June 26 2008

Record Industry Prepares To Demand Money From Radio

Herb Tarlek of WKRP The record industry is making me slam my head into the wall again.

Our friends at the Recording Industry Association of America (RIAA), Society of Singers, Rhythm & Blues Foundation, Recording Academy and others make up a coalition named musicFIRST.  According to David Kravets at Wired, said coalition has decided that it is time that AM and FM radio stations stop getting a free-ride of playing music without compensation to the artists.

You see, for the past 80 years, radio stations have played all of the music you hear for free.  The musicFIRST has now determined this is the equivalent of piracy due to the fact that radio stations earn advertising revenue from the music.  The radio companies claim that it is not piracy due to their playing the music acts as a promotional tool for the recording industry.  Martin Machowsky, a spokesman for musicFirst, said, “Today we gifted them a can of herring, about their argument that they provide promotional value. We think that’s a red herring. Nobody listens to the radio for the commercials.”

This issues is due to be addressed by the United States House of Represnitives, and should it pass, the new law could cost the radio industry in the neighborhood of $7 billion dollars annually.  According to the National Association of Broadcasters (NAB), the AM-FM radio industry grosses $16 billion annually, so you are looking at nearly half of their annual revenue going to the recording industry.

If you hadn’t guessed, I’m against this.  Yes, the radio stations sell advertising and earn a revenue from the playing of the music, but it is no red herring that this is the single biggest promotional tool the recording industry has.  Why do you think bands focus so heavily on the songs they release as their singles?  They know those are what will be played on the airwaves and help sell their albums.

What gets under my skin is that the record industry obviously knows what a powerful promotional tool radio is due to the long history of “payola“.  For those unfamiliar with the term, this was a practice started in the 1950’s where DJs received bribes to play and promote certain songs by artists.  This practice was still well known to happen up through at least 2005, and I highly suspect that it still hasn’t disappeared completely.  If radio wasn’t such a useful entity to the record companies, why would they make these payouts to have certain songs played numerous times?

If radio stations are facing paying such enormous fees for the music, what makes the recording industry not think that stations won’t make tweaks to their format to lower the amount of music they play?  Changes to talk radio formats, playing of more music in the public domain, more remote broadcasts from paid sponsers, an increase in the number of ads verses number of songs played per hour and so on.

While small stations and public broadcast stations will pay a flat fee of $5,000 a year, this is still going to put a hurt on a lot of mid-sized stations.  They will either be faced with selling out to large conglomerates like Clear Channel Communications, or they will simply close their doors, lowering the number of promotional opportunities for an artist, and, in turn, lowering the amount of money the industry collects.

The system was not broken, and it certainly did not need fixing.  The recording industry can claim all day long this is about protecting the artists, but how have they survived for 80 years without this revenue stream? I don’t care how they try to disguise this, but it is just yet another move in the industries endless march of greed. They simply can not let any potential revenue stream set idle, they have to continue to milk every potential source of income they can, and damned the consquences.

This belongs in the pantheon of bad ideas, and all one can hope is that this will never make it out of committee in Congress, but there is every chance that it will.

For those who don’t know who Herb Tarlek is, he was the slimey station ad sales guy on WKRP in Cincinnati.

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