Tuesday, May 19, 2009

Radio: The RIAA's performance royalty glee


So here we are.

If the streaming audio rates the NAB negotiated for terrestrial radio stay remain in place and the Performance Rights Act bill is passed, music radio will be history.

How many times do they have to be told? When content sharing is becoming part of most online media business plans, why is the radio industry allowing itself to be pushed and shoved in the opposite direction?

Radio invented it. When radio stations started playing records after World War II – it didn’t own the content – but playing music on-air provided its owners - the artist and the label - free exposure to the court of public opinion – the radio listener.

It’s the same principle as Google’s search engine. They don’t own the content that’s searched.

Did you see the score on Capitol Hill last week? The labels v. terrestrial radio: 21-9. Radio? Drop it likes it’s hot.

And what did the NAB have to say about radio’s slaughter?

What say you, NAB mouthpiece Dennis Wharton?

“Lawmakers are growing increasingly skeptical over record label claims that this legislation is about helping artists. And given the historic abuse of artists by the labels, who can blame them? The sad truth is that a performance tax will cripple an artist's number one promotional vehicle, free radio airplay, and it will transfer hundreds of millions of dollars from America's hometown radio stations into the coffers of foreign-owned record labels."

Dennis, when the NAB board fired Fumbles you were supposed to sack his speechwriter, too.

The NAB - S.O.S./different mouth. Denial, denial, denial.

You don’t get it - do you, Dennis? That vote verified that radio’s credibility with consumers is even shoddier than the labels.

Wharton’s quotes would have you believe radio’s winning. It’s not. Not even close. Short of a miracle, there will be a performance royalty fee on terrestrial radio broadcasts soon. David “Fumbles” Rehr gave that one away when he tried to play tough and the RIAA publicly tweaked his nose.

Right about now we should add that some of the best new music to be released over the past few years is coming from independent labels and direct-to-consumer sales that aren’t card-carrying members of the RIAA.

The labels’ ethical cirrhosis that used to infect radio stations has now spread to Capitol Hill.

Here’s your elected officials capitulating to clientele that combine the sobriety of Lindsay Lohan, the savoir faire of Michael Vick, and the vocabulary of any character in a Quentin Tarantino movie.

We’re talking about the music industry here. These are people that will hold a golf tournament for charity except that they forget to name the charity, because it always begins at home.

This is a business where an artist is most likely to receive royalties due after a label audit.

You were expecting maybe honesty? Integrity?

Rep. John Conyers, Jr., sponsor of the Performance Rights Act (H.R. 848) says, “that the needs of small, minority, religious, and non-music broadcasters are taken into account as he and other Members of Congress continue to work on the legislation.”

Read between the lines here. He’s helping the RIAA divide and conquer.

I’m not defending Clear Channel, Citadel or Cumulus. Come on, how long do you think they’ll be around? I’m saying you can’t run with multiple rule books. One law must fit all sizes – and any law that forces radio to be extorted by the labels is wrong.

This tiered payment system, based on revenue, has stations with annual gross revenues – remember that word gross, we’ll get back to that - of under $100,000 paying a flat fee of $500 each year.

Stations with gross revenues between $100,000 and $500,000 will shell out $2,500 a year.

Stations that bill between $500,000 and $1.25 million gross will send the RIAA a $5,000 kiss annually.

Stations billing over a million and a quarter gross will be required to negotiate royalty fees with the RIAA’s SoundExchange collection wing with the wiser-than-you-think judges on the Copyright Royalty Board (CRB), the government body that sets royalty fees. According to the bill the CRB will settle disputes and weigh the value of music to a station and its promotional exposure to the labels.

What’s it worth to be a fly on the wall in one of those meetings!

In all honesty, it’s still too early to tell the good guys from the bad on this one. You’re not dealing with a bipartisan issue here. This one? It’s all about the money – and that’s where it gets precarious.

Now here’s the good news. Stations grossing $5 million will be exempt from the fees for three years and those grossing over that amount will be exempt for fees for one year. Such a deal!

Now, lets get back to those gross revenues. That’s defined as all revenue earned – including those three worlds that have come back to haunt radio time and time again – non-traditional revenue. It’s all gross – not just time sold on the air. It’s all gross.

They’re not just stealing the stove. They’re coming back for the smoke.

