CC Version of Radio's Future

SirRoxalot said:

There is a fundamental difference between on-line and OTA radio.

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No there isn't. Obviously you've never tried iheartradio, radio.com , tunein.com, or any of the thousands of online streams of radio stations or services like Live365 or more. In those cases, they are exactly the same as broadcast radio, just using the internet instead of towers and transmitters.

SirRoxalot said:

OTA radio does a much better job of introducing new content than Internet music services.

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Except if you happen to be listening to a radio format built 100% around Gold, Classic, or Oldies. In those cases, you'll never hear any new music. Music services like Pandora will take your preferences and offer you choices of new music based on your likes and dislikes.

SirRoxalot said:

People value the input of experts. BigA will argue with this, but good radio people ARE experts at selecting and presenting programming content. That's why radio still reaches 93% of the population.

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Huh? Having “experts” has nothing to do with reach. Reach is a technical function. Yes there are “experts” in radio, but over the past 35-40 years they’ve mostly moved from being on the air to being behind the scenes programmers or consultants, either of stations, groups of stations, or formats. The on-air presenters, for the most part, don’t tend to be experts, but executors who carry out the formats created by the experts. There was a time when actual musicians and composers hosted radio shows. For the most part, that’s moved to public and satellite radio. OTA radio hosts are chosen by the quality of their voice and convenience of their location, rather than by knowledge of music or subject.

Do people value the input of experts? Some do, some don’t. We live in a world where experts simply provide context, while the public makes the decisions. Consider the role of experts on TV talent shows like American Idol, where experts offer opinions, while the public chooses the winner. Consider the popularity of user-created content sites like Facebook, Twitter, and even Wikipedia. Consider the American electoral system, where the role of experts is often ignored in favor of simple ideology. Do we elect the best people to run our government or just the people we like? You tell me.

SirRoxalot said:

Should there be a difference in rates between on-demand and broadcast services? I believe that there should. On-line interactive services are like the music store that lets you audition that record - and hands you a bunch more records "that you might like".

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You’ve obviously never read the Digital Millennium Copyright Act, where the royalty rates for online content was set. There IS a difference in rates between streaming services that don’t allow downloading, and download services. There is a difference between streaming and on-demand. However, they’re all set by the Copyright Royalty Board, and in both cases, they’re still much higher than royalties paid to songwriters, and obviously higher than the royalties OTA radio stations pay to labels and artists, which is zero. Companies like Clear Channel take their on-air programming and stream it online. When the content is online, the companies pay digital royalties. When that exact same content is on air, they don’t. This inequity was pointed out this past week by Tim Westergrin, founder of Pandora. He testified in Congress that royalties are more a function of platform than whether or not they’re “curated” or hosted. As I’ve been saying, what Clear Channel is attempting to do is merchandise it’s on-air reach as a negotiating tool to bring down online royalty rates. This is NOT about Clear Channel getting an advantage over other on-air broadcasters. ALL on air broadcasters have the exact same advantage over single-platform services like Pandora. What Clear Channel is suggesting is that their on-air service should be used as credit in setting their online rate. Up to now, they’ve paid a huge royalty for online, and only a publishing royalty for on air. This deal attempts to equalize those royalties a bit. That’s all.

First, don't be naive. If I can hear it on my computer, I can record it. I don't have to download it, I can simply capture the audio. Services like Pandora present tracks that are separated, and available on demand, which makes it easy to obtain that music. Streaming radio doesn't.

Secondly, new content doesn't have to be recently created. All it means is that it's new to YOU. Underground Garage by Little Steven features a lot of content that's decades old, but new to many listeners. Oldies or Classic Rock introduces music to a new audience that hasn't heard it before. The strength of Classic Rock among 18-30 males constantly amazes me. Good music stations, no matter what the genre, introduce seldom-heard music from time to time to add a little spice to the mix.

The on-line "radio" most often cited is Pandora - which was the thrust of the previous discussions. Pandora, some of iHeartRadio, Spotify, and others are on-demand music delivery systems. I was simply pointing out that on-demand music services act differently, and should pay royalties differently. They're a music delivery service, not a "radio" service in my estimation.

