WTJU and the World Wide Web

For me, one of the takeaways from the recent Public Radio Development and Marketing Conference was the increasing importance of the online audience. Granted, we're still at the "analog dollars/digital pennies" stage, but as the Jacobs Media Study shows, online audiences are growing.

And that's great news for WTJU, the station I volunteer for. Charlottesville, Virginia's blessed with a disproportional number of non-commercial radio stations. There's the powerhouse, WVTF (based in Roanoke) with the traditional NPR news/classical music mix. To a lesser extent, there's also WMRA (from Harrisonburg), with syndicated NPR news/talk. WNRN provides alternative rock, and other musical genres that appeal to the student population and the AAA public radio listener.

WTJU delivers a unique blend of several different formats. Although some of our programming is similar to that offered by the other stations, in my opinion WTJU provides richer, deeper content. Serious listeners can appreciate the difference -- and that's why I'm excited about growing our online audience.

WNRN maintains a tightly controlled playlist that leans toward the more popular and accessible artists of the genres they play. It's a successful strategy -- they've built a large audience over the years. But what about the artists that have something to say but aren't so mainstream? WTJU.

WVTF and WMRA air classical music, but it's designed for easy listening. Soothing melodies, excerpted movements, mainly classical and romantic composers (ca. 1730-1890), etc. It's not uncommon programming for public radio stations, and again, it works. Both stations have an audience. But what if you want to hear music of the renaissance, or something by a living composer, or a Maria Callas aria? WTJU.

And the same's true for jazz, and folk, and even world music.

Are there enough listeners within the WTJU coverage area to support this kind of in-depth eclectic programming? I think so, but it's a finite number. There's only so many people that can live within our listening area, and it's not likely the FCC will let us expand our signal.

But that's not true online. Through the Internet we could potentially reach every single person in the world who's passionate about Milt Jackson, or the Dixie Beeliners, or Steve Reich. And the early signs show we're making a start.

When I'm on the air, I send out updates about my program, always using http://cli.gs/WTJU as the URL for the audio stream. Cli.gs is a service that allows the creation of short, trackable redirects, so I'm able to see who's clicking on the link and from where.

The past two shows have brought in about 100 online listeners (we can currently accommodate 60 at a time). Most are from the U.S., but I've also had online listeners from Canada, France, Belgium, Sweden, Slovinia, and -- just this week -- Japan.

Online is where listeners (even local ones) are moving to, and it's where we have the best chance to grow. Because 200 stations streaming "Morning Edition" sort of cancel each other out (especially when the listener can access it directly from NPR). But a station streaming programming heard no where else? That's really where it's at.

Can't wait to see next week's stats!

- Ralph

Day 98 of the WJMA Podwatch.

Radio stations reap the wind

Robert Conrad of WCLV is leading the charge to get the government to not enact the “Performance Rights Act” H.R 848, which would require terrestrial broadcasters to pay additional money for the music they air. Here’s his plea:

WCLV needs your help. And we need it now.
I’m Robert Conrad, president of WCLV. The House Judiciary Committee recently held hearings on the newly reintroduced “Performance Rights Act” (H.R. 848), otherwise known as the “Performance Tax”. If enacted, the bill would require WCLV and other broadcasters to pay a royalty for all the recorded music we play on the radio. This money would go the record companies, most of whom are foreign owned. This would be in addition to the royalty payments we already pay to composers and publishers and to record companies for the right to broadcast our music on the Internet. The financial impact of this performance tax could be financially devastating at a time when the advertising that supports WCLV and its classical music programming is at an all time low due to the recession.
We ask you to write your representative in support of an opposing resolution, the “Local Radio Freedom Act” (HCR 49), was introduced recently. You’ll find a sample letter on our website. Click on the banner on the home page or on the links on every page at wclv.com. Help WCLV and other broadcasters. Express your support of the Local Radio Freedom Act. And please - do it today. Thank you.

