Monday, April 27, 2009

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’.” 


Anonymous said...

We are running these NAB promos for the performance royalty fee that are so bad that they actually work in favor of the labels. I cannot believe this crap! Orders to run them from corporate.

Anonymous said...

i still cannot get over david rehr claiming he negotiated a good streaming audio deal with soundexchange for terrrestrial radio. what he did do was devalue the stations even further. what good is streaming on line if you cannot afford it. why did rehr avoid negotiations based on rate card instead of per listener per song. thank the lord david rehr wasnt around when those ascap and bmi deals were stuck. radio would have been broke by 1965.

Dano in the 'Burgh said...

Let us not forget the role played by MTV in destroying the record business. With the advent of music videos, labels moved budget previously reserved for supporting "baby bands," particularly by underwriting relentless touring, to clubs and small halls, to producing videos. Fans were encouraged to fall in love with haircuts instead of artists. The result was a "flavor of the day" mentality and a return to diposable top-40 acts, rather than the development of talent that was actually TALENT, and not just a pretty face. The totally predictable result was that fewer artists emerged capable of delivering more than one hit, and bands with the potential to become the next Tom Petty, Bruce Springsteen or Chrissie Hynde, never got past the first record.

Anonymous said...

Good point! When MTV came along the labels pulled their radio dollars off the table for video. Before that the labels legitimately supported station adds with time buys.

The labels seduced then abandoned by MTV but they never came back to support radio with time buys when video production fell by the wayside. Edgar "I look like Sting" Bronfman pockets the money instead even though he still pays more out than he is bringing in so he can hang with Hollywood boys.

Too bad no one has told him being a label guy is like having a cold sore.

Anonymous said...

Man, what a bleak picture. For all the hangers on in this industry, it is a bad day. But truth be told, this is the greatest time in my lifetime to be a music entrepreneur, Maybe the greatest time ever.

Instead of being locked into moron-generated playlists and payola, DJs are free to cultivate an audience by actually knowing the music and gathering a following because of their expertise and their ability to recognize talent. These people were increasingly dead on arrival in radio and music business for the last 40 years. They were buried under bumkissing pinheads who rose to the top of the corporate music business and didn't know who to keep around.

Now it's the deadwood that's being left behind, while people who love music are flourishing online. And the smart business guys are migrating with them, taking care of the business and revenue side of things. Funny how that works, when the model requires the industry to serve the talent that the public is clamoring for, the growth is explosive. When it's the other way around, the only customers left are the ones that can't escape. Well, the lifeboats are leaving. Why go down with the ship when there's so much opportunity elsewhere?

Anonymous said...

Brian and Joe just got whacked for morning drive at WMVX in Cleveland. They had been on Cleveland radio AM drive (except for a few months in PM drive) continually since joining WENZ in Cleveland in the early 1990's. They also did a stint in Akron at WONE-FM before that. They were very active in charities and did a clean-cut morning show.

Anonymous said...

Brian and Joe gone now. Who is next to go at Cheap Channel?

Anonymous said...

WTAM fired Marty Allen and Phil Rado. Allen has been with Trivisonno as long as he has been on radio I believe. They were together at least two other stations. Allen was also the "brains" behind the Triv show. The show will fall apart without him.

Anonymous said...

The radio industry does not even begin to get bit torrents and downloading as an alternative to radio and that is their problem.

Anonymous said...

The next to go at WTAM is Bob Frantz. Mark my words on that one.

Anonymous said...

I hope that the RIAA eats terrestrial radio alive!

Anonymous said...

Tommy Bodean got it here at WNOK.

Anonymous said...

I agree with you on the labels and I look forward to your take on radio's ills and if they can ever be resolved especially on a day like today.

Anonymous said...

Gorman, you were right in your prediction about national formats. A lot of the PDs getting fired are CHR guys. Get ready for the Clear Channel Radio Network where every station sounds the same everywhere except for its 12 PSAs a day.

Anonymous said...

TIM NOBLE is out in Albany WHRL.

Anonymous said...

Bain and Lee will learn that radio is not like Dunkin' Donuts or the Burlington Coat Factory.

Anonymous said...

Clear has now, as expected, made 50,000 watt WCKY in Cincinnati a high-powered repeater!

Anonymous said...

not getting attention & something you mentioned are the number of "back office" people in billing, traffic and other departments who were also terminated today by clear channel.

one group were told just last week that their jobs were safe. the market manager knew all along and admitted he couldn't say anything and wanted to put a positive spin on it.

positive spin is not delaying the inevitable.

Anonymous said...

Wonder how long Trivisonno is going to stay on air now that his producers are gone?

Anonymous said...

Are you kidding? Trivisonno will have a huge show today. Everyone even non listeners will tune in. It is the radio version of rubbernecking. Everyone wants to hear this accident.

Anonymous said...

Radio-info reports that 590 people in total got fired from CC today. But John Broken Hogan still has a job. Go figure. Good soldier. He's Eichman to Bain and Lee's Hitler.

Anonymous said...

"Clear has now, as expected, made 50,000 watt WCKY in Cincinnati a high-powered repeater!"

Rich History Of Cincinnati Radio. R.I.P.

Anonymous said...

In a span of few years the Triv show is down from 5 people to just Triv (Snyder to mornings, Kim fired Marty fired Rado fired)

Anonymous said...

Whats next to go at WTAM? The News Department? Just have FOX News at top of the hour and a news anchor in morning drive? Don't be surprised if that happens either!

healthquotes said...

Once Clear Channel lost support from the Conservatives they were no longer able to count on government assistance and of course the recession is tearing apart the radio industry.