"Having experts has nothing to do with reach." Really? Creating programming that attracts a LOT of listeners doesn't affect reach? Expertise in programming has nothing to do with that?

According to your perspective, it doesn't matter who - if anybody - is on the radio. Ratings say otherwise. There are too many examples to cite of stations in the same market playing essentially the same music, yet one garners massive ratings, while the other languishes. You constantly denigrate the skills required to communicate with an audience. In your world, if you can't do it, it's not important. In this case, you live in a very small world.

The biggest reason that Pandora and other on-demand services pay more for music is that they are cutting into the purchase of music from the music industry. Their role in promoting music doesn't have nearly the impact on creating demand that the radio industry does. Whether the numbers are reasonable or not is another discussion.

SirRoxalot said:

First, don't be naive.

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I’m not naïve. I’m simply responding to the mistakes and misstatements you made in your previous post. Now you’re backpeddling from what you said. Recording isn’t unique to online. People have recorded broadcasts off the air for years.

SirRoxalot said:

I was simply pointing out that on-demand music services act differently, and should pay royalties differently.

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They do, and if you knew what you were talking about, you’d know that’s the case.

SirRoxalot said:

Creating programming that attracts a LOT of listeners doesn't affect reach? Expertise in programming has nothing to do with that?

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Maybe you don’t understand the definition of the word. I would say the quality of the signal has a lot to do with reach, not the quality of the content. Reach is calculated in the number of people within the sound of one’s voice. Not the expertise of the programming. But none of this has anything to do with this issue.

SirRoxalot said:

According to your perspective, it doesn't matter who - if anybody - is on the radio. Ratings say otherwise.

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No, according to job listings. What qualifications are radio stations looking for? Expertise in music? In the content they’re delivering? How many on-air people have college degrees or experience in music? You tell me. On air people are hired for the quality of their voice and convenience. That’s their expertise. In today’s world, the public can go directly to the performers and don’t need intermediaries. So what does an on-air person bring to the table? They have no expertise in the content, they don’t actually pick the music, they’re simply human voices who provide context to the presentation. I’m not saying it’s useless, but it’s not expertise, and they’re not hired for their expertise. The programmers are the ones who have that, and they’re usually not on the air. But none of this has anything to do with this issue.

SirRoxalot said:

You constantly denigrate the skills required to communicate with an audience. In your world, if you can't do it, it's not important. In this case, you live in a very small world.

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Oh come on. Have you actually listened to the radio? Do you want me to post transcripts of what these people actually say on the air? Sure there are a handful who know what they’re doing. But most were hired for convenience, to have a warm body in a chair to read live commercial copy. Don’t overvalue their contributions to world peace and intellectual discourse. It doesn’t exist. The real decision makers are not on the air. But none of this has anything to do with this issue.

SirRoxalot said:

The biggest reason that Pandora and other on-demand services pay more for music is that they are cutting into the purchase of music from the music industry. Their role in promoting music doesn't have nearly the impact on creating demand that the radio industry does. Whether the numbers are reasonable or not is another discussion.

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Says you. The music industry says otherwise. The music industry will show you historically how on air radio cut into music sales from the 1930s on. That’s why they took radio stations to court back then to prevent them from playing music on air. The only reason recorded music gets played today is because the music industry lost those cases in court.

But none of this has anything to do with this issue. Clear Channel isn’t Pandora. IHeartRadio is not an unhosted music service. If you just read my posts you’ll understand what this is really about.

SirRoxalot said:

The on-line "radio" most often cited is Pandora - which was the thrust of the previous discussions. Pandora, some of iHeartRadio, Spotify, and others are on-demand music delivery systems. I was simply pointing out that on-demand music services act differently, and should pay royalties differently. They're a music delivery service, not a "radio" service in my estimation.

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You are engaging in distinctions that are similar to when engineers try to "hear" whether you have a Foti or an Orban box in the audio chain. Interesting, from an insider's point of view, but irrelevant among users of the end product.