I have a great deal of respect for Mr. Conrad. He’s accurately called many trends in the broadcasting and has made WCLV the strong station it is today. In this case, though, he’s having to pay for the incompetence of others, and I’m not sure it’s a battle he can win.

A little background. When the idea of charging radio stations for the music they used first came about, there was (naturally) resistance from the broadcasters. Most stations had their own house orchestras, or featured a lot of live music (this was the 1920's), and so the primary rights issues were with the composers. ASCAP (the American Society of Composers and Publishers) was formed to collectively negotiate fees and collect royalties from various performing venues. They determined that radio stations constituted a public performance and demanded their fees.

When ASCAP double their fees in the 1940's broadcasters responded by allowing their orchestras to only play public domain works (that’s why we have Glen Miller’s big band arrangement of “Little Brown Jug”). They then created their own composer’s organization, BMI (Broadcast Music, Incorporated) to offer much more favorable rates to the stations.

In time, everyone came to terms, and things were fine. When broadcasters started using recordings rather than live musicians in the 1950's, though, the question of paying the record labels for the use of the material came up. Eventually, it was agreed that the publicity radio play – and resulting record sales – far outweighed any fee the labels might collect, and so artist fees never got off the ground.

In the 21^st Century, things got ugly. When satellite radio started negotiating fees, in 2004, the record labels weighed in again. It was a new media and the old rules didn’t apply, they argued. They wanted XM and SIRIUS to pay artist fees along with the ASCAP/BMI royalties. And terrestrial radio stations sat on the sidelines and egged the labels on.

Broadcasters were terrified of satellite radio and were hoping that these additional fees would help kill the fledgling industry. There were some NAB members – like NPR – that tried to get their colleagues to see that this was a dangerous precedent to set, but no dice.

In 2007 when Internet radio stations had to negotiate their fees with the SoundExchange (founded by the RIAA), they too had to pay artist as well as publishing royalties. Again, NPR and a few others tried to get the NAB to weigh in, but to no avail. Terrestrial radio stations, for the most part, didn’t stream and wanted these upstart Internet radio stations to be driven out of business by these fees that they didn’t have to pay.

In the end, artist royalties were levied with very little effort. And the primary reason was because satellite radio was already paying these fees. The precedent had been set.

And now the spotlight’s turned to terrestrial broadcasters. If every other broadcaster has to pay artist fees, why not them? And it’s now being argued that over-the-air radio is no longer the place where new music’s discovered – the Internet’s taken that role over. So if the publicity value isn’t there anymore, why should terrestrial radio be the exception?

Why, indeed? This isn’t something that’s come out of the blue. Digital broadcasters have been fighting this battle for the past five years, with terrestrial radio rooting for the other side. And now it's their turn. It's unfortunate that stations like WCLV are getting caught in the crossfire, but I think we’re just seeing an industry reaping what it’s sown.

- Ralph

Pandora and the 70% Solution

Josh Tucker asked about my initial letter to Eric Cantor (R-Va) concerning the Internet Radio Equality Act, and I’m sorry to say I can’t find the original text. This time around, though, I’ll share the letter right here so I can’t lose it.

And, as a special added bonus, I’ll hold off sending it until the end of next week in case anyone has any additions or corrections (just leave a note in the comments field).

With minor alterations, this letter will be going to my senators as well. I'll change the name of the bill from H.R.2060 to S. 1353 and other little things. While I’m at it, I might just write the folks that are holding these bills in committee and see if we can’t get a move on here.

Dear Representative Cantor:

I had recently written you asking for your support of H.R. 2060, the Internet Radio Equity Act. I understand that the resolution is still in committee, and I’m hoping you will do what you can to get it to the floor. Since our last correspondence, Tim Westerberg, the president of Pandora.com, has announced the company is about ready to close its doors. They will try to stay in business until Congress acts, but if there appears to be no serious effort, then they will stop broadcasting.

