Radio Ink royalty reversal

[TheBigA]

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

This has nothing to do with the issue. The music industry is united. The radio industry is battling itself. Who do you think will win?

 

[radioskeptic]

I think radio can still win this battle. But it'll be the small independents who do it. And they're fighting at a real disadvantage with the idiots at the NAB trying to sell them out. The big boys can't see that there's no guarantee that the rate they propose wouldn't escalate to the point where it would seriously hurt them, too, sooner or later (probably sooner). All they know is that they could survive the "compromise" with the recording industry that they're proposing if the rate stayed the same (and nothing else changed!), while many smaller operators would be immediate casualties. These are the same kind of people who dismiss AM "HD" interference, as well as the inability of small stations to afford it (not that most of them would go for it anyway, since they know it's really unworkable), by saying that it might be a good idea to "thin the herd"!

Any independent who doesn't follow Charlie Ferguson's example and leave the NAB is an idiot.

 

[radioskeptic]

And I almost forgot about this new report:
http://www.markramseymedia.com/wp-c...P-Ramsey-Report-October-2010-Satisfaction.pdf

Obviously, that isn't going to make things any easier, either.

But remember it's mainly big radio's post- consolidation practices that have made radio seem less important to the vast majority of us. (Most of the respondents were in major markets dominated by big radio.)

 

[TheBigA]

I think radio can still win this battle. But it'll be the small independents who do it.

The small independents can't do it. They don't have the resources, the contacts, and the credibility. The labels and artists don't care about small, zero audience radio stations. They'd prefer if they'd all simply stop playing music and go all talk. It's only the big powerful stations that matter to them. If it wasn't for them, there'd be no reason at all to negotiate. Simply shut the whole thing down.

The big boys can't see that there's no guarantee that the rate they propose wouldn't escalate to the point where it would seriously hurt them, too, sooner or later (probably sooner).

Using that logic, there are no guarantees of anything with anyone. No guarantees that at some point digital royalties will be 50% of revenue or more. But this is as close as it gets. By keeping the CRB out, you at least have a chance. Requiring an act of Congress also makes it more difficult. Plus the reality is that once the labels get this money, they will completely forget about radio, and move on to the much much bigger fish to fry. That's why they want to close this deal sooner rather than later.

Here's what we know: Do nothing, and you leave it up to the people in Congress, who know nothing about royalties, and just know we're the only country in the free world that doesn't pay royalties. That's a hard thing to defend when we're mentioned in the same breath with Iran and North Korea.

 

[TheBigA]

But remember it's mainly big radio's post- consolidation practices that have made radio seem less important to the vast majority of us. (Most of the respondents were in major markets dominated by big radio.)

I read that survey and it actually says more about "other sources" than it does about radio. What it says is that there is a multiplicity of other media, which we already know. More than there were just ten or fifteen years ago. And the multiplicity of other media is doing a lot of the same things as radio, such as giving traffic and weather information, entertainment, music, and anything else that used to be exlusive. So it's not that radio is "less important," but simply not the only source for this stuff any more. Radio lost its exclusivity. That's a fact. Consolidation didn't invent other media. And returning radio to what it sounded like 40 years ago isn't going to make radio more important. Just as bringing back radio drama in the 70s didn't bring back vaudeville.

However, in the bigger markets, and with the bigger companies, radio sells a lot of records and puts butts into concert seats. Labels and artists know that. Radio is a far better value than TV. It's why they still spend millions on radio promotion in the majors. But they don't spend a dime with small stations in small markets. That fact says it all.

But if radio is becoming smaller, nothing confirms that more than a bunch of pea-shooter operations stomping around and being obstinate. It's far more impressive to bring together the united force of radio to bear on the labels. If a mosquito in Michigan stopped playing music, no one would notice. But if KIIS in LA goes silent for an hour, it might get some attention.

 

[radioskeptic]

Here's an interesting item about the record industy's health, or lack of it:

Warner Music losses widen
Digital revenues climb, cloud distribution in future
http://www.variety.com/article/VR1118027625?categoryid=4076&cs=1&nid=2568

 

[TheBigA]

Not included in the Variety article was Bronfman's comments about the radio royalty. He simply repeated the MusicFirst talking points:

BRONFMAN JR. said he was "pleased that U.S. radio broadcasters have finally acknowledged their obligation to pay the recording artists who are the foundation of their business," but was "disappointed that they failed to vote on the deal both parties had agreed upon."

