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Radio DOES pay. Radio pays for songs. Radio is and has always been a song medium. People listen to radio for the songs. So we pay the songwriters, the creators of the content. We always have. We already pay a Performance Royalty. We pay several billion dollars every year to Performance Rights Organizations: BMI, ASCAP, and SESAC. Where that money goes afterwards is their business, not ours. If they want to share it with the record labels or musicians, that's fine with us. What we object to is a NEW royalty on top of our existing payments, paid to a subsidiary of the recording industry instead of independent PROs, with a royalty based on what the government says instead of being negotiated in the marketplace. We in radio feel we have the best system already in place.
Fifteen years ago, when the digital platform was growing, there was a fear in the music industry that it would allow consumers to create their own CD-quality copies of recordings. So they appealed to Congress to get an additional royalty for this new platform. The purpose was to compensate them for the money they'd lose in sales. They were correct, and people today prefer digital streaming to buying music. For that reason, record labels get a percentage of digital radio revenues. The bad news is the royalty is so high that it's stifled the growth of digital radio.
What the recording industry wants to do is apply the same royalty unfairly on a platform that doesn't hurt record sales, and that isn't interchangeable with the digital platform. They come up with a lot of fake surveys and studies to prove their point. They trot out lots of artists who no longer get OTA airplay to make their point. But the artists who DO get OTA airplay know they will make more money from our free airplay than they ever will from a royalty.
Most of the major radio owners would like to see record companies get some money from OTA airplay. Companies like Clear Channel and Beasley have already negotiated directly with several record companies to make that happen. The radio industry as a whole would probably be willing to make a similar deal, if we were given a major discount in digital royalties, and if smaller broadcasters who don't do digital broadcasting were exempt. But the recording industry refuses to even discuss that idea. So they continue to run to Congress.
Fifteen years ago, when the digital platform was growing, there was a fear in the music industry that it would allow consumers to create their own CD-quality copies of recordings. So they appealed to Congress to get an additional royalty for this new platform. The purpose was to compensate them for the money they'd lose in sales. They were correct, and people today prefer digital streaming to buying music. For that reason, record labels get a percentage of digital radio revenues. The bad news is the royalty is so high that it's stifled the growth of digital radio.
What the recording industry wants to do is apply the same royalty unfairly on a platform that doesn't hurt record sales, and that isn't interchangeable with the digital platform. They come up with a lot of fake surveys and studies to prove their point. They trot out lots of artists who no longer get OTA airplay to make their point. But the artists who DO get OTA airplay know they will make more money from our free airplay than they ever will from a royalty.
Most of the major radio owners would like to see record companies get some money from OTA airplay. Companies like Clear Channel and Beasley have already negotiated directly with several record companies to make that happen. The radio industry as a whole would probably be willing to make a similar deal, if we were given a major discount in digital royalties, and if smaller broadcasters who don't do digital broadcasting were exempt. But the recording industry refuses to even discuss that idea. So they continue to run to Congress.
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FredLeonard
Guest
More hypocrisy from the business elite. They keep talking about free markets and keeping government out of things and then turn around to pay off, to lobby, to rig the game in their favor, to protect their own interests and to create barriers for others.
Notice how broadcasters want cable companies to pay them but they don't want to pay record companies.
The vulture capitalists that now control the major broadcast owners and syndicators pollute the air with right-wing hate speech and lies so people will pay no attention to the man behind the curtain.
Notice how broadcasters want cable companies to pay them but they don't want to pay record companies.
The vulture capitalists that now control the major broadcast owners and syndicators pollute the air with right-wing hate speech and lies so people will pay no attention to the man behind the curtain.
Absolutely, and the record labels are free to say they don't want radio stations to play their records, just like cable companies stop airing certain TV stations. Fire all the promotion staffers who call radio stations. Shut down all the free concerts radio stations do exposing their new artists. Cancel all arrangements between radio stations and festivals. Send us Cease and Desist orders. No problem. The record labels could do that if they wanted. But they don't. They want it both ways. They want the free exposure, AND they want to get paid. The real problem is they want to get paid based on a system that is unrealistic and is bankrupting digital media.
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FredLeonard
Guest
So, program talk. To hell with the record companies. Local-live spoken word is the only niche terrestrial radio has left any way.
That's what some stations have decided to do. Except the recording industry also wants to charge news/talk and sports stations a royalty for what they call "incidental music." They want to get a share of revenues whether their music is actually used or not.
The more you know, the more there is about this royalty that's just plain wrong. And now that broadcasting companies are also involved in digital streaming, we can see the potential problems if that royalty is applied to OTA radio. All we're asking for is if we give you a share of our OTA revenues, then we should get a discount on our digital. What's wrong with that?
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FredLeonard
Guest
The industry can get some royalty-free incidental music if it wants.
And if radio is such good promotion, some smart record company or companies can waive royalties for selected pieces (sort of payola in reverse). But the dirty little secret here is the recording industry has decided that radio no longer is such good promotion.
