Radio, Radio: Good News & Bad News
March 5th, 2007 by jeff
The last few days have provided a pair of interesting decisions handed down by our federal government regarding the regulation of broadcast and internet radio. There’s some good news and some not so good news.
First, the bad news. On Friday, the US Copyright Royalty board announced new rates for internet webcasting of music. In essence, these are rates that webcasters must pay on a per-song basis for any commercially available recording. The rates were based on a proposal by the RIAA and, as you can imagine, are probably going to cost webcasters the ability to play commercial music at all.
Those fees will add up quickly for larger webcasters; the Radio and Internet Newsletter (RAIN) calculates that, assuming that the average station plays 16 songs per hour, sites would have to pay “about 1.28 cents” per listener per hour using the 2006 rate, and would owe this retroactively, in addition to licensing fees going forward. RAIN’s math indicates that the rate would render Internet radio unsustainable, or at the very least, more ad-laden than terrestrial radio — and that’s before the songwriters’ licenses are taken into account.
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The situation looks grim for webcasters large and small. Even tiny sites would owe the minimum of $500 per channel per year, which could also have implications for webcasters who provide customized radio stations, since the CRB does not define whether those would each constitute a “channel” (whatever that is). Webcasters have a 15-day period to ask the CRB to rehear arguments.
In essence, it is likely that webcasting as we know it is going to die thanks to the RIAA.
In slightly more positive news, the FCC today reached an agreement with the four major radio broadcasters in the US to settle disputes relating to payloa at radio stations. The agreement includes money to be paid by broadcasters but, more significantly, the inclusion of 8400 half-hour segments of free independent and/or local music on their stations.
Four major radio broadcast companies have tentatively agreed to pay the government $12.5 million and provide 8,400 half-hour segments of free airtime for independent record labels and local artists in separate agreements aimed at curbing the persistent practice known as “payola,” according to sources.
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The settlement between the government and the four broadcasters was reached at the same time as a separate deal designed to lead to more airtime for smaller record companies and their lesser-known artists as well as local musicians.
The American Association of Independent Music, a group of independent record labels, has received a commitment from the same four broadcasters for the free airtime, the officials said.
In addition to airplay, the broadcasters and the independent labels have also negotiated a set of “rules of engagement” that will guide how record company representatives and radio programmers interact.
The free airtime would be granted to companies not owned or controlled by one of the nation’s four dominant music labels — Sony BMG Music Entertainment, Warner Music Group, Universal Music Group and EMI Group.
Payola exists and will continue to exist. No one will stop the pay-for-play format because, as my father has always said, “Money talks and bullshit walks.” As long as there is one party involved that wants something and has the money to pay for it, there will be another party who will be more than happy to take it, particulary given the fact that the offers aren’t always money and those involved are often young risk takers.
Near as I can figure doing a quick internet search, the four broadcasters in question (Clear Channel, CBS, Entercom and Citadel) own between 1500 and 2000 music stations total. For the sake of simplicity, let’s air on the conservative side and say they own 1500 total. Now, 8400 half-hour segments of music means 4200 hours of programming per year. That’s 80 hours per week spread over 1500 stations.
Most stations provide some amount of community or non-profit programming every week as required by the FCC. I’ll give them the benefit of the doubt and say they provide 8 hours per week. That leaves each station with around 5800 hours of programming per year. That 8.76 million hours of programming per year on 1500 stations of which indies and local artists now get 4200 hours.
Granted, beggars can’t always be choosers, but for anyone who thought that this decision was going to mean Creed, Pussycat Dolls and Carrie Underwood might be get some air time cut in favor of local and independent artists, don’t hold your breath.
More likely, the stations will air these half-hour segments in the middle of the night or early mornings on weekends about the same time they run their required public service programming. No one listens to those either.
A few in the story have higher hopes:
Under the separate private agreement, the new “rules of engagement” are aimed at requiring equal access to radio music programmers for all record companies as well as transparency in their dealings, said Peter Gordon, who has been leading the negotiations on behalf of the independent music group.
Gordon is president of Thirsty Ear Recordings, an independent record label, and has been in the music business for 31 years.
“It’s absolutely the most historic agreement that the independent community has had with radio,” he said. “Without a doubt, nothing else comes close.”
Commissioner Jonathan Adelstein, himself an amateur musician, has been in the forefront of the payola fight and has been credited with working out the settlements. “I love music and I want radio to sound fresh, dynamic and real. But payola gets in the way of authenticity because money drives the music, not its quality,” he told The Associated Press.
Adelstein said the settlement has gotten the industry’s attention.
“Taking payola out of the system will lead to more interesting programming,” he added.