Did you sell station merchandise? Did you put on a job fair? Ka-ching! Ka-ching!

My guess is that your best bet of getting V.I.P. tickets to any of this summer’s major tours is to either have an in with someone on the Copyright Royalty Board or be a fellow Congressperson or major contributor to one who’ll cozy on up to Rep. Conyers. If you want V.I.P. U2’s – you’re talking premium. You’ll need an in with someone on the Copyright Royalty Board for those ducats.

Remember the old RCA-Victor logo with the dog and the Gramophone – His Master’s Voice? Just cut and paste Rep. Conyers’ head on the dog. One picture is worth a thousand words? That one’ll be worth the entire Performance Rights Act bill.

57 comments:

Anonymous said...

Unless there's some divine intervention out there, it looks like it's the beginning of the end for music radio as most of us know it. To paraphrase the Jenny Craig ad: "Have you contacted your elected officials yet?"

Anonymous said...

John, the way I see it. Don't count out Mel Karmazin and Sirius XM yet. They may end up being the only outlet for music in the not to distant future. If the RIAA silences radio and streaming audio, Mel has it all.
Was that his intent?

Anonymous said...

I never thought of that. It makes sense that Mel would know how dumb the radio execs and NAB are and that they would blow the performance rights deal as well as streaming audio royalty rates. Mel will come in and pick up the pieces. He already locked in his rate. When radio goes all informercials, talk, religion, news, and BS - Sirius XM will have most of the music. Considering that the RIAA is shutting down most streaming audio music stations, too it will allow Sirius XM to cut payola deals with the labels and its all perfectly legal.

Anonymous said...

If Mel has the entire music audience, I don't think he'll need to cut payola deals.

Anonymous said...

In reality, I think there'll be a handful of stations that pay the fee, simply because they can have the game almost entirely to themselves when nearly every other station is talk. It will be worth the price of admission.

Anonymous said...

John, When I first started reading your blog I thought it was a little over the top with scare tactics and innuendo. After reading it for a couple of years and seeing how so much of what you predicted came true I take what you say very seriously. I do not want my public airwaves to turn into a land of mindless chatter and infomercials and worse. I plan to contact my congressman, by phone, by e-mail and by letter so it is logged and I urge everyone reading this to do the same. This is pure ego and gaul on the part of the labels. I cannot blame them entirely since radio spent much of this decade treating them poorly. Clean it up.

Anonymous said...

Mel will cut payola deals to pay off his performance fees. One claw washes the other so to speak. Mel may be the most brilliant money man in media today. He should have been dead many times over but he always survives. I can see Mel as the Prince planning and setting this whole thing up and waiting for the day when he is the only game in town that can play music. I can't see how the radio stations can afford those fees plus pay additional royalties to stream on line. Mel does it again.

Anonymous said...

What's Obama gonna do about it?

Anonymous said...

The religious zealots will love it. The get rich quick schemers will love it. The right wing talk dictators will love it. What's there not to love?

All the bastards win from Mel Karmizan to Clear Channel and the other C-word companies. They will barter every spare minute of their time to any snake oil salesman that wants to buy them.

Anonymous said...

I hope that the RIAA shoves HD Radio up Clear Channel's ass!

Anonymous said...

I think it is too late for radio. There are now too many alternatives via the internet. Should the labels try to hold up internet radio the listeners will just go illegal. The labels will try to shut them down but will fail because they are fast becoming obsolete. It is too bad because a handful of gatekeeper stations that have talented respected people that know their music would be helpful. It is not a necessity though.

Anonymous said...

In the final days of radio there will be little left but religious broadcasters and other types of con artists who have developed an audience who will literally take bread out of the mouths of their own children to support their snake oil habit. No regrets here.

Anonymous said...

the labels are wise. they know that there are easy money grabbers in both parties and have them targeted. coyner never met a bribe he didn't stop to appreciate. what is it about michigan?

the labels know everyone's weakness on capitol hill & you may be half joking about free vip tickets to u2 but it is very real stuff you are saying. believe it or not someone in my office who is a major contributor to a certain rep was able to procure prime u2 tickets & backstage meet & greet from his office. even he was blown away since he used to get his tickets from promoters & stations he did favors for.

Anonymous said...

