Wired has a brief piece on the spat going on between the two right now:

http://blog.wired.com/27bstroke6/2008/06/recording-indus.html

Broadcasting as a form of Piracy, but not how we usually think of it. That's a line from the article. A "Duh!" line actually.

Of course it's not how we usually think of it. It's broadcasting, not piracy!

Moving on then.

At the core of the issue, we have the traditional recording industries looking for new sources of revenue. They claim it's piracy and competition.

I'll give them the second one, but not the first. People have been trading tracks since we've had recording devices. That's not really changed.

The real issue is their old business model. It's showing it's age big time. Back when we had Napster, Shawn Fanning offered them $2 Billion / year to license all you can share subscriptions.

At that time, they said no and neutered Napster.

The current P2P escalation of technologies was the predicted result of that. It all happened big time.

Here's my own pontification about it, from 2001

http://episteme.arstechnica.com/eve/forums/a/tpc/f/174096756/m/544098989?r=17809 6999#178096999

So, the NAB is in a very interesting position right now. Revenues in Radio are not exactly stellar either. Many think it's because there are so many new media delivery options.

There is a case for that, so let's go with it.

It might also be due to the general state of music, decreased perception of choice from people being exposed to more differentiated music, corporate cookie cutter formats and other things.

Perhaps it's just a combination of them. (likely)

I've written before about content innovation and daily relevance.

Truth is, without radio, major league labels would be at a significant loss promotions wise. All those new options do not present a unified front for these activities --and also have the doors open to many other options.

Have an iPod? Well, you might be spending your money on movies and games as much as you are music. Maybe you are just there for the free podcasts and fill it with your own unencumbered (non DRM) tunes.

(that's me)

Point is, radio --at least FM and HD Radio, are all about music. That expectation is set and remains set, even if we are all bitching about this or that about it.

I believe radio, at this key time, is poised to really court non-signed artists and content producers. There is a vacuum here that's not being fully met by the majors and they know it.

This litigation --ongoing spat is not about revenue. It's about control. Specifically, control of distribution and or promotion such that they hold the keys to the popular content and have the max potential to exploit it and the back catalog of past items.

Breaking that means opening the door for a lot of new stuff, and very likely more diversity.

In this environment, radio would add a lot of value as a filter, the value add being to bring the good stuff forward, leaving crap behind.

Applying the usual formulas to this mess would bring clear formats and identities to the content that have a good chance of being highly differentiated over the usual fare.

Put simply, radio needs to call this bluff, by investing in some infrastructure and services aimed at helping the little guy get big. It is possible today to get known and sell your works directly to interested people, or through intermediaries also adding value.

The RIAA isn't needed going forward, so call them on it!

More on that later, but that's the core thrust of this post.

Discuss?

The whole thing is just dumb,as I see it.

/goes back to downloading music.

The major labels by acting to preserve their outdated bloated business model are actually making it more attractive for independent musicians to take matters into their own hands and self distribute.

This is why "retired" bands are now signing majore deals with the likes of Live Nation. The money is now being made in live performance rather than CD sales.

Many of these same artists are now buying up the rights to their catalog or making their own CD's/downloadable albums and selling these at shows or online and making 100% of the revenue instead of 5%.

This will pave the way for new compelling artists to also see the "old" label business model as irrelevent and bypassable.

I can't see the strategic value in what the major labels are doing.

Radio should just stop playing music altogether.

!?!

If that deal goes through about radio stations having to pay a performance royalty to play recorded music, you'll find a whole bunch of stations changing to some sort of spoken word format in a hurry...

To play Devil's Advocate, how many radio stations really help sell a lot of music these days? You do have CHR and Country that are both mass-appeal and current-driven, and a few small niche formats that push new music. The rest are either 350 song oldies and classic rock, or they are at least heavily recurrent and oldie driven like AC, straight ahead Rock, and even many Hot AC stations.

A large percentage of stations are using music with little benefit to rights holders. What radio listener would go buy "Unchained Melody" when they can already hear it every weekday morning at 7:20, year in and year out?

No matter how many radio plays a particular oldie gets, it doesn't necessarily change the bottom line for the artist/writer/publisher.

Perhaps someone more knowledgeable about music sales can prove otherwise? I'm also curious what Nancy Sinatra has to gain by pushing for royalties from radio. Her dad's music gets little play anywhere, and beyond "These Boots Were Made for Walking," who cares about any of Nancy's music anymore?

"An identical proposal, S 2500, is in the Senate Judiciary Committee. Rates under both proposals would be negotiated, although small and public stations would pay a flat $5,000 annually."

For most stations, that's gotta be one jock's whole annual salary!