Listeners perceive, as has already been noted, all kinds of aural broadcasts to be "radio" or, in some cases, just to be "where I go for music."

It really does not matter if the service is customized, live or delayed or local or from someplace else. Using the TV analogy, if I use a DVR, I am still watching TV. If I use my television's web connectivity to access Netflix or Amazon Video on Demand, I am still watching TV. If I use Roku to stream shows stored elsewhere, I am still watching TV.

The same analogies apply to radio.

Just as beauty is in the eye of the beholder, "radio" is a perception or a term defined by the consumer, the listener. While it is nice to think that Pandora and the others are different from radio, and, thus, not really competition, that attitude will put all the nails in radio's coffin.

If it is audio, and it takes time that could be spent listening to terrestrial radio, it is radio. The faster that the industry accepts this, the better prepared we will be to move into new areas of opportunity.

You are engaging in distinctions that are similar to when engineers try to "hear" whether you have a Foti or an Orban box in the audio chain.

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This thread is definitely has a Orban tone to it. (I say 8100) ;D

As I said, do a search on the Congressional hearings. The demanded relief this past week.

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I understand this. My question is when? A year, two, never. How Long will they continue (P) if you are paying half of revenue, and your investors demand profit.

The deal with CC this week could drag this out for awhile.


We can all have opinions on this topic. Right or wrong, hold on, fasten your seat belt, it is going to be one hell of a ride. I can guarantee that!

musiconradio.com said:

The deal with CC this week could drag this out for awhile.

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The deal with CC only involves one very small indie label. Pandora said that one label would account for maybe 1% of all the music they stream, so it wouldn't make a huge difference for them. If you notice, no other labels have jumped on the bandwagon. I suspect the RIAA and SoundExchange have instructed the majors to stay away. The RIAA has been successful up to this point in keeping all labels on board. This deal marks a breach of unanimity, which isn't permitted.

The problem at Pandora is there is an inherent conflict between the founder, Tim Westergrin, and the investors in the company. Tim is proud of the royalties his company pays, and feels it is the obligation of his company to pay for the music it uses. At the same time, it's obvious they are overpaying, compared to other digital users. Tim has said that he would not bypass SoundExchange and negotiate directly with labels. But clearly that is the only solution given the total lack of action by Congress. Such action would put the company at odds with its founder.

The lack of action by Congress really means that legal action is the only recourse.

TheBigA said:

The problem at Pandora is there is an inherent conflict between the founder, Tim Westergrin, and the investors in the company. Tim is proud of the royalties his company pays, and feels it is the obligation of his company to pay for the music it uses. At the same time, it's obvious they are overpaying, compared to other digital users. Tim has said that he would not bypass SoundExchange and negotiate directly with labels. But clearly that is the only solution given the total lack of action by Congress. Such action would put the company at odds with its founder.

The lack of action by Congress really means that legal action is the only recourse.

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The Major labels hate free services. This is one major problem Pandora has and Tim knows it. Warner Music especially hates free services ever since Imeem went under and lost them millions. So for Pandora to cut a deal will be very difficult since Tim insists they remain free and especially difficult to remain free on mobile devices. None of the on-demand services offer a free service that is meant to remain free. Even Spotify plans to restrict their free service and operate the limited free service solely to drive paid subscriptions. Pandora doesn't operate that way and therefore more than one major label exec has come out and said they hated Pandora because Pandora operated for free. The only real music service I know of that operates a free service while having deals with the Majors is Slacker and that is because the free service uses Sound Exchange licensing. Without Sound Exchange licensing, operating a free service that is not meant to drive paid subscriptions will be very difficult. Although I think Pandora needs to license directly with labels, I honestly doubt that they would get a deal and still have Tim.

Casey said:

I honestly doubt that they would get a deal and still have Tim.

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I agree.

TheBigA said:

SirRoxalot said:

I was simply pointing out that on-demand music services act differently, and should pay royalties differently.

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They do, and if you knew what you were talking about, you’d know that’s the case.

