Royalty Fees = Royal Pain?

[johnbasalla]

Just read right here on R.I. that the President is in favor of radio stations/companies paying royalty fees for the music they play. A lot of thoughts are swimming through my head, but I'll share one right now. It used to be that radio airplay helped to drive record sales. Airplay was good for both businesses.
The key to getting people to buy a record, even a .99 download, is for them to know the name of the song and artist so they can easily access it. I've read on radio station's websites, listeners asking them to mention title and artist, sometimes to no avail. The people at the station may know their music like the back of their hand, but most listeners are not as consumed with station information as staffs are. People tend to half-listen a lot of the time so repetition in sharing information is as important as repetition in format song selection for this all to come together. Although this may not be a complete answer to the problem of music sales, how much help to both businesses would consistently mentioning title/artist be? Increased music sales would lower the heat on the whole royalty fee business. Music is a pass-time thing for many people. If they hear a song they like they may consider buying it if they know what it is. But, as a pass-time, it's not all that important, so they don't have any desire to run around to websites trying figure it out, calling radio stations to ask...

 

[Carmine5]

President Obama needs to take seriously the NAB's warning that if the PRA passes, more stations will flip to talk. And if he's pissed off at Rush Limbaugh, imagine Limbaugh X 100. Syndicated talk will flourish. It has been estimated that musicians will get pennies if anything at all from the PRA. Stations that remain with a music format will be compelled to charge record labels an advertising fee for any promotional consideration when a new artist gets airplay--provided a new artist will even get airplay. The PRA is a scorched earth policy.

It should be clear by now that the Obama Administration has declared war on the entire broadcasting industry.

 

[Whiplash]

I know I'm getting ready to go to a talk format, if this passes. This will kill small market, and non-com radio. What's left of it.

 

[radioboy]

From what I've heard from smaller market owners, a lot more jobs will be cut as well if this passes.

Carmine5 and 1250WTAE's comments are reflecting exactly what I'm hearing. If you still have a job, you need to work against the passage of this thing. If forced to pay, budgets will get cut again.

 

[johnbasalla]

Actually, I think that if many more stations switch to talk, they won't all be of the conservative nature. More Sports-talk will be the first place that owners will gravitate towards, as that has been proven to be marketable. But, in a large or major market, if a bunch of stations want to ditch music over this, some - if not many - will need to find a new way to go. How successful is The Oprah channel on satellite radio? Is that a model that could generate a new successful talk format? Wasn't there an experiment some years ago with a Comedy radio format? I guess it failed, but if you have a whole bunch of stations all yakking away, they can't all be doing various shades of the same thing. If you're a conspiracy theorist, you might twist your mind into thinking ... "Ahh, the real reason the President is in favor of this is that he figures if a whole bunch of stations stop the music and go to talk there's bound to be some liberal talkers in there. So this is a way to put liberal talk on some good sticks without having to dictatorially mandate it, which would go further into hurting the Socialist -Democrats chances in November".

 

[Caveman]

If musicians don't get paid for their work, eventually there will be no new music to play on the radio...If radio stations don't believe in paying for the music then they should run ads for free too?

 

[Chuck]

If musicians don't get paid for their work, eventually there will be no new music to play on the radio...If radio stations don't believe in paying for the music then they should run ads for free too?

I'm in favor of musicians getting paid for their work, but I’m not in favor of the so-called “Performance Tax.” The problem is the record companies have always treated their talent as disposable. The thought that, "We were looking when we found him," has been pervasive in the industry for years. The tendency is to bleed the talent for all it’s worth, and then move on to "discover" the latest hot new talent.

Out of ignorance, many musicians have signed recording deals that were far from fair to them. On the surface, they looked good to a wide-eyed young musician. A big cash payment, the chance to record in a major studio, going on the road (with all its many distractions) and the promise of fame and fortune is pretty attractive to a neophyte musician with raging hormones. A few years later, reality sets in, and many once-promising artists end up selling used cars or worse.

That doesn't happen to everyone, but it is a lot more common than it should be. They get screwed by their own record companies by signing contracts that favor the record company, not themselves. If the Performance Tax ever is enacted, you can bet that most musicians will only see pennies. That's because their payments will still be governed by existing contracts.

Only the record companies will enjoy any substantial gain from this. In the end, that won't fix their business problems.

 

[Caveman]

More and more musicians are releasing their music w/out big labels or label support...and they deserve every "penny" they can get.

And radio has screwed many more jocks than record labels have screwed musicians in recent years...many more.

