Will new music performance royalties put the final nail in HD radio's coffin?

[vsa]

The Senate Judiciary Committee hearing (11/13/07) on "Exploring the Scope of Public Performance Rights" saw both sides of the debate on the additional royalty for radio speak before lawmakers. More from FMQB:

http://www.fmqb.com/Article.asp?id=512299

If/when enacted, why would broadcasters bother keeping their money-bleeding HD-2 and HD-3 music juke-box stations on the air?

 

[R.F. Burns]

The Senate Judiciary Committee hearing (11/13/07) on "Exploring the Scope of Public Performance Rights" saw both sides of the debate on the additional royalty for radio speak before lawmakers. More from FMQB:

http://www.fmqb.com/Article.asp?id=512299

If/when enacted, why would broadcasters bother keeping their money-bleeding HD-2 and HD-3 music juke-box stations on the air?

How about both satellite broadcasters who rely more upon music than traditional broadcaster or webcasters. The BC industry is more st to absorb the costs than its competition.

 

[davideduardo]

If/when enacted, why would broadcasters bother keeping their money-bleeding HD-2 and HD-3 music juke-box stations on the air?

Any royalties are based on revenue. If there is no revenue, then there are no royalties... even ASCAP and BMI charge a very low base fee for stations with no billing.

 

[Radioman100]

Re: Will new music performance royalties put the final nail in HD radio's coffin

Oooh! Such a dramatic sounding thread title!

The short answer is no. No more than SoundExchange has killed terrestrial radio's streaming efforts.

 

[vsa]

If/when enacted, why would broadcasters bother keeping their money-bleeding HD-2 and HD-3 music juke-box stations on the air?

Any royalties are based on revenue. If there is no revenue, then there are no royalties... even ASCAP and BMI charge a very low base fee for stations with no billing.

Very true if things are done the ASCAP/BMI/SESAC way. However, if any new law allows "per play" or "per play times AQH audience" royalties, as with Internet streaming, that's a very different matter.

 

[vsa]

Re: Will new music performance royalties put the final nail in HD radio's coffin

Oooh! Such a dramatic sounding thread title!

The short answer is no. No more than SoundExchange has killed terrestrial radio's streaming efforts.

A performance royalty is the LAST thing radio needs at this time.

 

[Radioman100]

Re: Will new music performance royalties put the final nail in HD radio's coffin

A performance royalty is the LAST thing radio needs at this time.

Oh, I totally agree with you there, though the impact on radio wouldn't be all that significant really. If the recording industry actually succeeds in getting a performance royalty for radio, it will likely be end of the recording industry as we know it.

I can totally see radio as an industry boycotting new music airplay of any and all major label artists. They're hurting now, but without radio promoting their new music, they'll be gone. Bring on the indies and the acts that have chosen to work without a label like Madonna and Radiohead.

Think they can survive without radio? Ask the Dixie Chicks how that worked out for them. Sure, there were other forces at work there, but the near total blackout on airplay imposed by country radio wiped them off the map.

Think radio doesn't sell records? Think again. Taylor Swift is a country artist that's had an album on the Billboard country album chart for 54 weeks. That record should be in serious decline at this point as far as album sales go, having spawned just two country hits quite a while ago, but guess what? It's Billboard's "Greatest Gainer" this week. Why? CHR radio discovered her song "Teardrops On My Guitar" and over the past few weeks, it's gained a lot of airplay on CHR stations. It's getting spins on a little less than half of the Mediabase CHR panel stations.

And Taylor's label is selling many more copies of a record that should be just about done.

The pivotal moment for this song came when a certain major market CHR started playing the record. That started the avalanche.

Would you believe an HD2 CHR in that same market started playing the record exactly two weeks earlier? LONG before Taylor's label started pushing the song to CHR radio. I'm betting one of two things happened. Either the PD of the CHR across the street was listening to the HD2, or his listeners were and the record started getting phones.