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If you read MY post, you'd understand that I'm aware that on-demand services pay different royalties. I'm simply confirming that, in my opinion, that should continue to be the case.

SirRoxalot said:

Creating programming that attracts a LOT of listeners doesn't affect reach? Expertise in programming has nothing to do with that?

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TheBigA said:

Maybe you don’t understand the definition of the word. I would say the quality of the signal has a lot to do with reach, not the quality of the content. Reach is calculated in the number of people within the sound of one’s voice. Not the expertise of the programming. But none of this has anything to do with this issue.

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Perhap YOU don't understand the definition of the word as it relates to radio. "Reach" in radio is the same as cume - the number of people who tune in for at least five minutes during a broadcast period. At least, that's according to Arbitron. It's NOT the number of people "within the sound of one's voice". It's the number of people who LISTEN at some point - the number of people you reach, not the potential audience. That's certainly affected by programming.

http://www.arbitron.com/radio_stations/tradeterms.htm

I won't dignify your diatribe about what talent does for a radio station with a response. Suffice to say that I'm glad I don't work for you, or any company you're associated with. You have no concept of the value of talent, how they work, or what they do. I don't know what market you're in, but it sure ain't the market that I'm in - despite the efforts of some of the broadcasting companies here.

TheBigA said:

The music industry says otherwise. The music industry will show you historically how on air radio cut into music sales from the 1930s on. That’s why they took radio stations to court back then to prevent them from playing music on air. The only reason recorded music gets played today is because the music industry lost those cases in court.

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You refuted your own point. The music industry lost those cases in court. In other words, they didn't prove their contention. History has shown that the music industry grew exponentially and new artists were created because of exposure on the radio. The number of musicians paid by radio stations decreased when recording were allowed on the air, but the overall number of musicians grew because more artists were exposed to more people.

TheBigA said:

But none of this has anything to do with this issue. Clear Channel isn’t Pandora. IHeartRadio is not an unhosted music service. If you just read my posts you’ll understand what this is really about.

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I've read your posts. It would be nice if you would reciprocate. Then again, you either don't understand many other posts, or choose to take statements out of context. iHeartRadio has unhosted custom channels which operate similarly to Pandora. They also stream radio stations. Should they pay different rates for the different services? In my estimation, yes. Perhaps YOU need to catch up with what this is really all about.

SirRoxalot said:

Should they pay different rates for the different services? In my estimation, yes. Perhaps YOU need to catch up with what this is really all about.

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Royalties are not based on programming, but platform. OTA radio doesn't pay artist or label performance royalties, and digital does. As far as CC is concerned, that's not the issue. The issue for them, and the reason they made this deal, is because royalty rates for digital are prohibitively expensive, regardless of whether or not the content is hosted or unhosted. There has been no progress on legislation fixing the royalty situation, so they've taken matters into their own hands.

SirRoxalot said:

The music industry says otherwise. The music industry will show you historically how on air radio cut into music sales from the 1930s on. That’s why they took radio stations to court back then to prevent them from playing music on air. The only reason recorded music gets played today is because the music industry lost those cases in court.

You refuted your own point. The music industry lost those cases in court. In other words, they didn't prove their contention. History has shown that the music industry grew exponentially and new artists were created because of exposure on the radio. The number of musicians paid by radio stations decreased when recording were allowed on the air, but the overall number of musicians grew because more artists were exposed to more people.

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The several legal issues of the 40's which resulted in the ability to operate a music stations were first the breaking of the ASCAP monopoly in collecting performance rights. With the establishment of BMI and the unlocking of ASCAP's stranglehold on public performance, the first step was taken.

Then, with the fall of the power of the American Federation of Musicians and the indictment of Joe Petrillo, its mob-style boss, stations could play recorded music without having to "compensate" with a corresponding number of hours of live music by the station band.

No sooner had the AFM matter been concluded than we suddenly had independents like KLIF playing lots of recorded music, albeit in the block programming model of the era. But very soon we had Top 40 rising out of Omaha to take the nation by storm.

