Radio Ink royalty reversal

[TheBigA]

Radio Ink's publisher Eric Rhodes has written a couple of very hot editorials against the NAB's radio royalty term sheet with the RIAA. Just today, he issued a new editorial in which he reverses his position. I was one who responded to Eric's earlier editorials, and I told him what heard from the music industry. I suggested that while we all may disagree with some of the specifics of the term sheet, we must be united in this process, because our adversary is united. There will be time later to work out the details. There is other legislation being debated in Congress that might further hurt radio financials, and that may be part of why the NAB feels the need to negotiate on this now. Anyway, read Eric's latest column:

http://ericrhoads.blogs.com/ink_tank/

 

[radioskeptic]

I read it, and I'm not impressed -- well, not favorably impressed anyway.

Rhoads can't expect us to trust him just because he claims to be privy to what the NAB board members are thinking.

The record labels are in even bigger trouble than radio, and they won't be around much longer. The internet makes them superfluous. So radio shouldn't live in fear of them.

But Rhoads already has a major credibility problem. Just keep scrolling down on that page and you'l see that he's shilling for "HD" radio again. Can anybody take a guy like that seriously?

 

[TheBigA]

Rhoads can't expect us to trust him just because he claims to be privy to what the NAB board members are thinking.

OK...you're welcome to call the board members yourself and do your own research. I'm sure that's what a few owners are doing. His point is he can't discuss it publicly because that means sharing information with the other side, which is a bad idea. Anyone who does is a traitor.

The record labels are in even bigger trouble than radio, and they won't be around much longer. The internet makes them superfluous. So radio shouldn't live in fear of them.

This issue isn't just with labels, but with artists, musicians, and AFTRA. And I can tell you that the other side is very united on this issue. Thr labels could fall apart tomorrow, but without a deal, radio stations will either pay this royalty, or be forced to negotiate with each artist it plays individually. Do you have time to do that?

Plus there are a lot of other more important issues that the radio industry wants addressed in Congress. And Congress won't touch any of them until this is resolved.

 

[radioskeptic]

OK...you're welcome to call the board members yourself and do your own research.

Why should I? I wouldn't believe anything that bunch said if they swore on a stack of Bibles. They're the same kind of people who lobbied so hard for dergulation in the 1996 Telecom Act -- the very thing that allowed them to ruin radio through consolidation.

This issue isn't just with labels, but with artists, musicians, and AFTRA. And I can tell you that the other side is very united on this issue. Thr labels could fall apart tomorrow, but without a deal, radio stations will either pay this royalty, or be forced to negotiate with each artist it plays individually. Do you have time to do that?

What you're ignoring here is that Music First and Sound Exchange are really creatures of the RIAA, and that the RIAA is a creature of the big labels. When they go, so does the RIAA.

Negotiate with artists and musicians individually? Don't be ridiculous -- that impossible administratively. Through their unions? We all know that unions are losing power.

And that brings me to another point. AFTRA's demand for extra payment if radio spots are streamed on the web is unreasonable -- and I say that as a pro-labor union member myself (though not an AFTRA member). But the advertising agencies, not radio, should be fighting AFTRA about simulcast streaming royalties.

It's the most unreasonable position any union has taken since the 1950's, when James Petrillo, the long-time head of the AFM, wanted the record labels to pay musicians double union scale for recording sessions, claiming that they were making two recordings instead of one. (This was the same Petrillo who was behind the infamous recording bans of the 1940's.)

And I see no justice in allowing radio stations to pay a lower performance royalty rate for streaming than stand-alone webcasters. Neither webcasters nor radio stations that stream their air product should have to pay any performance royalty to the labels at all.

 

[radioskeptic]

OOPS! TYPO ALERT:

It's the most unreasonable position any union has taken since the 1950's, when James Petrillo, the long-time head of the AFM, wanted the record labels to pay musicians double union scale for recording sessions, claiming that they were making two recordings instead of one. (This was the same Petrillo who was behind the infamous recording bans of the 1940's.)

That should have been, "...wanted the record labels to pay musicians double union scale for stereo recording sessions, claiming that they were making two recordings instead of one.

 

[TheBigA]

I wouldn't believe anything that bunch said if they swore on a stack of Bibles.

