles ignored it even though the results of their bullying would spill over to the terrestrial radio stations that also stream on-line.

So what does a back-against-the-wall Fumbles do? He’s writing more letters and launching even more mediocre ad campaigns to combat the RIAA’s well-organized drive.

At last week’s subcommittee hearing on the performance tax, Steve Newbury of Commonwealth Broadcasting, who’s also chairman of the radio board of NAB, went right for the throat, claiming, "The record labels walk away with more money from this bill than do featured artists.” He rightfully blamed the labels for not paying their artists royalties owed, citing singer Toni Braxton as one such victim. He noted that "Free radio play is the best friend of artists and record labels" and claimed that if the tax became law, he’d be forced to cut services, switch his formats to talk or file for bankruptcy.

Then, not knowing his close, Newbury added that the fee would lead to new music not getting played and composers not getting their share of royalties. You can read his entire statement before the Subcommittee here.

I have only one question. Why would someone representing the NAB make a not-so-veiled threat of refusing to negotiate with the labels in front of the Subcommittee? Forget reading the room. Begin by knowing what room you’re in.

Mitch Bainwol, who spoke as a member of the musicFIRST coalition, another RIAA front, effectively played Newbury and the NAB like a Stradivarius – and did the improbable. He actually came across as the good guy.

Bainwol presented five points. First, radio pays nothing to performers but collects billions in revenue. Second, unlike other countries that abide by copyright laws, the U.S. does not pay a performance royalty. Third, more than half the songs played on U.S. terrestrial radio are older songs – not new music – and its promotional value has diminished. Fourth, the bill is aimed at major radio chains. Fifth, the tax does not transfer money to the labels.

Bainwol even went as far as to say that music promotes radio – not the other way around. You can read Bainwol’s statement here and if you’re a true glutton for punishment, you can view the entire hearing here.

You can judge a person by the friends they keep – and amongst those Fumbles is closest to is one he’s shared many a stage with - consultant Fred Jacobs. The Coot’s best shot to fight the Performance Royalty Fee was to ask radio stations to take photos of the gold and platinum awards received over the years to “prove” that radio sells music by airplay.

Yes, Fred. Radio does sell music – but those gold and platinum awards are another matter and in the real world should not part of that equation. You know what they really are. They’re strokes – and nothing else – from the labels for playing their biggest hits. One label exec told me he still has letters from program directors, general managers, and even station owners, asking – and even demanding -personal copies of gold and platinum albums. With many of these managers out of work, we’re seeing some up for bid on eBay and other auction sites.

Another thing, Fred. We’re talking today – not fifteen, twenty years ago. The question the other side's asking is. "What have you done for me lately?

If you don’t want to get shot or stabbed, don’t befriend people who use guns and knives. You don’t want to get mugged, don’t leave a bar drunk.

That holds true for radio, too.

Over a decade ago when Randy Michaels, with well-publicized fanfare, instituted “legal payola,” a pay-for-play scheme at Clear Channel that forced label to fork over dollars to radio through third-party influence peddlers for an annual up-front fee, I said this would come back to haunt radio. And it did.

But other chains, like penguins, followed Clear Channel’s lead. Legal payola allowed only labels and artists management to pay to get radio airplay. Instead of radio being a soundtrack for popular culture, it became a privatized jukebox for those willing to pay the steep price under the pretext of non-traditional revenue.

Simultaneously, artist management and independent labels found alternate ways to expose their music – television shows. In many cases, the producers of these shows approached the labels or artists – not the other way around. And, unlike radio, television actually pays a licensing fee to play the song. 

Shows that appeal to younger demographics like Gray’s Anatomy and Gossip Girl are breaking new music ahead of current music terrestrial formats. And that’s been s.o.p. for a few years now.

This is the definitive battle radio is up against. It must prove that it still can sell product through airplay.

It’s not that the radio industry hasn’t a strong case against it. It does. The problem lies with the fact that, so far, there is only one person who could plausibly argue the case against the labels’ thieving tax.

His name is Bob Conrad, the president of Cleveland’s classical music station, WCLV.

He’s doing what radio used to do – taking the campaign to his listeners by asking them to contact their local Congressional leaders and urge them to support the Local Freedom Radio Act (H. Con. Res. 49).

That’s the difference between Jacobs’ go-for-the-gold-record campaign, which is industry inbred – and Bob Conrad’s, which takes the campaign directly to its listeners.

Conrad saved the classical music format in Cleveland whereas in Detroit, Jacobs convinced Greater Media to dump its classical music format in favor of his abysmal Edge alternative rock format, which failed.

If the only responses come from classical music listeners in Cleveland, you’ll know it’s too late.

Pay-for-play. It was wrong when radio demanded it from the labels. It’s equally as wrong for the labels to demand it from radio.

Buzzard St. Patty's Day, 1983