And if radio is such good promotion, some smart record company or companies can waive royalties for selected pieces (sort of payola in reverse). But the dirty little secret here is the recording industry has decided that radio no longer is such good promotion.
Most radio stations buy jingles and production music from various services. Typically, that music is purchased royalty-free, with usage "in perpetuity." That's not what the recording industry is talking about. The Performance Rights Act would require a minimum payment from news, talk, and sports stations in addition.
It's illegal. Record labels can't use financial incentive for "selected pieces of music." They already do that in digital radio, but it's illegal in broadcasting.
Back in the 1930s, record labels objected to radio airplay. They'd put "Not For Broadcast" labels on their records. Then some smart promotion guy at Capitol Records discovered if he sent records to radio stations, they'd play them, and the sales would go up. All the other labels quickly jumped in to the act.
Then why does the industry spend millions to get free airplay on OTA radio? As I said, if they don't want airplay, just tell us, and we'll stop playing music.
Right now on my wall, I have lots of platinum plaques from the RIAA and the major labels thanking me for my role in helping them sell millions of records. I didn't ask for these plaques. They sent them to me. So obviously something is wrong here.
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Actually, the "not for broadcast" labels on 1930's and 40's records had more to do with the performers themselves than the record companies. Stars like Bing Crosby, Gene Autry, Paul Whiteman, Kate Smith, etc. had contracts with radio networks or sponsors and their ad agencies for their exclusive services on radio. They feared for their careers should local stations be able to just play a stack of, say, Crosby records in competition with (even directly against) their live network shows.
By the post-WW II years though, disc jockey shows on local stations had become a force in selling records. Many of these shows were sponsored by record shops or department stores who loaned the 78 rpm records from their inventory, then reclaimed and sold them after the show! Otherwise, stations at the time had to buy what records they wanted. I believe it was Mercury Records rather than Capitol who sent out the first free promotional records to DJ's. (Could free records have been the first form of payola?)
Radio is still the best medium of promotion for pop music, but I think the record companies have reason to be dissatisfied with the way many DJ's do their jobs...or don't. Remember the cliche, "When you play it, say it?" Most of the pop DJ's in my area can't be bothered to announce WHAT THEY'RE PLAYING. I've even phoned to ask, when I liked a song, and was rebuffed with "Go check out our web page." Well, if you have to go to the web to get the title, why not get the music there too? Are these stations in the radio business or the web site business? They're shooting themselves in the foot. And elsewhere...
Both labels and artists, because it was Paul Whiteman who sued WBO Broadcasting in 1940, and he lost, which opened the legal floodgates for free airplay. However, Whiteman was joined in the suit by RCA Records. The record labels made the case that record sales were being hurt by radio airplay. They ignored the other factor, that the country was in the Great Depression.
The court ruled that neither the artist nor the label could prevent a radio station from playing a record, since the purpose of making it was for mass distribution. Radio simply was part of that process.
Capitol was a brand new label in 1942, owned by songwriter Johnny Mercer, and they were looking for an advantage over more established labels. Mercer's partner, Glenn Wallichs, gave a free record to LA DJ Peter Potter. That was 3 years before Mercury was started.
So yes, giving radio stations free records was intended to be payola, but that was before payola laws were enacted. By the time they were, all labels were doing it, so it provided no advantage. Also, by indicating the promo discs were still the property of the label, they sidestepped the fact that it was a gift. It was rather a loan.
Both. They are in the communication business. The media business. It's not just towers and transmitters, but the interplay between content and consumer.
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I'm not sure where I read that Mercury may have been the first to send out DJ promo copies; the Wikipedia page on Capitol does mention the connection with Peter Potter you referred to. It could well be that Capitol was first to give free records to certain specific DJ's on a local basis (certainly true regards Potter,) but that Mercury may have been first to send out promo records on a large scale.
As for radio vs. internet as media, the point I was trying to make was that, as many assert that broadcast radio is fighting for its existence against the internet, it makes no sense (to me) not to put such info as "who sang that song" on the air rather than on the web page. News stations are just as guilty of this; the local news station is always saying "for more news, go to WXXX.com."
As for radio vs. internet as media, the point I was trying to make was that, as many assert that broadcast radio is fighting for its existence against the internet, it makes no sense (to me) not to put such info as "who sang that song" on the air rather than on the web page. News stations are just as guilty of this; the local news station is always saying "for more news, go to WXXX.com."
I disagree with that sentence. As I said, radio is not in the towers & transmitters business. That ended when the electronics companies like RCA, Westinghouse, and GE sold their stations. This isn't about preservation of the past. It's about creating content and reaching an audience. So if that means combining platforms, the way CBS is doing with AM/FM/TV/Interactive, or the way Clear Channel is using IHeartRadio, the end result is providing content for consumers. Sticking your head in the sand won't change the reality or make the internet go away.
