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Apr 16

Written by: Greg Runyon
4/16/2010 6:22 PM 

Today, the Speaker of the United States House of Representatives, Nancy Pelosi, decided after careful consideration that she supports the idea that money should be taken out of the local economy of Cedar Rapids, Iowa and sent to New York City, and more egregiously to London, Tokyo, and Paris. The purpose of this is to keep afloat an industry that has been so mismanaged that some of its largest companies are teetering on bankruptcy.

I write today again of the Performance Royalties Act, a measure currently before Congress that would compel local radio stations like Z102.9 (or any other free, over-the-air music radio station that you enjoy) to pay the record companies additional fees beyond those that we already pay for the performance of these songs. Every music radio station in America currently pays royalties to any number of trade groups, who then disseminate those royalties to the songwriters. The purpose for radio compensating the songwriter as opposed to the performer is that the songwriter may not have the avenues for revenue-generation that are available to the performer.

Performers of songs make money through myriad ways, all of which local radio stations help support, without asking anything in return: Song sales, concert ticket sales, merchandise sales, and so forth all benefit the performer. Songwriters, unless they are also the performer of the song, have no such opportunities. You’ve been to a concert, right? Hundreds, maybe thousands of people paying $30 to $300 a ticket ought to make some pretty nice coin, right? Well, let’s do some quick math: Let us assume an average ticket price of $50 for an arena show. Let us also assume they sell 10,000 tickets, which would not be a stretch for your upper-echelon artists at all. That’s half a million dollars in gross revenue in one night. For a lot of the radio stations in Iowa, that’s half of a year’s gross revenue, a year’s gross revenue, or longer. Let's say the performer plays 60 dates a year. Now we're talking $30,000,000 of gross revenue from one artist, working not much more than one day a week. After all the expenses of putting on a show are taken out, I don’t know what the profit figures might be, but there are not all that many radio stations in America that do that kind of business in a year, and I can guarantee you that none of them are located in Cedar Rapids, Iowa.

So I don't want to hear about how the poor artists need this money. Besides, the record companies, who are already well-known for screwing over their own artists, will be getting the first and largest cut of this money. This won't help the little-guy artist who struggles to even get airplay. It may help the already successful artists buy a few new Bentleys. The recording industry likes to position the argument as this issue being about the artists, because it’s certainly more palatable than the truth. If the record companies would like their artists (analogous to their employees) to make more money, why don’t they, I don’t know, pay them better?! What business is it of mine, the radio industry, or the U.S. Congress what a record company pays its employees, beyond the minimum-wage laws?

Supporters of this cause often point out that Internet and satellite radio stations already pay a performance royalty to the performers of songs. Why the heck does local radio get an exemption? Well, let me throw this out at you: Has a satellite or Internet radio station ever promoted a local charitable event? Z102.9 helped raise tens of thousands of dollars for flood relief for this community after the 2008 devastation. Where was your satellite radio then? Did Internet or satellite radio tell Iowa City area residents that a tornado was coming their way a few years ago? Were they on the scene filing news reports in the aftermath? They did not and were not. We did and were.

Why is local radio different than Internet or satellite? Try this: I say “naughty” words in casual conversation more than most people I know. But in 20 years of being on the radio, I have never been allowed to say certain words that are uttered every day on satellite and Internet radio stations. If we are going to declare that everything is the same between local terrestrial radio and Internet and satellite broadcasts, maybe it’s time for “Greg's Big %$#@^ing Radio Show” to hit the local airwaves.

I don't really have any desire, usually, to swear on the radio. In fact, despite my penchant for salty language, I will unceremoniously hang up on you if you call the request line and ask why I haven't played that %$#@^ing song you requested 20 minutes ago. But let us not pretend that local terrestrial radio is the same as satellite or Internet radio, or that it serves local communities or recording artists in the same way.

Sirius/XM had to merge because neither one was making money. In 2008, Sirius' Net Operating Income was -$5.31 billion. Did you catch the minus sign on the front end of that number? That's the business model you'd like local radio to emulate? Sirius/XM has less than 1000 employees. This one little radio company in Cedar Rapids, Iowa employs 30-some-odd (some very odd) local people. Is it better for you if we tighten our belt by trimming staff or whatever we need to trim so we can give a record company based in France more money, or the one in London that's about to be turned over to its creditors because it can't pay its bills, despite the fact that they've had moderately successful artists like the Rolling Stones and Paul McCartney in their fold for decades? How in the heck can you be broke with those guys generating revenue for you?

Let's call this what it is: A desperate attempt by a failing industry to improve their horrific financial condition, which they can blame on no one but themselves. This bunch thought the consumers of their products were so dumb that the buyer would keep on plopping down $19 for one or two good songs, six okay songs, and four turds just as long as they kept packaging them in jewel cases. They were so dumb that instead of embracing the rebirth of the single (as opposed to album sales) that came with the Internet, they resisted and resisted until illegal file sharing became so prevalent that it was nearly out of control. Essentially, Apple bailed them out of their own idiocy by setting up iTunes, where you can pay about a buck a song for the songs you want, instead of paying going-on $20 for all the junk that gets cobbled together to make most albums.

If local radio airplay isn't valuable enough to the recording industry, why do the record companies push so hard for airplay? Local, free airplay sells records, that's why. No one sane would dispute this. If you'd rather not have local radio airplay when you release a song because you think that's akin to the radio industry using your product without compensating you, would you be so kind as to let us know? Send your song only to Sirius/XM and some Internet streamers, and drop us a line letting us know you’d rather go for it without our help. Good luck selling records. Can you sell lots of records without terrestrial radio support? Sure. Does it happen? Yes. But far, far more often than not, it is local radio airplay that sells CDs and mp3s.

And we don't see dime one off of that. Never in my 20 years in radio has a record company cut me a check for getting behind a song. The cool part of this is that it's a beautiful cycle of prosperity for everyone involved, if we're smart businesspeople: We use the record company's product and promote it, while paying the otherwise potentially uncompensated songwriter. You get to listen to it for free. We make money by selling advertisements. Advertisers, not unlike the record companies and artists, benefit by having your ears hear their message. But they, unlike the record companies, pay us for the time that they are exposed to your ears.

Now, the recording industry wants to upset that beautiful balance, because they are pigs. I don't expect you to actually do this, but I'll ask anyway: If you value free, over-the-air, local broadcasting, would you let your representatives in the House and Senate know that? Thank you for your support.

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2 comment(s) so far...

Re: A Beautiful Cycle of Profitability

I was once again inspired by your blog and just sent Nancy Pelosi an email asking her to do her homework and take a good look at what the performance tax would do to local radio stations like ours.

By Loretta on   4/20/2010 2:14 PM

Re: A Beautiful Cycle of Profitability

Still no reply from Nancy Pelosi...hope she's taking this time to do her homework.

By Loretta Welsh on   4/21/2010 3:34 PM

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