So let's summarize: You don't believe Rhodes, you don't believe the Board, you don't trust the labels, and you think the NAB ruined radio. And because of that, you refuse to do any real research on this issue, speak with artists or musicians, speak with the decision makers involved, or attend any of the seminars on this held around the country? Lies are a whole lot easier to believe when you refuse to seek out the truth.

What you're ignoring here is that Music First and Sound Exchange are really creatures of the RIAA, and that the RIAA is a creature of the big labels.

I'm not ignoring it at all. It doesn't matter. What YOU'RE ignoring is that they are legally in a position to do this. And what you're also ignoring is that even artists who own their own labels are supporting this. You really need to do some research and talk directly with artists, as I have, and hear their view.

You're also ignoring that there are far bigger issues for radio to deal with in Congress, and Congress will not deal with any of them until this issue is solved.

Look, the fact is that it won't matter. I doubt very much you're a voting member of the NAB, so regardless of what happens, you will have no say in the matter.

And I see no justice in allowing radio stations to pay a lower performance royalty rate for streaming than stand-alone webcasters. Neither webcasters nor radio stations that stream their air product should have to pay any performance royalty to the labels at all.

That train left the station when webcasters started paying royalties, so it's too late. You should have stomped your feet them. Radio stations will pay lower royalties because they negotiated them. Just as Pandora is paying a lower rate, because they negotiated it. You want a lower rate? Negotiate with the content owners. Otherwise, you pay their price or simply don't use their content. Your choice.

You rant about justice, but it's THEIR CONTENT. They OWN it. It belongs to them. They created it. So they can charge whatever they want for it. If no one uses it or no one buys it, that's their problem. But if radio wants to use their content, they have to do what the owners say. Or else create their own content.

 

[radioskeptic]

I know a lot more about both the radio business and the music business than you think. I've been in touch with Bob Savage by email, and occasionally by phone. I've also talked to people who work for large stations who for that reason can't be quoted -- people whose employers use Iniquity's "HD" ( for "Huge Disaster") system -- and their view of it, based on hands-on experience, is every bit as negative as Bob Savage's and mine.

And while I haven't discussed NAB's Neville Chamberlain act with them, I know that most radio people outside the consoldators -- and many who do work for the consolidators in lower level jobs -- see that issue pretty much the way I do, too. Last month Inside Radio did a poll with this question: "Do you support the NAB ’s decision to present the music industry with a performance royalty offer that now establishes a performance right for radio?" The results: 25% said yes, 75% said no. And you should see the comments! (I'd provide a link if I could. Of course, I saved a copy of the PDF.)

As for what it means to smaller indie labels and publishers, check out this:
http://savannahmusicgroup.com/news/performance_royalties2.htm

You should also read Jerry Del Colliano's Inside Music Media blog entry from September 8. He explained what's in this "deal" for the big radio consolidators, the big labels and Gordon Smith. (I'd offer you a link, but it's been available only to paid subscribers since the end of September.)

 

[TheBigA]

I know that most radio people outside the consoldators -- and many who do work for the consolidators in lower level jobs -- see that issue pretty much the way I do, too.

That may be, but it doesn't matter. This isn't a thing where everyone has an equal vote. The reality is as I've said several times: Either radio negotiates, or they can forget about getting anything else from Congress. And they can expect Congress will ultimately vote against them. You can't play obstinate and expect anyone to take you seriously.

You should also read Jerry Del Colliano's Inside Music Media blog entry from September 8. He explained what's in this "deal" for the big radio consolidators, the big labels and Gordon Smith.

He doesn't know any more about this than you do. So it's no surprise you agree. Most of what he's said about this deal is fiction made up in his brain in Arizona, not based on actual research speaking with the players. JUst because he has a blog and says stuff you agree with doesn't mean he's right. The fact that you're more willing to believe a guy who's been out of the business for almost ten years than actual players who have their own money at risk says a lot.

For your own good, stop talking yourself into things, and go out and speak with real players who know what's going on. And the most important thing is speak with the other side, specifically artists and musicians. Radio could completely lose this thing. And the people who will be hurt the most will be the little guys.

 

[radioskeptic]

For my own good, you say? How arrogant can you get? Your arrogance and your condescension are astonishing. Are condescension and arrogance all you’ve got?

I’ve already told you what real broadcasters – not the morons running the big firms into the ground – think.

And Jerry Del Colliano knows what the people who do (or used to do) the real work of radio think. Ask Mickey Luckoff!