Radio and records has always been like love and marriage. Ups and downs. The end result has been mostly good. Radio played music and consumers if they liked what they heard bought the records. I think it fell apart with Clear Channel and Randy Michaels when they demanded pay for play and charged labels to talk to their program directors. That was the beginning of the road to hell which ended when 'legal payola' fell out of favor. Radio did this to themselves and they deserve it. I have no respect for the labels either and they are getting theirs by artists not renewing contracts with them like the Eagles and Nine Inch Nails and downloading options. They did it to themselves.

Anonymous said...

When is the radio funeral? I'd like to attend. Especially the after party.

Anonymous said...

Anonymous said... "When is the radio funeral? I'd like to attend. Especially the after party."

Yea, I'm with you - the Clear Channel types have killed radio, and I can't wait until they go under.

Anonymous said...

Great blog, John. As always. Mel Karmazin looks like the real winner here. He already has those fees as op costs. Radio doesn't. Internet radio doesn't. Now he can play games with the labels, too. Hats off to Mel. He is the best and brightest. Not Lew Dickey.

Anonymous said...

Mel has to have inside information and its obvious that the NAB didnt.

Anonymous said...

John, I had no idea this stuff was going on. I found your blog through Facebook and the buzzard book website.

Do you think radio could ever return to what it once was? How did it get so bad? How can these companies be so out of touch with their listeners?

I don't want to see more stations go under. Then again I realize that I hardly listen to radio anymore. I listen to NPR more than commercial radio when I do listen.

Anonymous said...

You have heard this one before. I hope you are wrong but I know you are not.

The radio business has really fallen apart for this to happen. I have to agree with the statement that radio has a worse reputation among consumers than the labels.

There was a time when everyone listened to the radio but there never was a time when everyone bought records.

Radio's demise to everyone I know is far worse news than the problems the labels are having.

I sympathize with neither. They put themselves i their own trick bag. Entertainment evolves and improves with age. Radio used to. I will bet that if you listen to an aircheck of almost any radio station from ten to fifteen years ago and one from today you will prefer the old model best.

What happened and why?

Anonymous said...

A friend of mine who was fired says she thinks that anyone else who was fired, like her, has an interest in contacting their Congressman about supporting this royalty measure. I don't know as I agree, but that's what she says.

Anonymous said...

We live in interesting times. If we want some good seats to U2 call your congress-person but only if he or she voted in favor of the performance rights fee. The sad thing is.....Gorman is right!

Anonymous said...

You must really enjoy the bitter, hateful bunch of radio has-been malcontents that read your spiteful garbage. Buzzard indeed. You feast on rotting flesh.

Anonymous said...

I'll tell ya what, sport - through no fault of their own, there's a hell-of-a-lot of radio has-beens! If you're not one yet, hang on - yer time's-a-comin'! Or maybe you're so awesomely talented you think you'll always work in this once great biz... Or maybe you're really Ryan Seacrest in disguise (drag?) - just damned lucky!

Anonymous said...

Yeah - It's grate feasting on the carcasses leftover from Clear Channel, CumeLess and the rest of the rotten lot!

Anonymous said...

I'd like to see who-the-hell wouldn't be bitter after giving this damned business your all, only to be shit on by buffoons like Slogan Hogan! And right now is not exactly a golden time to transfer your talents into another line of work! Thank God most states have greatly increased unemployment benefits!

Anonymous said...

Are you kidding? Mel himself will make out like a bandit. Satellite radio? Puhleeze. Fools' Gold with NO momentum, NO car sales, the Circuit City's of the world going out of business and, oh, PAYING to listen to music. I encourage all the Mel lovers in here to go buy some stock in the company especially if you have money you don't need. This is technology that is finished and anyone who actually believes the 18 million subscriber figure is smoking crack -- how many of these are freebies? How many are being counted because dealers have cars on the lots? At the end of the day satellite radio will be remembered as one of the biggest disasters in history and how anyone can say it's successful after being in business for 8 years, making not a dime, and now apparently LOSING subscribers, is beyond me. Radio may be in bad shape but anyone who thinks satellite is in better shape has another thing coming to him/her.

Anonymous said...

Clear Channel is fucked, anyway:

"Signs of Trouble at Clear Channel"

http://tinyurl.com/qqouag

I love it - fuck their IBUZZ!

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