I hope not! Did you drop a "0" someplace?

If that 5K is true, then VT + home studio = 10 stations, plus side voice work to get a decent, if modest, wage?

Ugh...

Randy, I'm thinking on your post. Good stuff...

Ok. Perhaps radio isn't selling all that much these days. Could it be simply because it's the same set of well researched tunes, mixed this way and that, with perhaps a few percent of churn?

Churn being new tunes in and old tunes out over time.

So, what if something like this gets tapped?

http://arstechnica.com/news.ars/post/20080625-amie-street-inks-deal-with-indies- will-add-1-million-songs.html

Seems to me there is a lot of potential here to crack the majors lock on things. Perhaps expanding that set of tunes, maybe just doubling the churn, to keep risk low, and existing investments in research relevant, would get the fee / license issue put back on the back burner where it belongs?

And on the content innovation front, seems to me a weekly podcast, subscription only for current week, downloadable archives for earlier ones, syndicated to stations looking to fill that empty slot, could make sense.

Think of it like that Passport Approved show, only for Indie artists, not just foreign ones. (and yes, that could easily mean both!)

The show links to the direct download sell to the fans page, a site like this, or maybe sells packages, or some other creative thing.

Station airs it, maybe refers it's listeners, captures a fee for the ads in the show, and a small referrer fee, and it's got some potential.

Randy, I think your point is a good one, but maybe worth turning around.

If radio isn't selling much music today (and that might be true for a lot of listeners), then why?

And more importantly, can it still do that, or not?

Perhaps it can.

I really like the themed shows. Makes radio almost like TV in a way. I know when to tune where there are some solid expectations. I can record, if I want and listen later, and that's cool too.

The themed programs also fit moods really well, where just blasting the tunes and spots are a hit or miss affair, the clear and regular programs are always a hit!

If there was more of this, I would consume more FM.

I don't think I've purchased anything new in quite a while by listening to the daily grind of day part music. I have made more than a few purchases directly linked to the themed programs!

If we continue to see a growing pool of unsigned, sell direct to the fan, live performance, content, then there will also be a growing vacuum where there could be people talking about it, filtering it, researching it, and packaging it for easy value added consumption by ordinary people just looking for something new, or maybe that just fits the mood of the day or time.

And in the context of my rant from years ago, this is exactly the kind of thing a lot of people thought would happen. It's damn cool.

In the other corner, we have the majors still doing this:

http://arstechnica.com/news.ars/post/20080625-judge-upholds-107834-in-attorneys- fees-award-against-riaa.html

Pretty tough to appeal to your customer when a significant part of your business model involves either suing them or denying them the product they want, when they want it and how they want it.

Isn't it mostly easier to just deliver that and make the money?

Likely.

It totally is easier to do that and look cool, hip and perhaps remain relevant.

>>Amie Street keeps the first $5 of a song's sales, and 70 percent of all revenue thereafter.

I don't know how this compares to what the big record companies take, but it seems like a lot to give to any "middle man," but the general business model is probably more practical and viable than each artist selling directly to fans via MySpace. I hope there will still be room for hard copy sales, or at least wav quality downloads for a premium.

Most radio stations will likely fail to sell music as long as they can still be "top billers" using 350 songs. While I too like themed blocks, I'm not a typical listener. Many commercial stations have found they can get higher ratings running their normal programming in time slots that once held specialty shows.

That's an error. 70 percent goes to the artist.

Major bummer on the shows. IMHO, best thing on FM today.

I strongly suspect hard copy sales are not going away. Look at the recent vinyl Freddies deal! Very interesting.

IMHO, hard copies, with value adds are an up and coming trend.

For some, just the music please. That's a download, pick your bitrate, or pay premium for lossless copies. Burn at home, stash on pod, whatever. DRM on these is a loser in the longer term. Make them easy and price them right leaving volume, security and consistency to take care of the rest.

It's gotta be easier and higher quality to just go buy a few tunes than it is to go and download them from the various file sharing services. Most will just pay, some will not and that's just fine.

(they wouldn't have anyway, but will still talk about the music, so it's not a total loss If it were me, I would actually give it to them, while at the same time collecting demographic info, and providing them a means to get out there and talk up the stuff, if anything for referrer fees

That would shut P2P down, for the most part, and generate a LOT of well targeted AD revenue --sigh...)

For others, a physical purchase means something, so sell it to them! Ship it, or distribute it somewhere it can be produced local. Does not matter, only that the buyer can get the media for their own use. DRM is a loser on these too, BTW --and for the same reasons.

Rip at home, mix at home, burn at home.

Then there are those people that like crap! Value added crap. So, bundle that physical purchase with a cookie!