 

[Chuck]

More and more musicians are releasing their music w/out big labels or label support...and they deserve every "penny" they can get.

That's true. A lot of musicians have figured that out. I get quite a few CD's every month from people who market directly. I also get calls and emails from those same people begging me to play their stuff on the radio. Sometimes I do!

And radio has screwed many more jocks than record labels have screwed musicians in recent years...many more.

While I see your point, and won't argue that some employers have treated their on-air talent very badly, I'd have to disagree with you about the numbers. There are millions and millions of aspiring musicians out there. The number of radio DJ's is more likely to be in the thousands. Making music is a huge industry. If you have any doubts, attend a NAMM (National Association of Music Merchants) convention. http://www.namm.org/ Companies like Peavey, Fender, Yamaha, Tascam, Gibson, Roland, etc, didn't get huge because nobody is interested in making music or having their works played on the radio.

Unfortunately, today’s artists continue to sign contracts that they may regret later on.

 

[TheBigA]

More and more musicians are releasing their music w/out big labels or label support...and they deserve every "penny" they can get.

The only musicians who will receive this royalty are the ones who get airplay. That won't be indie artists. If an artist isn't getting airplay now, they won't receive a royalty if this passes. This will simply be more money going to the multi-millionaire top artists and foreign-owned labels.

There is VALUE in free radio airplay. Artists who receive free airplay sell more, get more gigs, and ultimately make more money than artists who don't receive airplay. That is a documented fact. That is why this royalty is wrong.

 

[TheBigA]

Just read right here on R.I. that the President is in favor of radio stations/companies paying royalty fees for the music they play.

Actually the story says the Commerce Department sent a letter supporting the royalty. Don't know if Obama himself approved the letter.

The fact is that the money has to come from somewhere. In most countries, the government supports broadcasting with money from fees and taxes, and a portion of that money goes to pay royalties. If the government is saying it wants a similar system in this country, that's a whole different discussion. Then the Commerce Department would have a say in the discussion. Until then, they're just another group with an opinion, most likely motivated by an RIAA lobbyist.

There is an ongoing campaign in this country that seems to be aimed at pushing out private broadcasters. The recent FCC internet plan certainly won't help broadcasters. We the people need to decide if we want independent broadcasting, or government broadcasting. Right now, I'd say the momentum is on the side of more government sponsored broadcasting, because the private companies are all either bankrupt or heading that way.

Increased music sales would lower the heat on the whole royalty fee business.

That's not what I get in listening to the RIAA. It's not as much about the money as it is about having the RIGHT to control their content. They resent that radio can air music regardless of whether or not that music is in print or available for purchase. That's why they talk about a performance RIGHT. The problem is that in this world, there are no rights. They're seeking to put control on content that is uncontrolable. So while they may control radio airplay, the public will still do what it wants, and in the process, get their music from places other than broadcast radio. In the short run, the RIAA might get some money from those who don't mind the extra 4 minutes of commercials required to pay the royalty. But it won't be long before that becomes too much of a burden, and the listeners will go elsewhere. So the end result is killing the golden goose. Not the first time the RIAA did that.

 

[Carmine5]

If musicians don't get paid for their work, eventually there will be no new music to play on the radio...If radio stations don't believe in paying for the music then they should run ads for free too?

The Performance Rights Act makes no distinction between a member of a band and a session musician. Everyone gets paid or as the act states: "(1) grant performers of sound recordings equal rights to compensation from terrestrial broadcasters".

Session musicians, as contract workers for hire, should have gotten paid for the performance they did at the recording session. If they're union, then they certainly got paid. If they didn't get paid, then that is either their, their agent's or their label's fault. If the musician is a member of a band then, hopefully, he/she got an agent who negotiated a good contract with the label or corporation the band is a part of.

But the notion that a session musician should be paid in perpetuity for a recording they did once is ridiculous. It's like paying a royalty to every carpenter, plumber or contractor who worked on a particular house, each time that house sold. Session musicians, like any other trade, are craftsmen for hire. They get paid once for the work they did.

What is even more insane is that radio should be required to pay any musician. This should be a business arrangement between musicians and their labels, corporations or their producers. Radio is simply a means of promotion. It's in the middle and is, therefore, neutral.

The PRA was written by lawyers who have little understanding of the music business or how radio works in conjunction with that business. If it were to pass, it would be one of the greatest injustices ever to be inflicted on the broadcast radio industry.
c5

 

[TheBigA]

But the notion that a session musician should be paid in perpetuity for a recording they did once is ridiculous.