But the root issue was performance royalties. Radio paid, and still does not pay an artist royalty for analog transmissions; it pays a burdensome rate for digital streaming transmissions.

So the issue is not about hosted or personalized or local or national, it is about digital and analog. The record industry, an historic stifler of progress, sees digital as a way of giving every consumer a master copy of a recording, and wants to charge accordingly. They don't understand that making music accessible and affordable are the requirements for reducing piracy, not putting DRM controls on physical media and making it hard to use and hear music.

But, to return to the subject area this thread is dealing with, the whole rights thing is about digital vs. analog. It's questionable whether digital performance royalties leave a margin for profit in radio and among pure-plays as well. The CC thinking has to be along the lines of trading a bit of the previously non-royalty-subject analog part for a lower rate on digital. Since analog is fading, and digital growing, there is obviously a tipping point in the near future where sacrificing the old (cash) cow will benefit the rest of the herd in the future.

Introducing things like "you don't recognize the contributions of talent..." into an area that is purely a digital vs. analog issue may satisfy your localism (whatever that is today) and local talent (assuming anyone cares anymore) agenda, but does not respond to the digital vs. analog issue.

If the platform is immaterial - as some contend - then "radio" is platform-independent. It then makes sense to differentiate based on the service, not the platform.

If you're providing interactive on-demand service, you are indeed providing a digital copy of that material in a convenient, easy-to-obtain package. If you're providing curated content, it's not as convenient to obtain a particular song or performance, and you're providing additional content that may enhance or highlight that performance, or put it in a more favorable context. That's what helps to make new, or infrequently heard music, more desireable to listeners.

Simply put, different services should pay different rates because the benefits (or costs) to the recording companies are different. It's not as simple as "digital vs. analog". At this point, recording from an analog FM tuner of a decently-processed radio station would likely provide better quality than most MP3s. That, BTW, does not include the processing used on most CHRs and Hot/ACs. Then again, the original recordings these days have the dynamic range of a brick, but that's an entirely different discussion.

One of these days - if it hasn't already happened - some smart guy at a record company will pay Pandora for extra "spins" of their music. It'll be like Google, where whoever pays the most comes up at the top of the list. I don't know if that's happening already, but it's only a matter of time, and AFAIK there are no Payola provisions to prevent it. No wonder the big corporates want to play in the digital domain. No pesky towers, transmitters, or rules to deal with. In their ideal world, people will pay monthly to be subjected to content that's already being paid for by the highest bidder. What's next, blipverts?

SirRoxalot said:

If the platform is immaterial - as some contend - then "radio" is platform-independent. It then makes sense to differentiate based on the service, not the platform.

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"What makes sense" doesn't matter when there's a law on the books that seems unable to change. It would be nice if Congress earned their pay, but they don't. They barely even show up for work. So private business is stuck operating under laws that make no sense. This is why CC made this deal directly with Big Machine. The recording industry wants to get paid for it's content, regardless of platform, and wants that payment to be based on the per-play price rather than percentage of revenue. Radio companies prefer the system they've been using with BMI and ASCAP, which is why nothing has happened.

SirRoxalot said:

One of these days - if it hasn't already happened - some smart guy at a record company will pay Pandora for extra "spins" of their music.

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Pandora received a discount on the royalty that they say saved the company from bankruptcy. And they agreed to do things in exchange for that discount. We don't know exactly, because those negotiations took place behind closed doors. That discount was a defacto form of payola. The labels employ indie promotion people to promote spins of their music on digital outlets, similar to the people who were outlawed at OTA radio. The labels are paying money and granting royalty discounts for specific "spins" and services on Sirius XM and many other places. What is considered payola and against the law for OTA doesn't apply to the digital domain.

TheBigA said:

Pandora received a discount on the royalty that they say saved the company from bankruptcy. And they agreed to do things in exchange for that discount. We don't know exactly, because those negotiations took place behind closed doors. That discount was a defacto form of payola. The labels employ indie promotion people to promote spins of their music on digital outlets, similar to the people who were outlawed at OTA radio. The labels are paying money and granting royalty discounts for specific "spins" and services on Sirius XM and many other places. What is considered payola and against the law for OTA doesn't apply to the digital domain.