Why? Because the royalty rates SoundExchange requested and the Copyright Royalty Board approved without amendment take 70% of Pandora’s income. Now this is not unexpected.

Netcasters gave detailed testimony last year demonstrating that the new rates would have these results – it was simple math, and so far it’s been pretty darned accurate. Many small webcasters have already gone out of business. Pandora will be the first of the majors to fold, but most likely not the last.

There seemed to be a little bit of confusion in your kind response to my letter, so let me be as clear as possible about some points.

1) Everyone agrees that artists and copyright holders must be compensated for their work. And everyone agrees that there should be an increase over the previous rate to keep pace with the cost of living. What’s at issue is the 1200% jump in that rate.

2) No one’s asking for an industry bail-out. Passing the act will simply reduce the rates to a realistic level, and make them scalable. As a webcaster’s income increases, so will royalty payments.

3) The current system only harms the U.S. While American Internet broadcasters will be shut down by these rates, foreign netcasters will simply pick up the slack. Any advertising income that could have been generated by net radio will happen overseas. This industry will continue to grow outside of the United States and other countries will reap the benefits of it.

4) While the SoundExchange has represented themselves as advocates for the artists, their actions don’t support that claim. Their unrealistically high rates have already killed several sources of income. Forcing the large netcasters out of business will simply hasten the decline. It’s like a realtor who prices a client’s house several times higher than the market value. If they can get somebody to buy it, it’s great for the seller. But if it remains unsold, is the realtor’s actions really in the best interest of the client (who sees no money rather than some)?

The Copyright Board didn’t do their job and find a solution that was equitable to both parties. I’m afraid it’s time for the government to step in and do so.

Please vote for the passage of this bill when it comes before you.

Best Regards,

Ralph Graves
President, Digital Chips, Inc.

[I figure sending this on company stationary and using my officious official title might get Rep. Cantor's attention.]

Maybe now that McCain's selected his VP (Cantor was in the running, you know), we can get back to business here.

Thinking Outside of Pandora's Box

As the discussion about the eminent demise of Pandora and other webcasters continue, there's an underlying assumption that no one's articulating. Everyone seems to assume that the major labels have a lock on the music. And they do -- kind of. The RIAA has prevented podcasters from using major label tracks, and the SoundExchange is charging webcasters outrageous fees because, well, because they can.

Podcasters have already figured out that there are plenty of great artists not associated with major labels -- or any labels at all. Webcasters still haven't gotten the concept yet. And a lot of listeners haven't made the leap yet either.

There's a lot of independent artists making music as good -- if not better -- than anything being put out by the majors.

How much is out there? Here's a small sampling. BBC Radio One recently showcased under-18 bands -- that is, all the musicians were under eighteen years of age. Here's an excerpt of Huw Stephens, host of Radio One's Introducing program giving quick overviews of ten bands being considered for a slot at an Underage Festival.

Excerpt One features excerpts from Off Limits, OCD, Unicorn Kid. Prems, Mandygams, The Zimmermans

Excerpt Two has samples from the Liddy Berlins, Vanilla Kick, Spiked, Monday Street, Tristan and the Troubadors, 10,000 Flushes, The Naturals


You just heard ten great unsigned acts -- acts who are happy to let their music being used online. Now carry this forward for a minute. These are the best underage independent bands in the UK. That's just a small subset of the independent music scene in England. And that's a small part of the European music scene. And there are plenty of equally creative musicians in the Middle East, in Africa, in Asia -- and of course North and South America.


Why are we wringing our hands over the inaccessibility of the Top 40 when there's 40,000 (or perhaps 400,000 or even 4 million) other songs of equal quality readily available?

I don't know either.

- Ralph

Day 72 of the WJMA Web Watch.

Reppin' the House

Yesterday I posted about a new bill introduced in the House and Senate designed to bring royalty fees for Internet radio down to a more reasonable level.