Exactly, since they get paid whether the song gets played or not, whether the song becomes a hit or not. Heck, they get paid even if the performance is a demo and is never heard at all.

Also, to the best of my knowledge, no other country in the free world grants a performance right to session musicians or background singers. But the RIAA had to make this part of the law in order to get AFTRA and the Musicians Union to support it.

This would open the door for all employees of all production companies to demand a share of the revenues of all artistic works, such as movies, TV shows, and videos. Which would drive those companies into bankruptcy.

This is a far more generous royalty than any other country, and would ensure that recipients would make ten times the money the songwriters get. Which is one of the reasons the songwriters aren't supporting it.

 

[Goat Rodeo Cowboy]

Interesting conversation.

I always find it interesting to watch legislative struggles within industries that I am not connected with, or have never been connected with. The logic expressed by the players in such struggles, though very painful and serious to those affected, often seems like a "gnat on the elephants behind" when viewed from a distance. We mutter: "Why doesn't congress focus on something important!" That usually means: Something that affects ME.

Maybe broadcasters need to hope that music royalties someday takes Center Stage in Washington the way the Medical Reform has for the last year or so. It will not be pretty. In fact it will be very, very painful. And much of the American public will mutter: "A pox on ALL your houses!"

Let Congressional Committees lay bare the accounting of the recording industry; the recording artists; the radio broadcasters. Let them all stand (financially) naked in the spotlight the way the CEO of Anthem Blue Cross has for the last couple of days with her $13,000,000 pay package.

Now we all know that CHUCK with his small market station is not running in the same circles with Clear Channel, Citadel, Cumulus, Bonneville and other "biggies" and now is the time to be making that point with congressmen. We know what the story is that will ring out from Congressional hearings if this thing progresses to that level: Broadcasting CFOs will be lined up and questioned and the American public (and the legislators who are going to vote) will hear that with the industry station after station after station is expected to convert 50-cents of every dollar of advertising into CASH FLOW which disappears into the corporate accounting mechanism.

That will be followed by testimony by out of work musicians who are now pumping gas in New Jersey.

It won't be pretty.

I'm not taking sides with those who want to impose this expense, this "tax" on broadcasters. I am, however, pretty honked off at an industry that has worked its way into a corner where it may have a very hard time explaining to the public and to the legislators why it should be exempt from the same kind of "revenue mining" that is imposed on so many other lines of work.

 

[Chuck]

Now we all know that CHUCK with his small market station is not running in the same circles with Clear Channel, Citadel, Cumulus, Bonneville and other "biggies" and now is the time to be making that point with congressmen.

Yeah, I'm solvent. I'd like to stay that way...

 

[Gatekeeper007]

Since I am a musician and a song writer and have recorded in Nashville I can see what both sides are trying to say but I will tell you straight out this Royalty Fee is bad news. It will not put the money in the hands of the people it is suppose to help. It will however either create problems for small radio stations who trying to survive or are surviving at the moment. WLRE as an LPFM station depends on music to survive, we provide a service that no commerical station is going to try and do. When I write a song or preform yes I want to get paided for what I do but not at the expence of and or elimating other peoples jobs or small radio stations. I have had WLRE on the air going on ten years now and I don't want to see some lame brain idea that isn't very well thought out by our goverment kill it and all the services it provides to our local area. Also one other thing I have had alot of people that read these fourms ask me if since my first name happens to be Chuck and since I have been in electroincs and radio for over 40 years are any of my post under the name Chuck, the answer is no. I have always posted in every forum/webpage as Gatekeeper or Gatekeeper007 as this as been my nick name since before the internet ever started. I am not the Gatekeeper or Gatekeeper007 in every place on the net of course just the original one and that is all I post under.

 

[TheBigA]

We know what the story is that will ring out from Congressional hearings if this thing progresses to that level:

That is the RIAA's worst nightmare. They don't want Congressional hearings. They want to sneak this in with some other legislation so no one has to think about this.

Because the truth is that if REAL hearings were held, and tax records from the artists who currently get airplay were made public, we'd see what everyone in radio knows: The artists who get free airplay make more money than those who don't.

There is nothing in the law to benefit the majority of artists or musicians, the indie or unsigned artists who don't get airplay. The artists who will benefit are the ones who get airplay. The system that radio uses to choose the music it plays won't change. So the starving artists will continue to starve, while the rich will simply get richer. The RIAA has begun bringing in a few of the rich artists to testify, like Bono and Billy Corgan. But to bring in someone like Mary Wilson or Lyle Lovett as examples of starving artists ignores the fact that both of them were screwed by their labels. If you don't believe me, read Berry Gody's book. In it, he explains why Mary Wilson lives in a 1 bedroom apartment in Detroit, while Diana Ross lives in the South of France.

