Listener: Musicians Vs. Radio in Big Money Fight
George W. Bush got perhaps his biggest laugh of the summer when he responded to a question from a voter in Nashville seeking the president's thoughts about forcing radio stations to pay royalties to performing artists:
"Maybe you've never had a president say this," Bush replied. "I have, like, no earthly idea what you're talking about. I'm totally out of my lane. I like listening to country music, if that helps."
That's probably not going to do the trick, but Congress can use all the help it can get as it tries to arbitrate the latest conflict to emerge from the digital revolution's body blow to the music industry.
Artists such as Judy Collins, Don Henley, Tony Bennett and Sam Moore (of the R&B duo Sam & Dave) argue that radio stations ought to pay for the music they play on the air -- but station owners counter that for all the promotion they do for the record industry, it's the labels that should be paying them. Lawmakers can be forgiven for feeling as if they've landed inside a fraternal brawl.
They have. This summer's lobbying effort by a new recording industry-sponsored group, MusicFirst, has breathed new life into the drive to make radio pay artists -- and not just writers and publishers -- for playing their songs, but the issue is as old as Top 40. What's different now is that the music industry, in deep trouble, is casting around for ways to make up for the steep decline in revenue that hit the recording business after digital downloading changed the business's basic structure.
"The issue here is simply, it's about fairness," folk singer Collins told a congressional panel in August. "Radio is a multi-billion-dollar business built on our creativity, our passion and our soul." Collins and other artists who rose to fame singing other people's songs say they must tour well into their golden years in good part because they never got paid for all the radio play their music received.
Besides, they argue, with Internet and satellite radio stations now paying royalties to performers, why shouldn't broadcast AM and FM stations have to do the same?
Because as much as the record business is hurting, so is radio, says Dennis Wharton, executive vice president of the National Association of Broadcasters, who notes that radio revenue has been flat for several years and says his industry is in no position to carve out a new entitlement for artists.
Rep. Howard Berman, the California Democrat who chairs the House subcommittee on intellectual property, is expected to introduce a bill this month that would grant royalties from radio stations to performers -- the latest salvo in a battle that has been fought about once a decade since the 1940s.
The original fight over royalties pitted performers against both radio and the record companies. Back then, artists saw the two businesses as connected pieces of a larger system that made megabucks on the backs of the artists who provided their content.
But the record and radio industries in the '40s successfully drove a wedge between composers and songwriters on one side and performers on the other, creating an anomaly that persists to this day. Radio station owners continue to pay about two percent of their revenues, a total of $450 million last year, to the people who write and publish the songs played on the air, but leave it to the record companies to pay performers through their contracts for new albums.
There's no special reason to make that distinction. "It's just always been that way," says Wharton of the NAB, which has a deep interest in keeping it that way.
Broadcasters argue that performers shouldn't be paid by radio stations because radio is primarily a promotional device for new music: Airplay gets listeners interested in a song or artist and drives them to go buy the music, providing revenue to the record companies, which therefore should be the ones paying the artists.
The problem is that the business model that has supported the music industry for the past half century is collapsing, thanks to online music sharing, the demise of the CD album, the rise of the iPod and the diminishing roles that both radio and record companies are playing in the economics of music. Sales of music CDs dropped by 13 percent last year, according to the recording industry's trade association.
In the radio business, this drive by artists and record companies to squeeze money out of radio stations is seen as a desperate move by an industry that completely blew the digital revolution. Record companies failed to cultivate new talent, resisted new technologies and alienated an entire generation of potential customers by suing grandmothers and teenagers rather than embracing a new economic model, radio executives argue.
Alfred Liggins, the outspoken chief of Radio One, the nation's largest owner of black-oriented stations, says it's the record industry that should pay radio for promoting their product, not the other way around (though there is a slight legal problem with that scenario, since that kind of financial relationship runs the risk of triggering payola prosecutions.)
The new debate over performance rights is a battle of words and influence waged by two mammoth industries, a confrontation between deep-pocketed lobbyists with everyone involved claiming to be economically stressed and on the side of what's right and good.
But history reminds us that at almost every step up technology's ladder, the music industry has resisted change, arguing that giving listeners free access to recorded music would wipe out the market for selling those recordings. When radio moved from live orchestras and bands to spinning records in the late 1940s, the musicians union predicted the loss of thousands of jobs and the record industry hurled lawyers at radio companies.
It turned out that the more radio played records, the more listeners wanted to go out and buy those songs.
Again, in the 1970s, when cassette tapes made it easy for listeners to record music off the radio, the record industry howled in protest, only to find that while some people did create their own bootleg mix tapes, far more happily spent their dollars on prerecorded cassettes.
This time, downloading and file sharing are choking off the record industry's revenue stream, while Web and satellite radio eat away at AM and FM radio's audience.
"The record business is in a world of hurt right now," Wharton says. "And obviously our guys are apoplectic about what they would regard as a money grab by the foreign-owned record companies." (Four of the top five record companies are based in Europe or Japan.)
In the end, new revenue sources are likely to emerge in the reshaped media economy. Already, concerts and direct sales by artists are playing a larger role in the income mix for some performers, and online social communities are becoming essential to the economic model that some bands are cobbling together. But in the history of media, the big players don't always show the flexibility they need to adapt to new technologies. On occasion, they resort to eating their own.
Please email us to report offensive comments.
Posted by: EricS | September 1, 2007 12:04 PM
Posted by: mrmr0to | September 1, 2007 1:13 PM
Posted by: Don | September 1, 2007 3:42 PM
Posted by: Anonymous | September 1, 2007 3:44 PM
Posted by: J.P. | September 1, 2007 4:00 PM
Posted by: Anonymous | September 1, 2007 5:42 PM
Posted by: Jessica | September 1, 2007 5:55 PM
Posted by: Rich | September 1, 2007 8:08 PM
Posted by: Bill | September 1, 2007 10:06 PM
Posted by: Mikes | September 2, 2007 6:25 PM
Posted by: Anonymous | September 3, 2007 10:33 AM
Posted by: Anonymous | September 4, 2007 10:48 AM
Posted by: Bob C | September 4, 2007 11:51 AM
Posted by: Wayne Kahn | September 4, 2007 11:35 PM
The comments to this entry are closed.