I find it truly mind boggling how far some will go to get someone else (the government) to pull their collective butts out of trouble. A perfect example is the "Performance Rights Act" being considered in the House of Representatives.
The RIAA (Recording Industry Association of America) is pushing hard to get radio stations in the U.S. to pay a royalty for every song they play. This is the same group that has sued average people for thousands of dollars for file sharing and downloading music. On the face of it, the Performance Royalty Act seems to be only fair...after all, radio stations make money by attracting listeners who like the music they play. Why shouldn’t radio be required to pay a royalty to play an artists song?
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Let me disclose that I’ve been in the radio business for 34 years, as a disc jockey, program director, and production director. So, I’ll admit that I’m a little biased here.
But, let’s look at a bit of reality. Every time a radio station plays a song, it’s like a 3 or 4 minute commercial for that artist’s music. For many years, radio and the record industry have had a symbiotic relationship. Even today, the record companies actively court radio stations to play their music. They want radio to play their songs...because then the public hears the songs, and if a song turns out to be popular, the public goes out and buys the music. Therefore, the record companies make money off sales, the artist makes money off the sales, as well as packing concert venues across America when they go on tour, and the radio stations make money by selling advertising on their broadcast signals. The more popular the radio station, the more they can charge for advertising.
If radio does not play the latest Toby Keith or Coldplay or Kelly Clarkson song, the obvious result is that the listening public doesn’t hear the song and therefore doesn’t go out and buy the cd’s.
So, why would the RIAA want a performance Royalty Act passed into law? It’s pretty simple, actually. The recording industry has been sitting on its collective ass when the rest of the world has moved into the 21st century. CD sales are down. The record companies aren’t making as much money as they used to. People are getting their music online, through I-tunes and other sources. What people are not doing to the satisfaction of the record companies is going to the local CD stores and buying music as much as they used to. But the record industry can’t seem to get off their asses and embrace the latest technology. Instead, they want congress to pass a law requiring radio stations to pay royalties.
As a matter of fact, all music radio stations already pay BMI dues. BMI is Broadcast Music Incorporated, and it was established over 60 years ago to insure that songwriters, composers and publishers get compensated for the use of their work. The money collected by BMI goes directly to the songwriter, composer or publisher. It does not go to the record companies.
Under the Performance Rights Act, guess where the money’s gonna go?
So basically, the recording industry wants to have the radio industry pay for their shitty business model. Typical. Why make changes in the way you do business if you can find a way for someone else to pay?
Unfortunately, here’s what will probably be the end result if the Performance Royalty Act passes congress.
First, from "Inside Radio" a radio industry publication:
"Radio industry revenues broadly appear to be pacing down in excess of 20% through January," reports Moody’s Investors Service. Several market managers say they’ve seen little change in February and March pacings. "It’s tough out there," the head of a Midwest group tells Inside Radio. Declining revenues have not only led to layoffs and budget cuts, but could also put pressure on a company’s financial structure. Another mid-market CEO says, "If revenues stay down 30% or more, nobody can sustain that for the year and not break a covenant." Several public companies may run into covenant troubles with their bank, but the list will likely grow significantly longer if radio continues seeing steep revenue declines as it’s currently facing.
In January, Clear Channel Communications fired nearly 2000 employees nationwide. Just about every other broadcast ownership group has had to make similar cuts. I doubt there is a single broadcast group out there that is even close to making budget. So if the RIAA thinks radio is going to start paying to play songs when revenues across the board are pacing down 20 percent or more, they’re clearly out of their little minds. The most likely result is that a huge number of music radio stations, maybe even most, will change format to all talk or all sports or something along those lines. They will most likely fire more employees, and possible even shut off the transmitters of lower performing stations. This in turn will cut way back on the artists being played on the radio, which will lower CD sales even more, which will hit the recording companies and their artists even harder!
This is corporate ignorance at its mind boggling worst. We’ve seen how Wall Street and the banking industry have mismanaged themselves into crisis. On a smaller scale, we’re watching the recording industry do the same thing. And they’re going to bring down the radio business as we know it along with them.
And the funny thing is, as far as I can tell, a lot of the artists themselves (not all, but a bunch) actually appreciate what radio does for them and understand how much their success relies on radio. The Grammys were on tv the other night. Does anyone think that young artists like the Jonas Brothers or Miley Cyrus want top 40 radio stations to stop playing their music? Miley’s dad, Billy Ray Cyrus, would have been just another singer if it wasn’t for Country radio.
Most sensible business people would see that the world has changed, and they need to change with it. For the recording industry, coming up with a new business model that included the latest technology would seem the thing to do.
Instead, they’re going to cut off their nose to spite their face.