Gordon is likely right that this is the most significant decision of its kind in years. That still doesn’t mean it will have real or lasting change. And, with all due respect to the commish, how is this going to lead to more interesting programming? My math isn’t great, but 80 hours per week spread across 1500 stations is a little over 3 minutes per week - basically ONE SONG!
Now, the fact that they are on in 30-minute blocks does increase the impact somewhat. But, no major station is going to air a local or indie half-hour show in drive time or in prime radio time. At best, we could expect maybe an hour show on Friday’s playing local music and maybe an hour show on Sunday mornings or late Sunday night playing idie bands. In reality, all big radio is doing is giving us back what we had when they first took over.
I remember Made in Texas on and Lunar Rotation and other cool and interesting programming on broadcast radio stations in Houston. They played local music, interesting indie music and the DJ, generally, had control. But, those were just holdovers from the era when the DJ WAS the decision maker when it came to what was played on radio. That was just a throwback to the days when radio was relevant.
Today, with regional and even national programming directors telling local stations what they can and can’t play, the chances of independent artists getting a shot on commercial radio is nearly impossible. While this slap on the wrist may impact this slightly, it doesn’t fix anything.
The only way artists are truly impacted is when their music is played alongside established artists. It not only gives them a better shot at being heard because listeners are drawn in by the recognizable artist, but it provides the legitimacy that they belong with established music veterans. Segregating music out into little blocks just gives listeners the opportunity to change the channel to a station playing something they recognize. And since radio doesn’t want to lose listeners, they are going to do this when it least impacts their sales numbers.
The overall is still a negative for atists and for listeners interested in broadening their musical horizons. In other words, business as usual.
Inhibiting the growth of webcasting was the goal from the outset, with passage of the anti-webcasting provisions of the DMCA. The impossibly burdensome music use reporting requirements and now these grossly unreasonable compulsory license fees are part and parcel of the over all effort to put an end to webcasting.
The industry fears that webcasting will allow consumers to make unauthorized digital copies of recordings if they know — or are reasonably able to anticipate — when particular recordings will be streamed. Accordingly, in the U.S. by statute, and in Europe by contract, webcasters may not offer interactive programming by which consumers can request that particular recordings be transmitted; may not offer programming dedicated to particular artists, or even containing more than a few songs by the same artist or from the same recording; may not make prior announcements of the recordings they will stream; and may not offer archived programs shorter than five hours duration. This interference in the programming decisions of webcasters has no counterpart in the music industry’s relationship with non-digital program services. It diminishes webcasting unnecessarily, rendering it less compelling in many ways than ordinary broadcast radio.
The music industry’s treatment of webcasters exemplifies its approach to the licensing of digital audio services generally. By and large, rights holders are unwilling to offer licenses for digital uses of music that do not have an identifiable counterpart and associated business model in the analog world with which they are comfortably familiar. Audio service providers who wish to offer music in ways that do not comply with the stringent music use restrictions and business model limitations imposed on webcasters find it nearly impossible to obtain licenses for their services. When rights holders refuse to make licenses available, compliance is only possible by service providers who either forego the use of copyrighted music or cease doing business altogether. This choice among equally unappealing alternatives has fostered a culture in which many service providers consider it the better business practice to ask forgiveness from music rights holders for infringement rather than to seek permission from them in advance of launching a new service.
The problems lies with the music industry’s addiction to its traditional sales-based revenue model and the negative policy implications that has for consumers, technology firms, consumer electronics makers, and digital audio service providers of all types (not just webcasters). There can be no doubt but that public policy should support the opportunity of music industry rights holders to derive substantial revenue from their contributions to culture and to commerce. By the same token, however, the industry has no right to demand that public policy support its desire to do business in a particular way.
What’s really needed is an alternative to the music industry’s sales based revenue model.
I recently published a White Paper (available at bennettlincoff.com/fixing_what_is_badly_broken.pdf) in which I propose such an alternative. Mine is a comprehensive approach to rights licensing and rights management that does not depend on the efficacy of digital rights management (DRM) technology for its success. Specifically, I suggest that the rights of songwriters, music publishers, recording artists and record labels in their respective musical works and sound recordings should be aggregated so as to create a single right for digital transmissions of recorded music. The digital transmission right would be a new right, not an additional right. It would replace the parties’ existing reproduction, public performance and distribution rights (and, in those territories where it applies, the communication right).
Ownership of the digital transmission right in individual recordings would be held jointly by the songwriters, music publishers, recording artists and record labels who contribute to the recording. Each rights holder would have authority to grant non-exclusive licenses for digital transmissions of those recordings on any terms they and their licensees find to be mutually acceptable. The only limitation on this authority would be the obligation to account to co-owners pursuant to whatever arrangements they make among themselves for the division of royalties earned from this newly-established right.