This is exactly what MusicFirst said several weeks ago. As I've said, the music industry is united on this issue, speaking in one voice. Radio isn't. That lack of unity will doom radio's chances.

 

[TVradioguru]

And therein lies the big problem for radio, it has a history of dysfunctional behavior. Owner or GM of station A, can care less about the operation of station B, especially when not under the same ownership umbrella, nor will group A ever consider cooperating or siding with another group to a common cause or a common voice. This midset is now amplified with the focus on just keeping the lights on or keeping one's job by making the budget this month.

Station management is so wrapped up in their own little world, the vast majority isn't paying attention to the royalty discussion, nor seem to understand how this will adversely effect them in the long haul.

 

[TheBigA]

nor will group A ever consider cooperating or siding with another group to a common cause or a common voice.

That wouldn't be so bad. The problem is when those people attack anyone who attempts to co-operate or organize. I compared it to someone in the army who's more concerned about what his fellow soldiers are doing than focusing his attention on the enemy.

 

[TVradioguru]

Much of that stems from the self-important, arrogance of (unfortunately), many broadcast managers. They can't use an organization like the NAB to act as one voice, mainly because they can't agree just because someone else has an opinion. When you think about it, it's a lot like modern politics; the right wing won't agree with anythint the left wing puts forth (and visa versa) strictly because of their party affilliation. It has nothing to do with what's right or wrong.

There are many past examples of broadcasters screwing themselves and the industry because they refuse to work together, (or sabotage each other as the case may be).

 

[radioskeptic]

The real problem is that, thanks largely to what the consolidators have done, radio as a medium medium means relatively little to most of the public these days. See this story about what’s happening to the New Jersey Public Broadcasting Authority’s NJN stations:
http://www.nj.com/news/index.ssf/2010/11/ny_philadelphia_public_broadca.html

Naturally, it’s mostly about the fate of the TV stations. But note the lack of enthusiasm for NJN Radio:

Still another [proposal] calls for selling the radio licenses to WNYC and using the proceeds as seed money to build the television production, the officials said.

(Granted, the nine NJN FM stations are all Class A’s, and not one is the equivalent of a full-powered Class A. Only two are 6-kw, and with HAAT’s of 83 and 72 meters, they are the equivalent of 1.62 and 2.85 dB respectively below a 6 kw, 100m signal—and those two stations are in the least populous areas of NJ. The weakest is 17.25 dB below 6kw/100m! And some of the most populous areas have no dependable NJN radio service. For a complete list of the NJN radio stations, see http://www.njn.net/radio/frequencies.html)

 

[TheBigA]

The real problem is that, thanks largely to what the consolidators have done, radio as a medium medium means relatively little to most of the public these days.

I don't understand the relationship of "what the consolidators have done" to a story about public broadcasting.

There's a "lack of enthusiasm for NJN radio" strictly because of the way those stations have been operated, not because of radio in general. If this story was about New Jersey 101.5, the highest rated radio station in the state, you'd see more enthusiasm. But yes, there's a lack of enthusiasm for bad radio. No surprise there, but it has nothing to do with consolidation, because a lot of stations owned by companies like Clear Channel and Citadel are among the highest rated in the country.

Same with this royalty. There's a small station in Michigan that quit the NAB in objection to their proposal. That station has absolutely no impact on anything. If they stop playing music, as another small station in Las Vegas did, no one cares. If the top-rated station stops playing music, that's something else. This isn't endemic to radio, but the particular stations.

 

[radioskeptic]

It's simple enough, BigA. Abandoned houses bring down the market value of all the properties in a neighborhood, even the scrupulously maintained houses.

Similarly, bad radio hurts the medium as a whole. And the consolidators have been the leaders in cheapening radio. So what if some Clear Channel and Citadel stations "are among the highest rated in the country"? It's a smaller pie, and they've made it smaller. And the smaller it gets, the bigger the slice the idiot executives will take for themselves, making what's left for programming smaller and smaller, leading to further erosion of the total audience size in a vicious circle.