The other part of this story that people don't understand is that the big corporate radio companies, the ones who are made the "enemies" by MusicFirst, are the ones who wouldn't be hurt by this royalty. These companies, like Clear Channel, CBS, Cumulus, and more, are already paying millions of dollars in digital royalties to SoundExchange for streaming rights. CBS is #2 among SoundExchange payers, behind Pandora, because they stream on last.fm, Yahoo, and AOL. If the performance royalty was a problem for them, they would hold the line there. But they don't. Those companies are structured for paying royalties. No problem. It's easier handling legal affairs than handling personnel problems. They prove that every week.

The radio stations that would be hurt are the majority of stations, owned by small companies or individuals. A lot of them bring in more than the $1 million threshold in revenues, even though their profits are very small. These are the stations that can't afford to stream, and they definitely can't afford to turn over 15% of their revenue for the right to play recorded music. I will tell you that the Top NPR stations in the country bring in more than a million a year in revenues, so that threshold isn't as high as it seems.

Pandora pays 50% of its revenues to SoundExchange. They are the darlings of the music industry, and half of their money goes to the music industry. That should be an embarrassment to the music industry. If they want to make Pandora an example, they should cut Pandora's royalty to zero. They should say "We love what you do, and we believe the rest of radio should follow your lead, so you don't have to pay a royalty." But that's not what they do. They suck their friends dry, and they'll do even worse when they get the chance to get money from terrestrial radio.

 

[Carmine5]

But the notion that a session musician should be paid in perpetuity for a recording they did once is ridiculous.

This would open the door for all employees of all production companies to demand a share of the revenues of all artistic works, such as movies, TV shows, and videos. Which would drive those companies into bankruptcy.

Yes, the logic behind the PRA could very well be applied to other media content businesses and, I think, could start an avalanche of similar proposals. Hey, actors and writers make residuals, why not those who work behind the scenes of TV shows--editors, Foley artists and so on?

Some complain that radio makes money for playing an artist's work. While it is true that some markets have stations that do very well financially, Los Angeles for example, most stations are just surviving as small businesses. Is it wrong for a station owner to want to make enough to cover his/her nut? After all, no money=no electricity, personnel, lease payments, etc=no station on the air=no airplay for artist's music. It is a finely-balanced system that the PRA would tip and irreparably damage.

c5

 

[Chuck]

Also one other thing I have had alot of people that read these fourms ask me if since my first name happens to be Chuck and since I have been in electroincs and radio for over 40 years are any of my post under the name Chuck, the answer is no. I have always posted in every forum/webpage as Gatekeeper or Gatekeeper007 as this as been my nick name since before the internet ever started. I am not the Gatekeeper or Gatekeeper007 in every place on the net of course just the original one and that is all I post under.

Sounds like a case of mistaken identity. I've always posted under my real name which is Chuck. I'm in Texas and ran a LPFM station for over 8 years. I now own and operate a small Class A FM that serves the same community (although with a bigger foot print.)

That cleared up, I think Gatekeeper and I have a lot in common. In my previous life, I worked in the live sound industry for well over 30 years. As a result, I’ve met a lot of musicians, many of whom I still consider to be friends. Though those friendships, I've learned how record companies treat their talent. It is not always pretty. The record companies tend to have lots of attorneys and accountants on staff who make sure that they don’t pay a penny more to the musicians than they absolutely have to. That’s their job, and they are pretty good at it.

 

[Goat Rodeo Cowboy]

Let me offer a really "wild and crazy" idea.

In controlling forest fires, when the really big fire is headed your way, you go to the edge of the area you want to protect, start a line of small fires and let them burn toward the the oncoming disaster. Let the monster meeting of the flames happen in non-critical geography. Gives new meaning to the phrase "Playing With Fire".

Maybe it is time for grass roots broadcasters to set some strategic fires. Kick off a campaign asking congress to have hearings and write legislation that would collect royalties that would be dispersed directly to the musicians. Campaign that the record companies do not belong in the equation.

If radio has HALF the listeners we claim it does, and if radio has HALF the ability to implant a message we claim it does, an all out campaign by broadcasters.... even if just the small companies, the "family style" companies push the issue, could it force a firestorm that would make it hot in Washington for the short run which could result is much less heat in the radio station operating finances in the long run?

I needs to be a well thought out message that basically convinces people that the record companies do not deserve to play a role in this mechanism.