I'll show how I use Open Congress to make sure my elected officials know how I feel about this issue -- and what I expect them to do about. Now these posts aren't really about H.R. 2060 and S.1353. I'm just using them -- and my own representative and congressmen -- to provide a real-world example of e-democracy in action.

You can use these same tools to research the bills most relevent to you, discover where your representatives stand, and help you decide what you'd like to communicate to said officials.

OK, here we go. I'm starting with H.R.2060, and my representative, Eric Cantor (R-Va). The bill has three Virginian representatives listed as co-sponsors: Rick Boucher (D), James Moran (D), and Frank Wolf (R). Cantor's name isn't on the list. Hmmm. I'll have to mention that in my email to him.

Sometimes I wish Boucher was my representative. He's on the Telecommunications and Internet subcommittee, and he really seems to understand the Internet. He's a sponsor of bills such as the Community Broadband Act (H.R.3281), and has been pushing for equitable royalty rates since 2002. Oh, well.

I'm hoping that Cantor isn't sitting this one out because of partisan politics. But I've been hard-pressed to find any bills that he and Boucher have voted together on.

Cantor hasn't sponsored quite as many bills as Boucher. His most recent bills have been concerned with business. H.R.5169 wants to reduce the maximum taxes on corporations (hmmm - who benefits from that?), and H.R.4995, the "Middle Class Jobs Protection Act." And that act? Decrease the maximum on corporate tax and increase depreciation allowances.

Okay, pretty much Republican party line legislation -- cut taxes, grow business. So that's how I'll present my case to Representative Cantor. H.R.2060 is looking to grow business by cutting royalty rates (a stand-in for taxes here).

Thanks to Open Congress, I've got a pretty good idea of what my representative is doing, and what's important to him. Like the Liberty Bill Act (H.R.4856) which would require the Preamble to the Constitution be put on the back of U.S. currency. (Um, don't we have better things to do with our legislative time?)

I'm looking forward to his response to my e-mail.

- Ralph

Internet Radio Returns

Long-time readers of this blog know that I've been vocal in my support of Internet radio. For those who came in late, the Copyright Royalty Board who sets the royalty rates for webcasters enacted a ruinous rate hike this past year. In a nutshell, the Board only listened to one side -- the SoundExchange (ostensively representing the artists -- but still very much a creature of the RIAA that created it). The Copyright Board steadfastly ignored the testimony -- and, more importantly, the math -- of the webcasters (including NPR) that explained that a royalty rate that could take up to 150% of a company's income might not be a viable business model.

And that's pretty much where things have been since January, with the SoundExchange having the power to shut down the majority of netcasters by just calling in their tab.

But this past week a bill was introduced in both the House and the Senate to change all that. S.1353 and H.R.2060 move to overturn the ruling of the Copyright Board and institute a more equitable rate -- basically about 7.5% of a netcaster's income.

This is higher than the previous rate, (and everyone agreed the rate needed to go up), but at least, this is reasonable. If a web caster's only bringing in around $12,000, then artists will get $900. But if they're making $1.2 million, then the artists make $90,000.

Now that works much better than the current bone-headed rate. Because right now a webcaster that makes $12,000 could be on the hook for $18,000 -- which means they'll very soon be out of business and the artist gets zero. And the netcast never grows to the $1.2 million level, and the artists trade $90,000 for zero.

So this budding industry still has a chance -- depending on this legislation and the support it receives.

Time for a little democracy in action, I think. Next post I'll show you how I'm putting Open Congress to work on this.

- Ralph

...and who's going to listen?

Last post I offered up some ways podcasters are trying to monetize their work. There's lots of ways to do it (be sure to check the comments for that post, Sean Tubbs of the Charlottesville Podcasting Network shares his strategies).

Most of the ways discussed are scalable: the more traffic a site has, the more income it generates. So how do you generate traffic and raise your site's profile?