And as for NJN Radio's lack of support, it's largely because those underpowered stations don't cover the entire state. I thought I explained the weakness of NJN's coverage clearly enough!

 

[TheBigA]

And the consolidators have been the leaders in cheapening radio. So what if some Clear Channel and Citadel stations "are among the highest rated in the country"? It's a smaller pie, and they've made it smaller.

Absolutely not true. The only companies investing in radio now are big companies. Even though radio stations are the most affordable they've been in 25 years, no small investors are buying. And in a study released just Friday, it was reported that only the major radio companies are investing in new technologies that will be the future of the industry.

It has nothing to do with consolidators. It has to do with bad properties. You own bad properties, you can't expect good results.

But all this is off topic from radio royalties. The music industry only cares about big stations owned by major companies. They don't care about the pea shooters, and resent that those stations have unlimited use of their copyrighted content. At the end of the day, the big companies will be able to negotiate better royalties than the pea shooters, as has been the case with digital royalties.

 

[radioskeptic]

New technologies like voice tracking and "HD" radio?

The first makes radio much less interesting, and the second, which hardly works on FM and doesn't sork at all on AM, is just fouling the nest for the everybody else by creating interference.

The first is aimed at cutting costs so the miserly morons in the executive suites can give themselves even more inflated compensation packages, and the second is fundamentally anti-competitive because smaller stations couldn't afford it if they wanted it -- though most don't, because they're smart enough to recognize its flaws.

The fact the "HD" creates massive interference problems for smaller stations is just icing on the cake for the consolidators.

 

[TheBigA]

New technologies like voice tracking and "HD" radio?

No. New technologies like video on the web and mobile applications.

Voicetracking is old technology. Been done in some way since the 1940s. But voicetracking and satellite formats are far more popular on smaller stations than large ones. If you want to look at "abandoned houses," go over to the AM dial. Other than a hundred or so 50kw blowtorches, the major companies are getting out of AM radio, and no one has stepped in to replace them.

 

[radioskeptic]

The first high-quality FM portable I ever heard of was the Dynaco, a relabeled Bang & Olufsen made in Denmark. That was early 1063, so the B&O European model must have been available in 1962. Grundig, Nordmende and others weren’t far behind when FM started gaining ground in Europe.

Of course, the first portable I knew of was the Matsushita I got for Christmas in 1961 (they weren’t using the Panasonic name yet).

Even the mediocre Matsushita was pretty pricey for that time ($60 or $70 from Lafayette Radio), and the B&O was a lot more ($150). They were hardly mass market items, and they were mono. It was the development of chips that eventually made stereo FM feasible in car radios and cheap portables.

One other thing:

Their lawyer [over Armstrong’s FM patents] says the lawsuits continued until 1967.

I asked whether you could cite any cases. If you can’t cite cases that we can check out on the web, or at least in the law books, you’re not answering me. In effect, you’re just saying, “Because I said so!”

 

[TheBigA]

I asked whether you could cite any cases. If you can’t cite cases that we can check out on the web, or at least in the law books, you’re not answering me. In effect, you’re just saying, “Because I said so!”

Dana Raymond was the Armstrong attorney who filed all the lawsuits. Here is his obit. You'll see that the final lawsuit, against Motorola, ended in 1967.

http://query.nytimes.com/gst/fullpage.html?res=980CE2D81130F933A1575BC0A9659C8B63

 

[radioskeptic]

Okay, so it was only Motorola. Everybody else settled in 1959. Motorola lost their separate case in 1963, as well as their appeal in the Seventh Circuit Court of Appeals in 1967. Then the Supreme Court refused to hear their case, making the 1967 ruling the final one.

But even before that, royalties presented no financial obstacle to companies wanting to build FM equipment after 1950.

 

[radioskeptic]

NOTE: The previous three Replies were supposed to be posted on the thread "HD Radio -- New Initiatives" on the "HD Radio" board. I guess TheBigA had the same two threads open at the same time, because he didn't notice the mistake at the time either!