 

[TheBigA]

For my own good, you say? How arrogant can you get? Your arrogance and your condescension are astonishing. Are condescension and arrogance all you’ve got?

It's not arrogance. It's arrogance to say you know more than the NAB Board about an issue you clearly aren't completely informed about. These are people who have a whole lot more of their own personal money at stake than you.

And Jerry Del Colliano knows what the people who do (or used to do) the real work of radio think.

He's a bitter and angry man who was paid millions of dollars, and hates the people who gave it to him. He's not unbiased in his views, and now he wants people to pay him $100 a year to read his contradicting opinions. Talk about arrogance. Yes, he is the voice of all the people who no longer work in the industry. He's not the kind of person I want to trust if my money is on the line.

 

[KB1OKL]

Seems to me that Eric "Mr HD" Rhoads can't seem to make up his mind on any issue, he's been on both sides of HD and back again and now he's for the NAB position on royalties? I wonder what's in it for him and anyway wait a few weeks, he'll change his mind again.

 

[radioskeptic]

(I’m not going to use quote boxes here. Just refer back to Reply #9 at the bottom of Page 1 of this thread.)

BigA, do you remember when I asked, “Are condescension and arrogance all you’ve got?” Well that was a rhetorical question. Of course that’s all you’ve got!

You can’t expect me to bow to the supposedly “superior wisdom” of the NAB board when in fact there’s no wisdom there at all.

The NAB board is dominated by the consolidators—not necessarily the CEO’s themselves, of course, but their handpicked representatives, who will do their bidding. (Yes, I know that B101 owner Jerry Lee was on the board at one point, but he was just an anomaly, or perhaps a token!)

Now let’s see. Which executives at the consolidators am I supposed to hold in awe? Lowry Mays and his sons, and their amanuensis John Hogan at Clear Channel? Those boys ran CC into the ground—into bankruptcy—before the deal with the private equity firms Bain Capital and Thomas H. Lee Partners could be consummated. Bain and Lee wanted to back out, and CC had to sue to make them go through with the purchase. Is that your idea of an admirable record?

Or how about the jumped-up bean counter Farid “Fagreed” Suleman’s performance as head of Citadel?

’Nuff said?

It would be grossly understating the case to say that I have no respect for people who are ruining radio, and in the process ruining the careers of many talented people. It would be far more accurate to say that I have the utmost contempt for them, as does any intelligent observer of the industry—whether an outsider like me, or a beleaguered insider who has to deal with morons in the executive suite (and who has to worry more about the prospect of unemployment than people in other industries, too).

Finally, I’m appalled at the viciousness of your attack on Jerry Del Colliano. I’ve met Jerry once, spoken with him on the phone a few times, and exchanged a lot of emails with him. His analysis of what’s gone wrong with radio is right on the money.

And why shouldn’t he detest Clear Channel? They tried to ruin him. They didn’t “give” him millions; they paid him in an out-of-court settlement because they knew that their suit against him was without merit and that he had a good case against them. And they got a real bargain when they were able to buy his public silence on the industry for a few years as part of the deal.

That said, I have to say that I think he made a real mistake when he made his influential blog available only by subscription. He had 10,000 daily readers. I wonder how many he has now. At $100 a year or $10 for a single month, he’s lucky if he’s kept one-tenth of them.

Jerry’s blog and John Gorman’s were the best commentaries on the business available. They were always far more informative and entertaining than anything from, let’s say, Eric “Mighty Red” Rhoads! But John, who posted only one or two entries a week at his peak, hasn’t posted a new entry since January. And now Jerry’s put his blog behind a pay wall.

So now we have to follow the industry through TRI, Inside Radio, FMQB and others and read between the lines to get a real grasp of what’s happening and why.

 

[TheBigA]

You can’t expect me to bow to the supposedly “superior wisdom” of the NAB board when in fact there’s no wisdom there at all.

And you say I'm arrogant.

 

[TheBigA]

The NAB board is dominated by the consolidators

Care to be specific? I looked at the names on the board, and there's no one from Clear Channel, Cumulus, or CBS. I can't see how you can say it's "dominated by consolidators."

http://www.nab.org/about/nabBoard.asp

But you claim to know more than them. So I guess you make your own definitions, and using them, Cox must be a consolidator.

Finally, I’m appalled at the viciousness of your attack on Jerry Del Colliano.

