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Online Radio No Threat to Radio

T

taylorengineer

I once thought radio was heading for the dustbin of history and that internet delivered programming would be the new delivery method for music. But after seeing what Pandora is paying in rights fees I'm not so certain.
Pandora alone is paying almost $3M to Lil' Wayne......north of $1M to Coldplay and several others.....over 800 artists will be paid $50K.....and $10K paid out to over 2000. How is any online broadcaster actually making a profit with these kinds of payoffs in royalties??
I have never understood why radio stations (and now internet stations) should have to pay royalties. Why is radio not compensated for exposing the music of new artists to listeners and creating a market for their music? Playing a new song from the new Coldplay album is actually an advertisement for the new Coldplay album. If radio didn't play it......how many would purchase it?
This Sound Exchange deal is simply a control mechanism in an attempt to control the delivery of music products. And tariffs, in a free market, are usually not a positive for business or consumers.....
Why don't the radio groups tell artists to bypass ASCAP, SESAC, BMI, and SoundExchange if they want their music played on their stations? And then develop new talent, much like "American Idol" and other "star search" has done over the last 10 years.
I think just the organized threat from radio would cause Sound Exchange to come up with a more reasonable approach to artist compensation.
Too bad more companies don't tell Sound Exchange to take a hike - like Jerry Lee (owner WBEB) did in Philly. And if artists want anymore "FREE" airplay then they need to see both sides of the business equation - what they really get in exchange for what they provide.
 
Careful taylorengineer, that's what they said about TV when it was being developed. Radio had to reinvent itself in order to survive the new medium. I don't know if radio can reinvent itself to survive the online medium.
 
This comes back to what I keep asking about record labels, and what value they provide today. All I can see is:

1) A&R--which is a fancy word for "filter", which Big Radio can do just fine if not better on the macro/broadcast end, and any number of smaller/DIY outlets can do on a micro/narrowcast end, and a computer can do it with Pandora, etc.

2) "a record company, Rosie, just gave me a big advance!" (which may be the last nickel you see for your recordings for a LONG while). Get rich slowly is almost always better than get rich quick. Incidentally, Big Music seems to harp on this point more than any other (e.g., "piracy takes money away from new artist development!!!").

Plasticware manufacturing and distribution? Not in the world of MP3s and the margin crushers at Wally World and Amazon. Payola Independent promotion? Not when CC told the indies to take a hike and nobody else is listening to them anyway. Studios? Not when DIY is just as good and a lot cheaper.
 
Lot of cash for a song...no wonder why I hear the same 5 songs on Pandora.

Seriously tho, I feel internet radio will have the same effect as TV. Sony did a research last year. They found that by 2016, I forget the percentage, but more will be receiving their news and entertainment on a hand-held device or over the internet...less viewership over traditional/cable/satellite, than presently. Cable companies are already feeling the loss of customers/revenue.

The advances and advantages of 'internet feeds' is obvious. Look at the growth of internet radio stations...all without the FCC regulations. I can't see how it can not effect terrestrial broadcast. For less than $10,000 I could have a nice radio station compared to millions for 'old school'
 
I agree Hippieguy.....I have been posting about the coming "new age" of content delivery for a couple of years.
But I was astounded at the payouts to certain artists and am scratching my head wondering how Pandora can make a profit.
Are they really going to sell enough advertising to make this work? The math just doesn't add up unless they can sell a helluva lot of time. Will that lessen the Pandora experience?
I use Spotify and they have a very reasonable 1-2 spots every 6-7 songs. But are these business models viable? Can Spotify generate enough revenue with this "light" spotload to pay all the royalties, cover the overhead, and still make a profit?
It seems to me that any internet station is going to be penalized for being successful. Same for OTA radio stations who stream.
I would like to create an internet station but I don't see how I could possibly afford the royalty fees to Sound Exchange, BMI, ASCAP, and SESAC.
 
I'd like to see a comparison on royalties between Pandora & IheartRadio. I think we know the answer already...

G
 
taylorengineer said:
I once thought radio was heading for the dustbin of history and that internet delivered programming would be the new delivery method for music. But after seeing what Pandora is paying in rights fees I'm not so certain.
Pandora alone is paying almost $3M to Lil' Wayne......north of $1M to Coldplay and several others.....over 800 artists will be paid $50K.....and $10K paid out to over 2000. How is any online broadcaster actually making a profit with these kinds of payoffs in royalties??
I have never understood why radio stations (and now internet stations) should have to pay royalties. Why is radio not compensated for exposing the music of new artists to listeners and creating a market for their music? Playing a new song from the new Coldplay album is actually an advertisement for the new Coldplay album. If radio didn't play it......how many would purchase it?
Click to expand...

Because of the personal customization features, Pandora IS someone's personal music collection, to a point. They'll subscribe to that (and Spotify, Rhapsody, etc.) instead of relying solely on radio or even digital downloads. That's right, even the iTunes/Amazon MP3 model of selling tunes has some dust on it.

The 'free exposure' card radio plays is dusty and dog-eared. Peep how Clear Channel is pimping iHeartRadio for confirmation of this.
 
Why is it incorrect for radio to expect compensation in some form or fashion for exposing it's listeners to new music/talent?
Stations get paid to advertise every and any other product.
I think I could correctly argue that without radio there would be no Madonna or Lady Gaga. The record labels would have zero profit with zero sales. Music radio stations would have zero listeners, and zero profits, without the artists. This should be a win-win for both stations AND artists.
The present royalty structure is far more "fair" to the artists and labels than it is to providers.....especially online providers.
Just sayin'........
 
jfrancispastirchak said:
I've got a dollar in my wallet that say's BigA will be weighing in on this one...
Click to expand...

Thanks for the invite! Here I am!

taylorengineer said:
I have never understood why radio stations (and now internet stations) should have to pay royalties. Why is radio not compensated for exposing the music of new artists to listeners and creating a market for their music?
Click to expand...

The RIAA has been fighting this since the 1940s. They first prohibited radio from playing recorded music. But the Supreme Court actually ruled against them. Then back in the 90s, when Congress debated the Digital Millenium Copyright Act, the RIAA demanded a license fee to cover them for losses they'd incur from users downloading CD-quality copies from the internet. That was approved, along with a lot of control freak rules that prevented digtal broadcasters (including satellite) from doing things like Michael Jackson tribute channels. It also instituted the performance royalty for labels and artists. Now that they have their foot in the door, they want to use this to force a new royalty for OTA radio.

taylorengineer said:
Why don't the radio groups tell artists to bypass ASCAP, SESAC, BMI, and SoundExchange if they want their music played on their stations?
Click to expand...

They just negotiated a good deal with ASCAP and BMI. They're suing SESAC. Clear Channel and Entercom have bypassed SoundExchange to make deals directly with Big Machine Label Group. Sirius attempted to bypass Sound Exchange and was sued. The problem is that Sound Exchange is basically a Congressionally-approved monopoly. They're legally allowed to hold music hostage and force radio stations to pay them for music. Congress is going to take up an Internet Fairness Act, that will allow radio to negotiate directly and remove the Copyright Royalty Board from the equation. But the labels are objecting.

The fact is that OTA radio is still the biggest way for artists and labels to market their music. The problem is there's more music being made than can be played on radio. More than 90% of the music being made doesn't get OTA airplay. But most of that is music for limited audiences. So the music industry wants to bypass radio, and promote things like Pandora and Spotify. But their excessive royalties are getting in the way of promoting the music. So their short term greed is killing their long term greed.
 
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