Said cookie could be:

1. Tickets to a live venue

2. Passwords to downloadable assets. (art, bonus tracks, stories, movies, you name it, bundle it!)

3. Stickers, candy, and other swag. Key chains, maybe with a USB copy of the tunes --heck, sell the tunes on a USB stick like Bare Naked Ladies did.

4. Lottery tickets!

other stuff.

One idea I had for physical media, if we can get past the litigators, is to allow local venues, and that includes radio, to resell tunes with their own value adds.

It should be damn easy to get the licensing, or know where to pay the royalties for some kind of compulsory licensing scheme, for remixes, custom sets, and albums themed and branded by local venues.

They can download, mix, burn, print, package and value add.

So, back catalog stuff brings with it some additional margin and promotion opportunities not really all that available today.

Like classic rock? Maybe buy the KGON old and new volume 1 of x monthly music collection CD. On that CD, mix the best of the best, or maybe just some deep tracks along with new efforts for a trans-generational rock experience.

(I know plenty of people that would buy these in a second.)

IMHO, the actual value of recorded music is dropping. It's easier to produce, way easier to distribute, and there is a LOT of it available.

The majors are working their asses off double time to keep that value artifically high and control over distribution is how they do it. They are in the way of new music economies.

While they are bitching about "lost" revenue, others are innovating and adding value to recorded music as they should.

Other things that can leverage this distribution.

Want it early, listen to the radio and or pay for the physical copies / premium downloads.

Want it free? Wait a while, and be willing to trade some demographic info for the non-premium bandwidth limited download, take the P2P risk and hassle, or phone a friend, who can refer you and get credits for their own stuff.

The point being, one can compete with free. There is illicit free, which is not legit, and then there is free that is legit. Most people will pay, or trade for the latter, so why not entertain that.

If the stuff can be had through legit channels, then why bother with P2P. Some branding and consumer education can make P2P look old school, losers drool, geek in the basement old school, lamer stuff.

Once that happens, leverage the eyeballs and ears for revenue, turning what is "lost" revenue into new business models.

Powerslacker said: Radio should just stop playing music altogether.
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Radio did stop playing music altogether, at least ASCAP licensed songs back in the late 40's. ASCAP wanted a large royalty increase. Radio said "no" and pulled all ASCAP tunes from the air or from being played by their live studio musicians that many stations used in that era. Radio played only songs that were in the public domain (copyrights had expired, etc) and formed their own licensing agency called BMI (Broadcast Music Inc). The music aired was pretty boring for awhile but ASCAP finally relented and ASCAP songs went back on the air. However ASCAP had created their biggest competitor, BMI, which to this day is competing with ASCAP to license songwriters. ASCAP got greedy and it cost them dearly.

I think that Randy's "Devil's Advocate" observation is spot-on: over the last five years or so, radio has transitioned away from contemporary music to emphasizing on recurrents. If you compare today to 1998:

* Modern rock--which was almost like a top-40 format without the club music--is mostly gone

* Modern AC and Hot AC--which were like top-40 without the "teenybopper" music--are mostly gone

* Smooth Jazz--which played a lot of contemporary stuff in the '90s--is virtually gone. Gavin pulled its Smooth Jazz chart almost 8 years ago, and there is very little music being produced today in this style.

* AC stations like K103 have shifted their focus to music from the '80s and early '90s.

* CHR stations have started to sound a lot more focused in terms what they play. In the 1990s, songs from Modern Rock and Modern/Hot AC playlists were routinely incorporated into CHR playlists. Now that the latter formats are gone or are going away, CHR is left with the contemporary crop of dance club music, which almost exclusively seems to be R&B and Hip-Hop.

Isn't Gavin, itself completely gone?

If I may interject -- and add to Stan's history -- ASCAP was not very open to membership for African-Americans or other minorities. BMI filled a large void.

Didn't know that!

Alfredo, great post man. I think you and Randy have it very close to right.

As Littlesongs said, ASCAP was indeed not open to new membership....at least to anyone who was writing rock and roll songs, either black or white. ASCAP was founded by people like Irving Berlin, George Gershwin, Cole Porter, etc and these guys hated rock and blues music. They felt if they ignored it the music would soon go away. Big mistake. But they finally did change their position in the mid to late 60s and started signing pop/rock writers but by then BMI had become very well established.

Semoochie said: Isn't Gavin, itself completely gone?
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Both Bill Gavin and his magazine, the Gavin Report, have been gone for many years.

Thanks Stan.

On a somewhat related note, here are the remarks to the FCC -- "In the Matter of
Broadcast Localism" -- from the Future of Music Coalition.