What was vicious about it? He and Gorman had a lot of power at one time, and wish for those days to return. They've found a power base in a lot of people who are also out of radio or haters of big companies. But they aren't actually in radio any more. And it's not like they don't have the money or contacts and couldn't afford to buy radio stations. But that's not as easy as sitting on the sidelines. These are basically programming people who don't want to run a business. I've read Jerry's comments about the NAB plan and most of it is personal attacks on the NAB and Gordon Brown. Very little of it deals with the specifics that I've discussed in this thread.

I don't care about personal attacks or enemies. I care about the issues, and I've read little in Jerry's blog or anything you've written that deals directly with the facts, which are: (1) The recording industry is united and motivated to get this royalty, (2) The recording industry has the law on its side with this royalty, and (3) if they get what they want, it will deal a crippling blow to radio. Those are the issues. Not Gordon Brown, not the NAB, not consolidation, and not Jerry. You're focusing on the side show. Quit looking for enemies in radio. This is a fight over recording industry royalties, not radio. Quit trying to fight some battle that was over a long time ago, and deal with the one in front of you.

 

[bossbill]

That said, I have to say that I think he made a real mistake when he made his influential blog available only by subscription. He had 10,000 daily readers. I wonder how many he has now. At $100 a year or $10 for a single month, he’s lucky if he’s kept one-tenth of them.

Mistake? If Jerry kept one-tenth, that's 1,000 x $100 = $100k per year!

I did subscribe to Jerry's newsletter. I often disagree with him, but I try to absorb as much as possible from as many sources as I can, and form my own conclusions.

 

[Savage]

Big A: I'm just curious to know. Why is resolving (caving to) copyright with the music industry a precondition to radio's getting anything else done with Congress? I don't get why lawmakers would be eager to alienate the hundreds of thousands of constituents aligned with US broadcasters - owners, groups, employees, associates, vendors - to curry favor with the four multinational purveyors of audio pornography which passes for "the recording industry" these days....?

If the NAB is this impotent, we need a new industry lobbying organization. (I know, that's a discussion for another time, but it needs saying.) I for one don't settle for "well, you're screwed. That's the best we could do. Don't forget to get your dues and membership renewal in on time.")

 

[TheBigA]

Big A: I'm just curious to know. Why is resolving (caving to) copyright with the music industry a precondition to radio's getting anything else done with Congress?

Ask the folks on the NAB radio board. They're the ones saying this.

But let me ask you: What has Congress done for the radio lately? Are you aware that right now there's a proposal to charge radio a spectrum fee that would pay for free broadband? How'd you like to pay that?

I don't get why lawmakers would be eager to alienate the hundreds of thousands of constituents aligned with US broadcasters - owners, groups, employees, associates, vendors - to curry favor with the four multinational purveyors of audio pornography which passes for "the recording industry" these days....?

Those four companies aren't the people who've been lobbying Congress. The face of this royalty has been artists, from Micky Dolenz to Dionne Warwick to U2 to Nancy Sinatra to the Four Tops. The face of the broadcasting industry has been Clear Channel and Citadel. Who would you vote with?

As I've been saying, I've heard a lot from people on the other side of this issue, and I'm here to tell you that when they speak at forums on this issue, they're united against radio. They're not calling each other names or looking out for themselves. They are speaking as one. Meanwhile, radio is attacking itself and its own. That's not a way to bargain from a position of strength.

Steve Newberry is a very smart guy. He hates this royalty as much as anyone. Giving in on this issue is against every bone in his body. But he'd rather pay 1% than 15.

I can tell you that a big chunk of the music industry hates this NAB term sheet. You'd never know, because they're not squabbling in public. But they think they've got a good case to get their full 15%. Are you willing to risk that?

 

[radioskeptic]

(The following post refers to Replies Nos. 12 and 13 from TheBigA.)

I knew, BigA, that you wouldn’t be finished with that one line in Reply # 12 posted at 9:10 last night:

And you say I'm arrogant.

As I expected, you followed up with a fairly lengthy post at 1:31 this morning, when I was sound asleep. (I saw it this morning before I left for work, but I haven’t had time to reply until now.)

First, I want to thank you for providing that link to the NAB board membership list. You actually made my case for me. The Executive Committee includes Caroline Beasley of the Beasley Broadcast Group, Richard Cummings of Emmis and Cumulus Media chairman Lew “Tricky” Dickey. None of them are small potatoes!

