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AG News:
Wednesday - 8/11/2010
Radio Industry vs. Performance Royalty
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I don't suspect that what follows will have much impact. After reading numerous articles and comments on the Performance Royalty issue at radio industry web sites, I've decided there needs to be a clarification on what this fight is about. What's appearing as reasons for radio not having to pay, what the NAB supposedly placed in front of its board and members, and how this will play out in stations going dark or turning to all talk appears to have nothing to do with the real issue: change in the fundamentals of radio.
Little resembles how radio was done two decades ago, relative to how it is done today. There is a new advertising landscape. There are now multiple ways for artists and record labels to reach the masses. In addition, a lengthy list of laws have appeared within the past decade.
You can take this argument any way you want, as evidenced by what's being written and said. Only, don't take it back to the statement that the record labels have had a cozy relationship with radio for a long time and that shouldn't change. Why not? Everything else has.
Radio Business Report/Television Business Report has the most detailed set of articles concerning this subject.
Read and heed them all. They show how a situation is going from bad to worse. All that's displayed, however, are emotions and demands that won't figure into the final equation.
Let's not go over why, or for how long, PRA has been knocking on radio's door. Those words have been spoken here many times - and they are the reason I don't believe these words will have much impact, either.
Let's look instead at the NAB's proposed negotiative points: whether radio still holds "promotional" appeal for records, if the radio industry is prepared to pay onerous rates already being paid by other music-based businesses, and whether emotions hold value when discussing Performance Royalty rates.
Start with the last point because it's a quick answer. No! Nobody on that Copyright Royalty Board cares about what you feel. They never have and won't in this third stage of bringing parity. (Internet radio took the first hit, with satellite and cable owing up when PRA was pressed for their industries.) The charge today is to bring an equitable payment of use for music when that music is used to make money.
I've been involved with PRA since its inception, and I have learned this is not personal. It is, though, business. And there's much support for seeing the musicians, with artists, compensated each time their work is used to support a business model. So, strike any comments about promotional value. They don't matter. Radio is just one spoke of many in a music distribution system that is completely changed. (There's that word again.)
One article at RBR/TVBR is about someone filing a lawsuit because they believe SoundExchange is a monopoly; this person also feels that he should have the right - the RIGHT - to operate his radio station after investing whatever amount of time and money is claimed. The laws don't support this argument, and it's been shot down multiple times - before the radio industry decided that PRA was close enough to affect it, back when it was hoping PRA would shutter many aspiring internet radio stations. Another point in this person's lawsuit argues against recordkeeping: "I ask the court to relieve me of having to list each song, artist and title when they play as it cannot be done technically with my automation system." My automation system? I'm wondering if this fellow still has a dial telephone in his home. If your automation system is out-of-date, get another.
There are proposed NAB demands "on the table" in another of the articles (listed above). A few demands are within reason. However, most are items of lunacy, far removed from the discussion, and cannot be tied to a settlement with musicFirst (or anyone on the other side).
Let's, again, move to the easiest to answer. "Inclusion of radio chips on all mobile phones." Will someone in an executive suite in the radio industry please explain how the payment of royalty issue comes close to the politics for getting a radio chip in a mobile phone? Better yet, will anyone explain why the carriers - those folks who control the cell phone industry - would volunteer to include an ability to listen to a terrestrial signal when they all see a basket of money by providing a music source that originates with them? Those persons in radio who believe that this point will ever see a moment of discussion are living a fantasy, following in the footsteps of Gary Fries who, time-and-time again, kept the radio industry salavating with all those promises of moving into the future. Words were all they were. Actions never followed the claims made by Fries when he led RAB. Now you can add the radio chip in exchange for paying royalties as another of those word groups with no bite.
Another NAB topic concerns PRA payment negating "AFTRA issues." Here are two disjointed items that cannot be connected. Has anyone discussed this concept with AFTRA?
The points that NAB talks of - a tiered payment plan and across-the-board reduction in online streaming payments - are very much in play. They probably have been in the music industry's plan since the inception of talks with broadcasters. But, a "permanent removal of CRB jurisdiction for terrestrial and [its] streaming" is not something that can be waived by the record labels, musicFirst, or SoundExchange. Doing so would bring the wrath of cable, satellite and internet radio players, all groups that have grown much stronger since PRA was introduced.
I'm wondering how executives in the typewriter industry responded when they saw the world changing. No, there's no need to wonder. We all know how those companies fared. Same can be said for the film and developing industries. All failed to change, and all are a memory.
So here's the clarification that must be accepted by NAB and its members - the radio industry failed to change at the risk of losing its power. It ignored the oncoming train, which is only a few feet away now, and there's no board member or argument that justifies why radio should be excluded from making the same payments that other music-based businesses are forced to make. (Please, don't refer to making "stars" out of artists. That's something "American Idol" and iTunes seem to be doing better than radio today.)
If you're a station owner, or group head, there were warnings that you needed to prepare for what lies ahead. Nobody took them seriously enough to motivate change in the radio business model, leaving this industry under a big question mark. (Don't let the article at RBR/TVBR about a record label denouncing Performance Royalties represent a beacon of hope. There are dozens - if not hundreds - of labels leaning the other way.)
I don't like it that any business should have to pay a performance royalty when that business is providing exposure. Besides, as has been stated before, why should an unknown act that's breaking into the music scene be paid the same amount as an established artist and group? That's just the way the ball bounced as Performance Royalties were being forced on others, when NAB and RAB were sitting quietly on the sidelines.
Unfortunately the radio industry didn't see fit to get into the game until its final inning.
There is no winning now, only decisions on how to soften the impact of this "change."
PS: Imagine what will happen to the radio industry if all those stations that claim they will swing to talk, do. That change will be far more devastating than what is offered through PRA.
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