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The latest in Music Royalty debate

T

TheBigA

I'm really mad now.

www.radio-info.com/news/the-nab-and-musicfirst-still-arent-in-harmony-over-a-performance-royalty/

I've been angry with MusicFirst since they paid some professor at the University of Houston to invent a study that said radio airplay hurts music sales. That was an obviously wrong study, and started the discussion on a bad foot.

When the NAB proposal came out during the summer, I spoke in favor of it. I don't like paying for music, but I know a bird in a hand is better than two in the bush. An agreement for a 1% royalty is better than the possibility of a 12%, especially if it keesps the CRB out of the way.

For a few weeks, MusicFirst kept quiet. Even Mitch Bainwol managed to keep his mouth shut. But at a conference in August, he gloated a bit and showed his cards. Big mistake. Everyone now knows that radio is simply a means to a much bigger end.

But then on Monday, the NAB came out with its "term sheet." And MusicFirst simply couldn't help itself. Saying that radio bases its business on artists is absolutely wrong. Record labels base their business on artists. They sign contracts with artists. Artists don't sign contracts with radio. (although that's not a bad idea). This shows a complete misunderstanding of the music business. MusicFirst has become the Hamas of the music industry, a terrorist organization, and deserves to be written out of any negotiation.

A lot of people, like Jerry Del Colliano are trying to turn the NAB and Gordon Smith into the enemy. He says the NAB has sold out its members. Then this afternoon, Eric Rhodes of RadioInk suggested some big radio groups will quit the NAB and refuse to be bound by any NAB agreement. The fact is that the NAB doesn't represent all broadcasters, and as we've seen in digital negotiations, individual companies can negotiate on their own. There is no unified radio industry, no single voice here, and never has been. Any negotiated settlement would not have had the power of law. But if the majority negotiate, and you don't join them, you can't operate as though nothing has changed. Because the majority has changed the rules, even though you didn't sign on to the game.

Here's my view: Radio had to negotiate. Radio HAD to put out a proposal. Why? Because in the Gen X world we live in, if you don't negotiate, you're part of the problem. You're obstinate. You're not playing fairly. So once the proposal was made, radio did its part. It put the ball in music's court. The response by MusicFirst was a bad one, although not binding. Had Mitch himself said it, that would have been binding. But the negative reaction makes music look like they're the bad guys. They're the obstinate ones. Maybe the MusicFirst response was done to appeal to the base. There are a lot of people in the music industry who don't like this deal, and think the industry is justified in its demands for 12%. MusicFirst is the lap dog for those people.

Mitch needs to slap the hands of MusicFirst, take his $100 million, and shut up. Move on to the bigger battles quickly. Act while he can. Because in two weeks, it will be too late. What happens next is anyone's guess.

Read Eric Rhodes' very well thought out blog here:

http://ericrhoads.blogs.com/ink_tank/2010/10/the-day-the-music-died.html
 
Interesting article by Eric Rhoads. Some good point, some nonsense.

Using BMI/ASCAP/SESAC "to get more money to the performers" is nonsense. The owners of the performance rights get the fees. Guess who these folk are? Not the guy with guitar.

BMI/ASCAP/SESAC are competitors to the recording companies for rights revenues--and performance rights fees will put pressure on these organizations to cut their fees. There is only so much money to go around.

Despite the caterwauling by the music industry, Apple has taught them that they can make money with downloads. Yes, volume is lower, but they discover what software companies have known: nothing like selling a product with minimal manufacturing costs, no delivery costs, and made up entirely of thin air (electrons!).

We must still understand that the music industry does not want streaming. Hence the use of the CRB and high rates to stop streaming by all means.

While some stations may consider dropping music, most can't. We will see the continued migration of the two remaining viable AM formats to FM (sports and news/talk). For many small market stations there is not enough "give" in the bottom line to afford extra rights fees. Both BMI/ASCAP/SESAC and any new performance rights organization will find they will have continuing battles trying to collect from cash strapped small market operations. You can sue everyone, but this is an expensive and losing proposition.
 
I don't necessarily think that MusicFirst slapped radio in the face so much was expressing frustration over a bizarre set of demands from the radio industry. They're dealing with MusicFirst and part of the requirements involve concessions from the consumer electronics industry and labor unions. If I'm MusicFirst, I'd throw up my hands and roll my eyes, too.

It's like if I came to buy your house, and you set the price at $200K, and I then added, "But you also have to make the neighbor across the street take down his awning because I think it's ugly and also make the city rename the street after my grandfather." How could you sell a house to someone who is making demands that you have no control over?

Of course, those demands weren't aimed at MusicFirst, they were aimed at Congress, so you could say that the NAB was negotiating in bad faith, since they weren't even focusing on the issue at hand but a bunch of other unrelated issues. That said, I don't really think that either the NAB or MusicFirst is operating in bad faith. I just think they both have their specific needs, and they either don't overlap or are in direct opposition.
 