And the NAB Radio Board? That one boasts Greater Media CEO Peter Smyth, Entercom CEO David Field, Radio One CEO Alfred Liggins and Clear Channel VP for Government Affairs Jessica Marventano, as well as John Beck, St. Louis market manager for Emmis, Joel Oxley, a regional VP for Bonneville, and William McElveen, a regional VP for Citadel (Fagreed’s rep on the board).

Most of the rest of them are from smaller groups—mini-consolidators or consolidator wannabes (like NAB Executive Committee member Steve Newberry’s Commonwealth Broadcasting, which has 22 stations, all in Kentucky—that’s just consolidation on a small scale!)

Now about what you said in Reply # 16:

I can tell you that a big chunk of the music industry hates this NAB term sheet. You'd never know, because they're not squabbling in public. But they think they've got a good case to get their full 15%.

Really? Well, just look at this: http://www.musicfirstcoalition.org/node/814

They can’t keep their own troops in line! They’re already crowing about getting much more than one percent. And why do suppose they’re so cocky? It’s only because the NAB has caved on a matter of principle. Their sense of their own value is so wildly overinflated that they’re absolutely indignant at not being offered more. Thus they’re already preparing to go to the barricades, or so they say.
's
But don’t worry. They won’t succeed. And we don’t need the NAB to stop them. Grassroots lobbying by small independent station owners can do it. I know that from my own experience.

Two U.S. Representatives from neighboring districts, members of opposite parties (and both nodding acquaintances of mine) were co-sponsoring the House resolution against repealing radio's exemption from the performance royalty, while a third (whom I don’t know) was co-sponsoring the bill to remove the exemption. I called up the owner of a small rimshot station whose COL is in the district of one of those resolution co-sponsors, but who lives in the district of the guy who was co-sponsoring the bill to repeal radio’s exemption, and I explained the situation to him. I told him he might be able to make a difference if he were to approach the bill sponsor as a constituent. He did and, believe it or not, the guy actually switched sides. He took his name off the pro-royalty bill and signed on as a co-sponsor of the anti-royalty resolution!

True story!

So my advice to all small independent owners is, follow that example. You don’t need the NAB, and you certainly don’t need Gordon Smith! Just make your own case to your own Member of Congress, and try to enlist your friends, family and employees in the fight. Don’t let Cheap Channel, Citadel and the other consolidators be the face of radio. You’re the face of real radio. Make sure your elected officials know that!

 

[TheBigA]

First, I want to thank you for providing that link to the NAB board membership list.

Your point was that the board is "dominated" by consolidators. The fact is it isn't. But then you explain that you simply don't like anyone who owns radio stations, regardless of how big. What any of this has to do with the subject matter is beyond me.

They can’t keep their own troops in line! They’re already crowing about getting much more than one percent.

You clearly don't understand my point. They're arguing with radio, and so are you. They aren't arguing among themselves. Radio is. Radio has two enemies: MusicFirst and itself. That allows MusicFirst to focus on the offensive. Were you ever in the military? You'd be more worried about other soldiers than defeating the enemy.

Grassroots lobbying by small independent station owners can do it. I know that from my own experience.

Good luck. What you don't understand is that the small, independent stations might be left outside any agreement, as many of them were for digital. That will leave them on their own to negotiate individually with MusicFirst and Sound Exchange. That's the alternative. See how much music a few thousand listeners gets you when you're dealing face to face with copyright owners. They don't care if you play their music or not, as long as you pay. That's the future.

 

[radioskeptic]

What I get from your last post, BigA, is that you don’t believe democracy works.

Granted, democracy has had its problems recently, largely because of an ignorant and ill-informed electorate. But lots of small broadcasters are well-informed and capable of making their positions known to Congress. And they’ll have much more credibility on the royalty issue than the has-beens you cited in Reply #16. (Dionne Warwick? Mickey “Circus Boy” Dolenz? Nancy Sinatra, one of whose two No. 1 charted hits was a duet with her far more famous father? The Four Tops, with all but one of the original members dead?)

Apparently, you don’t believe democracy can work anymore, and that plutocracy reigns. That speaks volumes about your whole Weltanschauung. I keep giving you enough rope in the hope that you’ll hang yourself. This time you’ve come close, but you’re still really only tying yourself up in knots.

Well, I have to sign off for now. I’ll revisit this thread sometime this evening. In the meantime I’ll let some other R-I members have at you.