Two Days of Music Talks and the Word "Radio" Doesn't Show
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If you work in the radio industry, you are at the apex of these words from a Chinese proverb: "May you live in interesting times."
We have Arbitron's PPM being questioned by the Attorney General of the State of New York, RAB stuttering through 16 continuous quarters of down revenue, radio finding its former music label mistresses turning on it, and the technology train pulling out of the station as radio morning shows push downloading podcasts - that's so 2005.
Here's another simple fact. There is no way radio can hide behind the non-reporting of negative stories about the industry by radio trade magazines. Prior to the internet, radio employees received many stories in industry trades that read like the publicity releases behind them. "Investigative reporting is non-existent within all radio trades, especially after Clear Channel bought Inside Radio to silence a critic named Jerry Del Calliano.
Then we had the rise of names online like Del Calliano, John Gorman, Mark Ramsey, and even myself. All have been pointing to radio industry executives' missteps for years. Through these eyes, it's well documented how consolidation saw stations being bought for many multiples over what made sense, that satellite radio was never a problem, why the quality of radio's product to advertiser and audience dwindled, and the most obvious - that HD Radio was time and energy wasted.
Warnings have been there many times, like this which appeared June 24, 2002 at Audio Graphics: Those of us who watched radio stations being bought like trading cards over the past five years have repeatedly asked "How are they going to pay for this?"
Oh, each person has pointed out how radio has mangled its trip online too.
The radio industry's move to digital will be used as the antithesis of good business strategy in text books for MBA candidates for decades to come. It will rival buggy whip stories of transition to the automobile, all because a group of executives kept a more watchful eye over the dollars for investors and their own pockets than they did on their ability to be agile in a changing market.
It's not over; that is, the onslaught of contention that radio needs to overcome will continue. Unless the industry starts to react differently, it will continue to lose share in public media consumption and advertisers' dollar spend. Here is one major reason why: radio has lost support of the record industry, which has provided free content since the 1940s. When radio is finally required to pay "performance royalty fees," owning a radio station will become more bother than it's worth.
And if you don't think that day of reckoning is coming, perhaps this little story will help change your mind.
I had the opportunity to attend the Digital Music Forum West in Los Angeles last Thursday and Friday. Not that there are expectations anyone in radio would know what that was - it received no radio industry trade mentions, and there was nobody associated with radio in attendance (to my knowledge). That was a huge signal at the conference that this radio/music relationship is over.
Before getting to my point, please consider the following session titles at this Digital Music Forum West:
- The State of the Digital Union
- Global Music Marketing in the Digital Age
- Beyond the Download: Rethinking Digital with Alternative Business Models
- Social Networks & Music Discovery & Recommendation Services
- The Digital Copyright Debate - Is the System Broken? If So, How Do We Fix It?
- The Future of Mobile Music
- A Briefing on New Technologies & Business Trends Impacting the Future of the Music Industry
- Digital Rights and Clearances for Music
- The Evolution of the Live Music Business
Throughout the two days there were four keynote speakers. I will only mention one, Jac Holzman, Founder of Electra Records and Chairman of Warner Music Group's Cordless Recordings, because he is indicative of the problem faced by the radio industry on this next step into digital.
I afford Mr. Holzman more respect than any leader in radio with the exceptions of Jerry Lee and Robert Conrad, respective owners of Philadelphia's B101 and Cleveland's WCLV. Jac Holzman is one impressive individual.
Following Jac's explanation of how he launched Electra Records, there was room for one question to be asked by an audience member. I couldn't help but use this one time in two days to open my mouth and ask what I considered the most important question affecting radio today. Here it is, verbatim: "This is something that I have not heard at this whole [Digital Music Forum West] conference. And it is in no time did you mention anything about the role that radio played in the promotion of any type of Warner, Electra, Asylum, Record ... I'm kind of set back that within the framework of the past two days the word 'radio' has not come up at all."
It's not the question that you need to hear, but the answer. Over the course of the next few minutes, Jac Holzman mentioned internet radio, satellite radio, and digital radio. Yet he just couldn't seem to let the words "broadcast radio" or "terrestrial radio" fall from his lips.
You may view the entire interview below, or fast-forward to 26:45 into it to hear my question and Jac Holzman's response.
As in the past, there is a moral to each story printed at Audio Graphics; and, as in the past, I'm expecting that radio industry leaders will ignore this one too. So here is a wish that those in the audience who truly love the radio industry will begin mapping out plans for either 1) operating under a new music royalty rate plan or 2) marketing airtime to record companies and establishing what four minutes of a song's exposure is worth (daypart pricing acceptable).
We all live in interesting times. The reluctance of the music industry to give any credence to radio's role in past promotions is a strong indication of what radio will find as this new fight for broadcast royalty rates moves into next year - and a new administration.
Radio will end up paying these dues. The new question now is whether radio industry leaders have a plan formulated to attack this questionable practice. Will they be content to continue pushing the CD quality that HD Radio delivers?
For what it's worth, I'd start setting up new music rate cards immediately and not wait for Congress to force these SoundExchange-backed broadcaster rates on a radio industry already staggering from multiple problems. The royalty rate payments are coming, if nothing else to put radio on equal footing with all other music-based media.
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