Let's not be naive. The only reason that the NAB and Music First are in discussion at all is because of the threat of Congressional action. Making demands aimed at Congress is all part of the game.

What a sad state of affairs that terrestrial radio is held in such low esteem that recording companies no longer value airplay as a promotional tool effective enough to outweigh any the value of any payment to artists.

My solution is still to say "Screw 'em. Legalize payola, and offer to pay artists what composers get for the music played. Let's see who comes out ahead."
 
SirRoxalot said:
What a sad state of affairs that terrestrial radio is held in such low esteem that recording companies no longer value airplay as a promotional tool effective enough to outweigh any the value of any payment to artists.
Click to expand...

The fact is that the record labels have been fighting for this royalty for 60 years. It has nothing to do with whether or not they "value airplay as a promotional tool." Labels in the rest of the world get the same airplay value for their music, and also get a royalty. So nothing has changed from the label point of view. What's changed is that consumers don't value the ownership of music to the degree they once did, and are no longer compelled to buy albums. So now the labels have joined forces with artists and musicians to give them greater lobbying power.

The real problem in this equation is the labels only value airplay at a small number of top-rated major market radio stations. They don't care about small markets or unrated radio. Legalized payola, or changing lebls for airplay, will only benefit the bigger, more powerful stations. The rest will be left in the cold.
 
To Me I think they got this backwards.I understand people in the industry got to get payed for their work,but i think the music industry should pay radio for playing their artists music on the air.Its a promotion. If the person who like the tune thats played on the air,they will go to buy the cd or download it from Itunes.Now the music industry is holding the radio industry hostage for millions of dollars to pay for these royalties and it could bankrupt some stations in the long run.lets see whats going to happen with the new congress with this issue.
 
So the whole royalty issue could go away if Commissioner Copps gets his way. To provide locally-produced programming, we'll just set up a microphone at the local Denny's, and anyone who wants to perform their own original material can do so. We'll charge $20.00 a minute VISA or Mastercard, plus an agent contract if they make it big. We don't need no stinkin' RIAA, BMI, ASCAP, Sesac.

And we'll see how well the record labels do under that scenario.
 
Add the voting element and you might have a hit. Listeners have to feel involved. Make it a non-stop reality show, where listeners vote on their friends. The ones with the most votes move into heavier rotation.
 
I want every radio station to stream online. Everyone voice your complaints to all those companies like RIAA, CRB, etc. that are involved and maybe you'd get somewhere.

There are small market stations I want to hear! Stupid royalty fees, if I was ruler of the world there would be no such ridiculous things. Hope CRB and others go out of business so they can't charge anymore fees!
 
icycool7227 said:
Stupid royalty fees, if I was ruler of the world there would be no such ridiculous things. Hope CRB and others go out of business so they can't charge anymore fees!
Click to expand...

This is why they're so short sighted. If they really wanted to kill OTA radio, all they'd have to do is voluntarily waive the performance fee. But their short term greed has stiffled this new technology. So rather than beat OTA with more choice, they allowed the free nature of OTA kill the potential of digital. They were so sure and over confident that they would get the same fee for OTA, and when it didn't happen, they screwed themselves, and now they know they made a mistake, and it's too late. But the CRB is a government agency, so no chance that it will "go out of business."
 
I'm really liking the "mic set up at Denny's" idea... put a seven second delay on the front of the feed, pay one guy to collect the fees at the Denny's (either give him a percentage of the take during his shift, and / or make Denny's pay for the publicity of you being there) & give him a "dump" button if somebody goes berserk.

You're commercial free, you're royalty-free, and you have one (minimum wage + tips?) staff member on the clock at any point in time.

...Would it be payola if singers slipped the employee money to get bumped up in line, or for better times? Hm-m-m!!! :D

Floundering AMs... are you listening??? Want a format to get back your under-35 audience? I think Bill's found your next format!

*scrambles to copyright this idea*
 
No cover songs... unlicensed music only...
 
OK, so it's unlicensed, but there are copyright issues to deal with. You'll need a blanket release form signed by each performer. Pretty standard, by the way.

So we have unfamiliar music performed by unknown artists. Kind of what Americana radio is. Keep in mind that using unlicensed music performed by amateur unsigned artists basically turns your radio station into American Idol auditions without editing. That can be entertaining for a bit, but can also be pretty painful after a while. Anyone who has ever been to musical tryouts knows you can only sit through so much of this before you want to scream. So it might be tough to build an entire station around this kind of thing.
 
It would be an interesting experiment to be sure, but I agree as with the popularity of American Idol or X-Factor, is based on contestants performing other artists songs for the most part. It would be really difficult to find enough tolerable independent local music to fill a two hour block on a regular basis. Big A is right unfortunately, listening to a 'train wreck' only can go so far.
 
The concept was pay for play. Don't need listeners, just wannabees with a Visa card. Vanity radio...
 
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