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FredLeonard
Guest
I disagree with that paragraph. Radio is not in the towers and transmitters business - but too many in the industry think they are and act like they are. They do have their head in the sand. And many of the efforts from broadcast companies to go online are half-hearted, ineffective and face internal opposition from the head in the sand crowd.
RCA sold out to GE, which sold all its radio stations immediately because they had been so badly managed and were not competing effectively. Westinghouse bought CBS, changed its name and still owns stations. And any company that owns transmitters and towers - and a license to operate in a protected oligopoly - is in the electronics business and has a vested interest in "preserving the past."
If you want to get rid of me, disagree with the industry line or criticize some management decision. I'd read it and keel right over.
I'm sure that's true in a lot of small markets. Out of 14,000 radio stations, less than half have actual working web sites with consistent fresh content. Those are the stations that aren't investing in the future, or focusing on how the audience is using radio. But the people I work with, and most of the major radio owners like CBS, Clear Channel, Cumulus, Hubbard, Beasley, and more, have entire staffs of people whose job it is to create content for the web, and integrate the air signal with online services. I pound on their heads every day. Certainly industry leaders like Bob Pittman and Dan Mason are all very active and public in new media. But I agree that others are half hearted and facing internal opposition. Just as there were lots of radio companies that didn't see the future of FM or TV. But I'm not among those people. I'm speaking for myself here, not the entire industry. OK?
That's demonstrably not true. Look at the efforts by companies ranging from Emmis to Univision to Clear Channel, Cumulus and CBS. They are building entire new media platforms.
However, the real issue today is that most of a broadcast company's revenue comes from OTA. And as audiences move to new media, broadcasters have to deal with music royalties that essentially are so burdensome that there is no way to make a decent profit on the pureplay model as it now stands. Look at Pandora's P&L!
GE sold off the radio division because, in that late-80's time frame, there was no opportunity for growth due to the 7/7 station cap. GE thought that they could use the capital elsewhere, and had Randy Bongarten sell the stations.
Actually, they merged in 1995. In 1997, the new entity, which had taken the CBS name, merged with Infinity. And then, in 2000, the CBS/Westinghouse/Infinity combination was merged into Viacom. So the company as it stands today is definitely not Westinghouse.
Westinghouse's CBS brought 15 stations to the merged entity, while Infinity brought 70.
No, they really don't. Most companies have already gone through one or more impairment charges, effectively devaluing the properties to post-recession levels. And what they have a vested interest in protecting now is the revenue stream, which they are attempting to make device independent.
There is no "industry line".
There are widely divergent opinions on how to transition to new media, mostly a concern to larger market large-station broadcasters who generally know that the platform is shifting... but the revenue is not.
Then there are the smaller stations in bigger markets... those doing ethnic, religious or brokered programming. They treat stations like an MLP which will produce great returns for a finite period, and eventually disappear. They treat annual profits as a combination of operating profit and return of capital.
And the smaller market stations live from local service and sales. They can't afford costly website and new media alternatives in most cases, and will continue to try to make a profit (which less than half of them do) from the traditional model.
Keep in mind that 30% of all radio revenue comes from the top 10 markets. And that is where the transition to new media buying by ad agencies is the big "cattle prod" towards change.
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Exactly. Getting back to the OP, several years ago, the NAB went to the RIAA with a proposal to pay a portion of on air revenue to record labels. I think it was around 2%, which is about what we pay to the songwriters. The minute that went public, the NAB faced a firestorm of protest from some of its members. Some actually quit the NAB over it. In the last few years, Clear Channel, Beasley, and a few more have made direct deals with several record labels, including Big Machine, to pay a portion of on-air revenue in exchange for a discount online. But there are hundreds and possibly thousands of radio stations who don't stream, and don't want to pay anything more than they're currently paying. That's why I'd say they should be exempt from any deal radio makes with the RIAA. But if Congress enacts a new royalty, I doubt it will give such an exemption, and it will be destructive to most of the radio industry. The radio industry does not speak in one voice. Even the NAB doesn't represent a lot of owners.
You mean... like AMA doesn't speak for ALL doctors?
Oooops. Didn't mean to thread-jack.
Just the wealthy ones???
Last year the US music industry had the lowest revenue (in 2013 $'s) in decades and judging by falling download sales, could fall even lower for 2014. At this point they will fight to get every cent they can from every source possible. They see the total revenue of the US radio industry (ignoring the profits or lack of) and see a goldmine. And at this point, logic does not apply. They would rather see every radio station die trying to pay them royalties than to have radio continue on not paying them royalties (songwriter/publisher royalties are not paid to labels/artists). Furthermore, they ignore the fact that the radio industry is rapidly shifting toward a digital future where artists/labels will already get paid.
I would be literally surprised if Congress did anything.
I would be literally surprised if Congress did anything.
Exactly. They don't pass budgets or enact important legislation. Why should they make an exception and pass this?
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