The digital transmission right would be enforceable only against those directly involved in providing digital transmissions of recorded music. Accordingly, consumers would not incur any liability merely for surfing the web, accessing streaming media, or downloading music files. Neither would copying for personal use require authorization. Similarly, software developers, technology firms, consumer electronics makers, and telecommunications and Internet access providers, as such, would have no liability under the digital transmission right. On the other hand, service providers would need licenses if they operate web sites, social networking services, P2P file-sharing networks or the like that provide digital transmissions of recorded music.
Consumers would only need licenses if they act as service providers in their own right; that is, whenever they are responsible for the digital transmissions at issue. By way of example, consumers would need authorization if they operate music-enabled personal or hobby web sites; or if they upload music files to a web site or service that does not have its own license under the digital transmission right authorizing this activity by users of its service (known as a “through-to-the-user license”); or, if they offer recordings to others through participation in a P2P file-sharing network, or similar service, that does not have such a through-to-the-user license.
The right would be implemented through a combination of free market transactions between individual right holders and service providers and voluntary collective rights administration. The best results for all would flow from a marketplace in which collective licensing is the norm and direct licensing the exception. The division of ownership of rights that I suggest will tend to encourage rights owners to work together through collective licensing organizations. I also suggest solutions to the complementary issues of how to license transborder transmissions and on what basis to distribute royalties each from those transmissions. In my view, overall success for the music industry will depend on the presence in each territory of at least one collective organization whose catalogue encompasses all or nearly all recordings and which is authorized to grant worldwide rights at its local rates for all digital transmissions of recorded music that originate from its territory.
Through the digital transmission right implemented as I suggest in the White Paper, digital transmissions of recorded music could be made available from the largest number and widest array of licensed sources, anytime, anywhere, to anyone with network access. Consumers would be free to enjoy music when, where and how they themselves decide. Technology firms and consumer electronics makers would be free to offer greater interoperability between the many recording, playback and communications devices that are available, and to meet consumer demand for new products with next generation capabilities. And, in the aggregate, music industry rights holders would do at least as well financially under my proposal as they do now under the system that my proposal would replace.
Radiofire.net is an online radio station that is absolutely free. Bands can post their music and listeners can search by zip code to listen to their favorite artists for free. Check it out!
Radiofire
Maybe it’s time to start boycotting RIAA artists.
Maybe we need to boycott the RIAA. IT’s seems like anything that will help urban music they are against. When they should have been against personal CD recorders 15 years ago, they should have been in support of copy-protected CD introduced 6 years ago. The internety should be left alone. it’s just another form of monopoly!!!! It’s not like webcasting or the internet as a whole killed the industry, it was them fake ass A&R’s they were hiring, and them marketing reps that was embezzleing monies from the companies. not the growth of the indies.
Thanks for the comments, everyone. Boycotts always sound good in theory, but they rarely work in practice. How many times has a boycott of gasoline worked? The problem is that the industry is sustained by teenage girls, who don’t really care about the RIAA or political issues as a whole. If the song is cool and their friends like it, they are going to buy it.
If we really want to see change, it has to happen via economics and, frankly, I think it already is. Commercial radio sales have dropped dramatically over the last 10 years. The major labels, once 7 back in the 80’s, are down to 4 and all of them are losing money. DRM’s are under attack even by the very people (Apple) who have to provide them. As quickly as the RIAA can sue someone, another 1000 people download.
I think that the RIAA and major broadcast radio are on the way out. The problem will be with who will fill that void. Right now, indie artists struggle to find outlets to help pay to feed themselves. As one very well-respected Brazilian percussion player once told me: Art don’t pay the rent. As much as we musicians want to play for ourselves, we also need to provide for our families and, if we can’t do that, as much as we hate it, we’ll choose other careers and music will become a hobby.
More than trying to kill the RIAA, we need to figure out what (or who) will take its place and try to make sure that isn’t more of the same.
>>Boycotts always sound good in theory, but they rarely work in practice.
Oops! Meant to agree that resistance is futile in this case.
And to think that I was considering bringing back my humble Live365 station. So much for that.
Since the advent of internet radio, and primarily due to one station in particular, I have purchased hundreds of CDs. I have purchased MORE CDs (albums) in the past 5 years than I have in the prior 35 years all due to finding great music that is not or would not be played on the commercial FM radio. The RIAA is hurting themselves. I believe that the people recording their music from internet broadcasts will just go underground to obtain it. These new licensing fees are nothing more that pure unadulterated greed. Fuck (can I say that here and not have this post censored?) the FCC, the US Copyright Royalty board and the evil RIAA.