Monday, June 08, 2009

Save Your Radio addendum

Got some offline feedback for my post annotating the Save Your Radio propaganda informational landing page. A little clarification: commercial radio's strategy is to get what they want through misrepresentation, just another link in a long chain of clueless behavior. But the record labels are doing the exact same thing, for the same basic reason -- a failure to adapt.

Commercial Radio

When radio was the primary audio source for news, sports, information and music, life was good. Content attracts listeners, and radio makes money by selling the attention of that audience to advertisers. It's the same concept with websites. Quality content attracts viewers, and sites with strong numbers are more attractive to advertisers. During the 1980's you could make money in radio without even really trying. And so the trimming began. Less live DJ, tighter playlists generated nationally rather than locally, less news, etc.

Radio was still in the content business, but since there wasn't any real competition, the quality and variety of the content didn't matter that much. Satellite radio, while hardly being a radio-killer, should still have served as a wake-up call that content (radio's core business). Instead of competing by improving programming quality (hard to do with skeleton staffing), focussed on the digital nature of the satellite signal and HD Radio was (still)born.

The NAB lobbied heavily to throw up as many legislative roadblocks as possible. They welcomed the RIAA's demand for performance royalties from XM and SIRIUS. Radio's strategy of handling competition was to kill it, so things could return to normal (that is, with radio being the sole audio provider).

The Recording Industry

The major labels are also in the content business. Initially, they started out selling audio recordings on wax cylinders. Why would you purchase one cylinder and not another? Because of what was recorded on it. Labels moved from selling wax cylinders to heavy shellac platters to thinner vinyl LPs and 45s, to CDs. The type of units varied, but it was always about the content rather than the media it was encoded on.

And as long as home recording remained primitive, labels retained control of their material. You could only own a copy of the song if you purchased the media the label sold it on. End of story. Cassette tapes changed that somewhat, but the big shift came with the rise of the original Napster. That's when labels forgot they were primarily in the content business, and not the selling-little-pieces-of-plastic business.

Rather than move into the digital world and begin selling their content in a new fashion, they shut Napster down. Like radio, the strategy has always been to react to competition by killing it. The wholesale suing of downloaders -- both real and imagined -- by the RIAA was a vain attempt to stop the migration to online music, or at least slow it down.

Now keep in mind that when they plead their case, the RIAA never talks about saving the labels. It's always about getting money for the poor, down-trodden artists. The artists that, according to most major label deals, get only 15% of ever CD sold -- less 20% for returns and breakage, less the recording and promotional costs fronted by the labels (as priced and accounted for by the labels). The artists who have yet to see a dime of the $250 million settlement money from the original Napster case or any other case since for that matter.

When satellite radio came along, the labels tried their best to kill, or at least severely cripple it, which they did with intensive lobbying and the enacting of the unprecedented performance fees. The same thing happened with Internet radio. But little plastic disc sales continued to decline, and revenue continued to fall.

So now they turn to commercial radio, looking for more money from one of the few remaining revenue streams (and it is a revenue stream -- radio stations pay royalties to the song publishers, most of which are owned by the majors).

Repositioning the truth

Radio is now facing the same fees they encouraged levied against others. And to garner support, they've misrepresented the performance royalty as a tax, hoping all the negative connotations of the word conjures up will help their cause.

Record labels are trying to get the performance royalty enacted because they're still wedded to the concept of selling little shiny pieces of plastic and that just isn't working. To garner support, they've misrepresented the performance royalty as a way to help starving artists when, in fact, the labels will be the prime beneficiary.

So on each side of the issue of performance royalty, we have an industry that:

1) Does not understand what business they're really in.

2) Prefers to answer competition by killing it off rather than changing to meet new market demands.

3) Tries to garner support for their cause by misrepresentation of the issues.

Sorry, I'm not rooting for either side in this clash of the dinosaurs. Just wish they'd be honest about what they're really fighting about.

- Ralph

Day 63 of the WJMA Podwatch

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