Radio and records: the Lost Worlds, Part one

Specifically, terrestrial and Internet radio and what we still refer to as the record labels.

Don’t they remind you of two dinosaurs locked in a deadly battle?  One problem. 

Like the dinosaurs, the equivalent of a large meteorite is about to strike earth resulting in instant extinction for both. 

It doesn’t have to be that way. 

Let’s start with the major labels.     They’ve been consolidated down to four companies – Sony, EMI, Universal, and Warner.  

The labels used to be a business made up of trained ears and crafty minds.   After consolidation, the ears and minds were fired, or bought out and replaced by automatons. 

instead of attracting people who were born to be in the business,it’s now run by  deaf beancounters or know-nothing trustafarian music business wannabees like Heirhead Edgar Bronfman, Jr., who buy their way into the business. 

You can spot them a mile away.  They resemble fermented rock stars.

They don’t even drop names anymore.  They want to be the name. 

Since consolidation, the labels would rather have one act selling ten million copies of an album than ten acts selling a million each. 

Artist development is a myth in this quarter-to-quarter world.    Don’t confuse the labels with the fact that overnight sensations that sell ten-million copies of an album vanish just as rapidly.

The labels cozied up to Best Buy and WalMart.  Not long after, many independent record stores found the big boxes selling albums for less than they could buy them at wholesale. 

And they were still expensive.  Half the stores’ DVD selections were priced lower than the average CD. 

How long did it take for the big boxes to fall behind in paying their bills…90 days, 120 days and longer? 

About the time it took to put the record stores, like Tower and independent stores under.

The labels had to keep the big box stores in business and continue stocking them because they were the only go-to retail outlets left. 

Around the same time, the labels and radio concocted legal payola with the sole purpose of controlling new music radio playlists, which, they believed would convert to sales.  It didn’t because the music they were paid to play was not what their listeners expected to hear. 

Consumers stopped buying CDs at retail, and peer-to-peer file sharing, which the labels ignored because they insisted on inventing their own failed technology, became the new ground zero hearing and procuring new music. 

Being consumer-controlled, illegal downloading supplanted radio as a source for new music. And right behind and coming up fast is Internet radio.

The way consumers listen to, use, and perceive owning music is changing and evolving rapidly.  

Not just new generations – but all generations are accustomed to getting certain services free and on demand (search engines, audio, video, and print), and in real time (news, weather, sports and traffic). Those that refused to accept change – like the labels and the movie industry, it doesn’t really matter.   They’ll continue to play a game of catch-up they will never win. 

Believe it.  The labels and film industry spent millions to target, search, destroy, then legitimize Napster.  That gave rise to the next generation p2p’s Kazaa, Grokster, and Morpheus. By the time the labels and film spent more multi-millions to secure a favorable decision from the Supremes to silence them, Bit Torrent technology came into play. 

Just last week, the owners of the leading Bit Torrent site, Pirate Bay, which is based in Sweden, were found guilty by a court there for promoting copyright infringement of others – though they haven’t shut the actual site down yet. 

And those scurvy pirates may still end up victorious after all.   It was revealed last Friday the judge who fined the Pirate Bay owners – better known as the PB4 - Fredrik Neij, Gottfrid Svartholm Warg, Peter Sunde, and Carl Lundstrom (no, I can’t pronounce their names and neither can you

)$3.6 million and sentenced them to four years in  the hoosegow is a member of the Swedish Copyright Association and sits on the board of the Swedish Association for the Protection of Industrial Property.   Attorneys for the PB4 are appealing the decision. 

No matter what the outcome may be, you already know the rest of the story. Someone’s invented the sequel to Bit Torrent delivery and we’ll be hearing about it any moment now. By the time labels and film shut that down, they’ll be another and another.

Take it one step further.  Where does social networking end and file sharing begin?  Aren’t they becoming one and the same? 

Most importantly, we have evolved into a society where the consumer is in control?

Where does terrestrial and Internet radio fit into this mess? 

Smack-dab in the center of it.  Stay tuned.

----

After completing this piece, I received news that Bain Capital and Thomas H. Lee ordered its Grim Reapers to initiate thinning the already skeleton-crew herd at Clear Channel.  The first victims fell yesterday - mostly afternoon drive talk sidekicks and producers.  It’s likely that morning show support staffs, off-air PDs, air talent, and smaller market engineers will be notified this morning that they won’t be partaking in John Hogan’s new localism policies. 

Those terminated today are still eligible for the severance deal as promised in Clear Channel’s privatization deal with the SEC from May 21 2007.   It reads, in part, that anyone who is “…actively employed at the time the merger is completed, and involuntary terminated without cause during the following one-year period is eligible for the benefits..” For the record, they are “Less than 6 months - 1 month of Base pay; At least 6 months but less than one year - 3 months of Base pay; One to less than three years - 6 months of Base pay, and Three years or more -- 9 months of Base pay.

“Base pay’ means, in the case of a full time employee, the employee’s applicable base benefit rate in effect at the time of termination or, in the case of a part time employee, the employee’s average base wages over the immediately preceding twelve week period.”

As I've mentioned before this also means that any Clear Channel employee surviving today’s purge gets fired on or after July 30, 2009, “nobody’ll owe you nothin’.”