 

[vsa]

Re: Will new music performance royalties put the final nail in HD radio's coffin

A performance royalty is the LAST thing radio needs at this time.

Oh, I totally agree with you there, though the impact on radio wouldn't be all that significant really.  If the recording industry actually succeeds in getting a performance royalty for radio, it will likely be end of the recording industry as we know it...

In a pre-Christmas surprise that most broadcasters could do without, identical bills were introduced in Congress on Tuesday (12/18/2007) proposing to impose a performance royalty on the use of sound recordings by terrestrial radio stations (AM/FM/HD).

http://textpattern.kurthanson.com/articles/136/broadcast-performance-royalty-bill-announced

 

[Radioman100]

Re: Will new music performance royalties put the final nail in HD radio's coffin

If it actually makes it through, you can stick a fork in the recording industry as we've known it. They're done.

I wonder how many artists starving for airplay will gladly sign with Clear Channel Records? Maybe it's time for a new CBS Records label?

 

[R.F. Burns]

Does any of this remind you of ASAP & BMI? BMI was createx in response to the people at Ascap

http://www.events-in-music.com/ascap-vs-bmi-vs-sesac.html


If this is true, this decision by the RIAA, sounds like a desperation move by an industry who are trying to shake down those who have brought wealth to their pockets. I still believe the RIAA has more to lose in all this than broadcasters. This kind of move isn't anything new. Maybe this is what broadcasting needs to reinvent itself. Its happened before. I'm waiting for the RIAA to try to charge I-Pod users every time we play a song recorded on our I-Pods.

 

[Savage]

Wouldn't y'all like to sit down with the guy who negotiated that deal with the music publishers three generations ago, whereunder the radio industry has gotten to write a check annually for the privilege of making Frank Sinatra, Elvis and the Beatles worldwide superstars?

Yep. Radio PAID. Not the other way around.

I know all the history with the AFM "Petrillo" recording strike and the prohibition on broadcast of 'phonograph records' in the 1930s but you've got to admit that history always sounds the echoes of irony.

 

[R.F. Burns]

No Bob, you are a station owner and you are in a much better position than any of us concerning this issue. I realize that you aren't running a music station, but, if this comes to pass, does this sound like desperation on the part of the recording industry. I realize my question is not fairly posed, but I'm sure you can read through my editorializing.

 

[Savage]

Oh, absolutely, RF - no question that the recording industry is in a class by itself when it comes to cluelessness and myopia. The record companies and theeir music royalty tribunal allies represented by BMI and ASCAP continue to live in the era when consumers bought vinyl LPs because those "records" contained some quantity of hit singles, which released individually and promoted via radio airplay, established arists and songs.

That model is at least ten years out of date. But the recording/music industry people keep looking backwards. Consumers of contemporary music are now only interested in unrestricted choice and instant online access to music and video. Instead of catering to new tastes and coming up with successful ways to market to young consumers and work with the radio industry, the music industry tries to punish those parties because we won't conform to their outmoded expectations.

Think about it: can you think of a single other American industry which engages in regularly, systematically, SUING ITS OWN CUSTOMERS IN FEDERAL COURT for consuming its product? The spectacle of the RIAA dragging college kids off to court for downloading songs is too preposterous for comment.

I agree with Radioman. If performance royalties are imposed on radio, the music industry will rue the day. Record companies, take note: the concept of "nobody is irreplaceable" also applies to you.