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There is actually a webcaster, Jango, that openly sells plays on their internet radio service through their "Airplay" platform. Although designed specifically for indie artists, artists can buy plays then have them target people who are fans of similar artists. I wouldn't be shocked if more webcasters did this. Have to pay the bills somehow.

Related:

Radio Royalty Deal Offers Hope for Industrywide Pact

http://www.nytimes.com/2012/06/11/business/media/radio-royalty-deal-offers-hope-for-industrywide-pact.html?_r=1&nl=todaysheadlines&emc=edit_th_20120611

It might not be an unrelated story that the publishing royalty negotiated by the Radio Music Licensing Committee with BMI, ASCAP, and SESAC has lowered the OTA radio royalty bill by over $1 billion. Could that money be part of another attempt by the NAB to do an industry-wide deal with the labels? Would stations be more willing to pay labels if it didn't actually cost them more than what they're paying now?

TheBigA said:

It might not be an unrelated story that the publishing royalty negotiated by the Radio Music Licensing Committee with BMI, ASCAP, and SESAC has lowered the OTA radio royalty bill by over $1 billion. Could that money be part of another attempt by the NAB to do an industry-wide deal with the labels? Would stations be more willing to pay labels if it didn't actually cost them more than what they're paying now?

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That may be. I suppose that most station owners really don't care how the money they currently pay is divided. I'll even go so far as to say that many feel the performing artist should share in the royalties. A lot of great performers have died penniless due to bad deals from their record companies. That’s not right, but it is not radio's fault.

What has most of us concerned is the high additional cost of streaming, as well as the Byzantine song reporting and collection process that is imposed by Sound Exchange. At least BMI, ASCAP and SESAC just send a bill, which you pay. Sound Exchange makes you calculate how much you owe them every month. What kind of a business model is that? Worse yet, they have a very time consuming song reporting process. I can see how a large cluster could need to have an extra employee, just to deal with Sound Exchange.

It seems to me if you are going to charge someone for something, the least you can do is to make it easy to pay what you owe. That concept seems to have totally escaped Sound Exchange.

Chuck said:

What has most of us concerned is the high additional cost of streaming, as well as the Byzantine song reporting and collection process that is imposed by Sound Exchange.

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Yep...I think the mindset there was all the onus was on the stations, which was unfair, especially considering the methodology for calculating the royalty needed a staff of accountants. This is why the NAB wanted this to be handled by a different group rather than SoundExchange. Someone who is independent and not a subsidiary of the RIAA. The relationship with BMI, ASCAP, and SESAC has been relatively good for the most part, and radio has come to expect that level of professionalism.

And I agree that radio stations don't care how the money is divided. What we objected to was creating a new royalty that was ten times as much as what we were paying the songwriters. The various rights holders should share equally in the money. Songwriters should not make less than artists, especially when artists typically base their performance on the songwriter demo. And musicians should not receive royalties. They get paid regardless of whether or not the song gets played on the radio.

TheBigA said:

And musicians should not receive royalties. They get paid regardless of whether or not the song gets played on the radio.

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Even though many of my friends are musicians, I have to agree.

If you are one of the session players, you have been paid very well for your time when the recording was made. Any further income really isn't justified. If you are a session player, 99% of the time you are doing tracks for used car commercials (or worse) with no expectation of further compensation. That is normal. On the other hand, if you do a track for a major recording artist, the same work involves residuals. I don't blame anyone for trying to make a living, but somewhere it becomes ridiculous.



I suspect the s.

The reason musicians received a point was to ensure their support in Mitch Bainwol's war. Same with AFTRA. His strategy was a completely unified music industry, where no one blinked. But Mitch is gone, and it's time to make a deal. I think once they get down to it, the deal will look similar to what exists in Europe, where the labels get the money through an intermediary, and they distribute to the artists. AFM and AFTRA will be left out. That will leave AFTRA available to negotiate a deal for commercials. Poof.