The best way is to have really compelling content. That's what happened with Mignon Fogerty, better known as "Grammar Girl." She combined a down-to-earth approach to grammar with a well-written concise script and a sense of fun. Within six months, her podcast had been downloaded over 1.3 million times. Fogerty's grown her podcast into a franchise, and it's become her full-time job.

Grammar Girl grew primarily by word-of-mouth. The program answered a real need, and the rest is history.

Regardless of content, the growth of any website pretty much relies on kindness of strangers. There are several ways to get the word out, but its up to the folks who come to your site (and are excited by the content) to share their discovery with others and build critical mass.

If you're already a celebrity (even in a highly specialized field), then you have an advantage. Leo Laporte was already a recognized tech authority, as well as a radio and television personality when he started "This Week in Tech" podcast. He continues to be heard on the radio, and appears on television as well. This, plus his appearances on panels at tech conferences and other events keeps his profile high, and helps bring traffic to his site.

Of course, if TWIT wasn't such a great program, no one would stay subscribed, but it -- along with the other programs built around it -- sustain a healthly audience. And LaPorte now enjoys advertising from major corporations.

Another really effective way to spread the word is to be sociable. That's what Web 2.0 is all about.

The more you link to other sites, the more sites link to you, sending potential readers back and forth across the web. Social media sites can also help. It's almost a requirement for an up-and-coming band that they have a MySpace page (that's why I'm working on one for DCDRecords). And there's FaceBook, Twittr, Flickr, and many, many more. All designed to share who you are and what you're about, and all designed to help like-minded individuals find each other. Or in this case, linking niche businesses with potential customers/audiences.

Most of these resources are free, but they do come at a cost -- time. Right now, in addition to this blog, I maintain a corporate blog for DCD Records, produce a twice-monthly podcast for the label, and manage two websites (one for DCD, the other for its parent company). While none of it takes a great deal of time, it can represent a significant part of a 40-hour workweek if I let it.

There are still many social networking sites I haven't even signed onto yet -- but I won't. It's possible to spend all my time blogging, and posting, and never get a lick of work done.

Even with just the little bit I have done, though, I've seen a significant growth in webtraffic, and in our business' income as well. Where possible, I've provided readers opportunities to share my posts on Digg.com and other social news sites.

Finally, going offline can help traffic online. Just as a radio station promotes itself with billboards, bumper stickers and print ads, generating news and taking out ads in other forms of media can help a website. It works, because you get your message before folks who otherwise wouldn't be aware of you.

Many newspapers ran the story of Grammar Girl's success -- which helped further fuel that success. Leo Laporte regularly appears on radio and TV -- which helps attract people to his site. Cross-promotion in other media can be very effective, if you have the resources and connections to take advantage of it.

Any other suggestions? I'd love to know how everyone else manages this trick!

- Ralph

The RIAA and the Sam's Club Weenie

When the RIAA trots out figures showing how much money they've lost to illegal downloads, there's an unspoken assumption folded into those figures that make them far bigger than they should be.

It's the driving force behind the RIAA's war on consumers that's hauling computer-ignorant grandmas and even dead people into court as vicious intellectual pirates. It's behind Universal's one dollar tariff on every Zune player Microsoft sells, and the current efforts of the SoundExchange to hobble webcasters. It's the reason why record companies continue to force copy protection on consumers that do little more than punish legitimate customers.

And it's an assumption Sam's Club never makes.

The assumption: Every free sample represents another lost sale.

Go to the food section of any Sam's Club and you're likely to find one or two employees offering free samples. Usually, the freebies are some kind of impulse item, such as cocktail weenies.

Sam's Club, and its parent company WalMart, are famous for being ruthless about the bottom line. They operate on very thin margins, so if something's not working -- and working well -- then out it goes.

Free food samples at Sam's Club have been a fixture for years, so obviously they work well. And why not? Take one bag of 100 cocktail weenies out of stock (wholesale price, $4.50) and cook 'em up. One hundred shoppers receive one sample each. If just one in five people picked up a bag, that's $179.80 in sales (at $8.99 a bag).

