It's amazing how much publicity one person can get by simply saying "we might have to shut down." But, weighing the press coverage received by Pandora's founder, Tim Westergren, regarding its potential demise, there is power in saying that something you love might go away.

This is not about Pandora, though. Not really. Tim Westergren is a gentle, immensely-talented, forward-thinking leader who has few peers. His love for the audience is returned. If forced to close Pandora, Tim will come up with another approach - like tapping the independent artist pool. If that happens, the radio industry better watch out.

"Broadcast radio is in no position to claim it's a unique promotional vehicle for music anymore."

Now, on to the real topic. The radio industry better watch out even if Pandora doesn't chase independent artists because it's next on the CRB's hit list.

Radio is faced with declining revenues, and we all know that. It's reflected in every radio industry trade. What's not mentioned much, if at all, is that the same streaming royalty issues that are crushing Pandora still need to be overcome by radio broadcasters. Plus, when (not if) the performance royalty issue is passed for broadcasters, which will require them to pay performance royalties for on-air broadcasts, many radio station managers will find themselves in the same situation as our friend Tim Westergren.

We don't have the time to cut up this scenario many ways, and you don't have the time to take it all in in one sitting. So, here's a short list of the major red flags that radio industry executives who practice HITS (Head In The Sand) thinking are missing.

It's apparent that radio broadcasters want pure-play internet radio dead. Internet radio is nothing more than competition. But, by standing on the sideline while internet radio is going through this fight to lower performance royalties, terrestrial radio gives up a chance to unite a stronger voice.
Broadcasters who think that having 219 House members signed on to an NAB-backed resolution will help stop this record industry money grab are leading a delusional life. The House members take no risk here; it's a non-binding resolution. The reason NAB was able to acquire so many signatures is because those signing realize the NAB controls local airwaves, which could be used to undermine each politician's bid to get re-elected.
It's apparent that the music industry wants internet radio dead and broadcast radio paralyzed. Neither are needed in a world where the internet - and soon, WiMax transmissions - will allow the record industry to create (and control) its own music distribution without fear of living under FCC regulation. We all know the value of exposure via radio. It's just that record labels now have the power to create their own stations - and there's simply no barring them from doing that online.
The online radio industry is not growing to the extent that recent comScore and Ando Media reports indicate. It's growing at a much faster rate. Each company only includes in its "report" those stations that subscribe to its services. (I'm on the inside loop on this next statement.) There are thousands upon thousands of streaming radio stations that are not included in the numbers you see from comScore and Ando. A few of these non-reported station audiences would make what's reported by these two firms appear weak. Additionally, thousands of non-reported station audiences are delivered by pirate online stations whose owners aren't - and have no intention of - paying CRB royalty rates. Keep your eyes on this group. It is your radio of the future.
Advertising revenue for internet radio is growing slowly. Until this industry gets with the program and starts providing analytics that go deeper than what its land-locked broadcasters offer (impressions and psychographic breaksouts of audience, industry standard RFPs, standard Affidavits of Performance, and standard invoicing), local radio revenues will decrease farther. This is simple economics; radio, online, has a cheaper CPM, delivers accountability, and proves its worth though metrics. The terrestrial radio industry is fighting to keep rates high, offers no accountability (response metrics), and cannot prove that the money spent for a radio advertising flight pays for that advertising.
No one on either side - broadcasters or internet radio stations - wants to change the business model. It's all based on advertising using the :15, :30, and :60 spot clusters. Sure, we have Gateway ads, and a few sponsorship hours sold, but little else in innovative pricing. The time has come to blow up existing approaches to selling radio and create methods so outside the norm that the new approach grabs attention.
Independent artists are more than willing to sign waivers to give radio stations - online and off - the right to play their music in exchange for the exposure that airplay brings. Why aren't radio stations more willing to lean towards these artists? If it's a fear that the quality of music is not there, it's unfounded. FM was built on music you couldn't hear on the only other radio at that time, AM broadcasts. Internet radio needs to follow this lead that is decades old: find good music and play it. Make a star. And then, do it again.

Broadcast radio is in no position to claim it's a unique promotional vehicle for music anymore. There are too many other promotion avenues today. Record labels no longer need radio to get songs heard, even with legal payola.

Internet radio better stop its whining and start organizing into one mass industry. This seems a pipe-dream, though, because large webcasters want nothing more than to see the little guys go away. Ironically, that's the same approach broadcasters have toward the large webcasters. The big eat the little, who eat the smallest.

One thing is known for sure. The way things have been done guarantees that when a radio station sticks with those old methods, it won't be around for the next fight - selling the audience to advertisers, and then generating the most quantifiable reports.

The radio industry needs revamping. Not a fight to keep the status quo.

Until the radio industry (pure-play or broadcast) can provide a suitable replacement, Pandora's closing could be radio's loss of a site with a very close relationship to its audience - a loss that would surely cause an uproar. Too bad politicians will still ignore the cries.

Name one other station - online or off - which has a person like Tim Westergren at the helm. If Washington won't listen to Tim, everyone else is going to lose too. The record labels have the most powerful weapon, CRB backing.

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