 

[R.F. Burns]

It makes me wonder how public libraries have existed all these years. The way I see the RIAA issue can be equated to Wall Street. Company A earns a profit but it isn't quite the profit projected by Wall Street and so stock prices (company worth) falls. The recording industry made record profits during the 80's, 90's and part of this decade due in no small part to the reissuing of back stock on the new CD format. It cost companies little money to produce these new packages, relative to the cost of a new recording and there was a treasure trove of seamingly endless material to reselll to the public. After 20 or more years of reselling old material, in some cases many times through the use of remastering and including additional bonus cuts in the final CD, the well has basically run dry. The record companies would love to do this again, this time by selling the music in the form of zeros and ones over your home PC and in their quest they are even attempting to make the transfering of your own CD to another format an illegal act. Its greed and lack of inovation which is killing the recording industry. Most of us grew up with single 78's and 45's. When CD's became the norm, the industry basically killed the single release. If you wanted that new song you paid $10 to $20 or you had to do without. Sure there were a relatively few CD singles produced but most cost $5 or more and hardly 50% of hit singles were made available in single format and so people found other ways to get those singles. Napster, the original download site was created as a form of world wide music library. The shortfall which these download sites suffer from was that there was no built in time limit or expiration date to the music that could be downloaded and that is one diffreence betwen a typical library and these download services. Still, it comes down to greed and the lack of enough new product which has hurt the recording industry. What is needed is a new Rock & Roll, but what that is at least at this time, nobody knows.

 

[Savage]

Amen to that. But there's more, and a lesson which the music industry refuses to learn from home video.

When home VCRs debuted in the mid-1970s with Sony's Betamax, Hollywood went spastic with paranoia. It's the end of the world as we know it! Rampant piracy will drive the movie studios out of business! Movie theaters will be demolished by the scores across the country as they go broke! And so forth.

In what has proven to be one of the greatest ironies in media history, the Walt Disney Company, of all people, sued Sony in the 9th US Circuit to block the sales of any home video device capable of recording - and actually won a restraining order. That's right, Disney actually succeeded in temporarily stopping a technology which has ultimately proven to be the biggest growth vehicle in the company's history.

Of course once Disney dropped the fear and loathing of any technology which didn't include 35mm motion picture film with sprocket holes exhibited to congregate masses of people in central auditoriums at predetermined times, and instead allowed folks to see Cinderella and Peter Pan whenever they wanted on big-screen home theaters, their annual revenues tripled. Former-obstructor Disney has proven to be one of the most astute marketers in selling home video, including direct-to-video releases and the use of scarcity of heritage titles like Alice In Wonderland, Lady & The Tramp etc. which are periodically re-released in enhanced DVD versions for very limited times.

Did the recording industry learn from this? (Of course not.) Their solution for responding to challenges of new technology: let's turn our customers into victims by dragging them to court for enjoying our products. It's like getting a call from the GM dealer, warning you that since you didn't buy the mandatory options package with your new pickup, the law's coming over to cuff you and put you in the back of a cruiser.

In the "genie's-out-of-the-bottle" department: instead of punishing music buyers and radio for not complying with the music industry's creaky business models, record companies should be finding sensible ways to market their product - profitably - in harmony with customer preferences. And, of course, treating radio broadcasters who have propelled record sales for three generations now, as valued business partners for mutual benefit instead of like villains.

Once a successful technology launches, it's futile to try to stop it. And hundreds of years of jurisprudence have shown that legal measures like actual and threatened lawsuits are very poor remedies for protection of intellectual property.

 

[Chuck]

Once a successful technology launches, it's futile to try to stop it. And hundreds of years of jurisprudence have shown that legal measures like actual and threatened lawsuits are very poor remedies for protection of intellectual property.

What is even more interesting, Disney, manages to sell their products at a premium price. Even at Wal-Mart where most recent movie releases are about $15-17 each, Disney releases sell for about $24.95. I've never seen any of their products in the $9.99 or $5.99 bargain bins.

It isn't hard to find out about the actual cost of producing Disney films, since they encourage public investment in them through their "Silver Screen Partnerships." For the most part their films don't cost any more to produce than any other quality film, but they manage to sell them at a premium. That sounds like smart business to me. The only thing that amazes is they didn't get the message of working with new technologies a bit sooner. They left money on the table by getting into a legal battle over the Betamax.

Record companies should take note. You can learn a lot from the previous mistakes of others. History does repeat itself.