And those 100 weenies generate other sales as well. The smell of cooking weenies will make some shoppers hungry, and cause them to purchase some food items when they were just planning on picking up some toilet paper in bulk. Further, of those who sampled a weenie but didn't purchase at that time, some will go back to Sam's Club at a later time for a bag or two when they're hosting a party (I have).

From Sam's Club viewpoint, giving out 100 cocktail weenies generates more than enough revenue to justify the loss. After all, giving up $4.50 to net 40 times that amount is a good deal just about anywhere.

But that's not how the RIAA would see it. If 100 people each ate a free weenie and only 20 bags were sold, then 80 people didn't purchase bags and therefore the RIAA suffered $719.20 in lost revenue.
As Sam's Club knows, not everyone who accepts a free weenie will purchase. If they charged a nickel a weenie, there would be fewer takers. If it's something that's not important to you, you might be willing to try it no risk (that is, for free) but certainly not if there's any money or effort involved.

If the RIAA would recognize that free samples are an important part of their business, we'd all be a lot better off. A good portion of the stuff being downloaded for free is only of interest because it is free. I'm willing to bet a lot of Top 40 MP3's wind up deleted once the novelty wears off.

Sam's Club uses free samples effectively to generate sales. The RIAA's maniac drive to lock down every possible usage of its material only hurts itself. Free weenies are good for business.

The RIAA should realize that -- and quit being such a weenie.

- Ralph

Internet Radio Under the Sword

The deadline has come and gone, and Intenet radio is still available. So is the crises over? Can we all breathe easy? Look up. Hanging over netcasters is the sword of Damocles.

Audiographic does a good job going into the details of what happened last Monday, but I'll give you the short version. Congress didn't act, and the new ruinous rates went into effect. The SoundExchange magnanimously said they wouldn't collect the rates as long as netcasters continued to negotiate with them.

OK, so all's well that ends well, right?

Look up.

The SoundExchange reserves the right to demand payment at any time with interest. And they're now demanding that netcasters put digital rights management in place (DRM) to combat "streamripping."

Readers of a certain age may be familiar with the concept of stream ripping -- it's like holding a cassette deck up to the radio to tape your favorite song. Yes, the SoundExchange (run primarily by members of the RIAA) is concern people might be recording streaming audio onto their computers and not paying for songs!

Now even record industry reps have admitted this is not really a problem -- but it could be! As with the last century audio taping off the radio, its an amazingly labor-intensive process that yields very poor results. Netcasters already can't publish program guides, so you don't know when the songs you want will come up -- you'll just have to keep filling up your hard drive until the song comes along. Then you have to edit your recorded stream. And most netcasting is done at 64kbps -- about half the bit rate of most MP3s, so the difference in sound quality is similar to a 45 rpm vs. a cassette tape recording of a radio broadcast with a hand-held mic.

Why do that when there are plenty of other sources for songs that take less than five minutes to snag the tune you want from some P2P site?

The practicality of this request isn't open for discussion, however. If a netcaster protests, it could be intepreted as a sign that they're not "seriously negotiating," and the royalty bill comes due.

What does that mean for you? Expect a return to clunky, buggy media players that don't work very well. If the RIAA can't kill Internet radio, at least they can severely cripple it.

Look up.

In a previous post I tried to put the demands of the SoundExchange into perspective by positing what would happen if the government did the same thing to your withholding. To continue that analogy, imagine the federal government coming to you last Monday and saying, "You now owe us 30% more in withholding from each paycheck you've received since January 1st. If you cooperate with us and agree to spy on your neighbor, we won't collect this money. If you choose to resist, or at any future time do not do this duty to our satisfaction, you must pay this tax bill immediately, with interest."

Look up.

Then contact your senators and representatives. It's past time for legislative action.

- Ralph