Tuesday, March 27, 2007

Attack of the Music Mafia

“The music business is a cruel and shallow money trench, a long plastic hallway where thieves and pimps run free, and good men die like dogs. There’s also a negative side.” - Hunter S. Thompson

More and more people are listening to online radio these days, with overall listening time per person coming close to equaling that of terrestrial radio. Music aficionados are enjoying the eclectic and distinct genres that they can access with the simple click of a mouse. Listeners can also tune in terrestrial radio stations from other cities, in case they feel the KISS-FM in Chicago is better than the one in L.A. or Dallas. For many fans, this is about as close to heaven on earth as they can get. The ability to have so many listening choices at one's disposal was likely once a whacked-out dream inside someone's head. And with the growth of WiFi and portable technology, webcasting could someday go wherever we go.

But, things can't ever possibly be this good. A dark cloud looms over the horizon. Soon, music fans could be deprived of the rich sounds and wildly varied styles and genres of music coming through their computer speakers. They could be without the bossa nova, lounge and other forms of exotic content provided by LuxuriaMusic. Or the not-too-commercial content of FolkAlley. Or the deep selection of 80s new wave hits served up by Java Jane. Yes, this burgeoning media form could come to a grinding halt soon, if lawyers and lobbyists in Washington, DC get their way.

Even acclaimed non-commercial stations like WXPN and KCRW could shut down their webstreams. Heck, so could the big commercial guns like Clear Channel!

This is not a veiled threat. This is real. And it could very well happen.

SoundExchange, the D.C.-based trade organization (and arm of the Recording Industry Association of America) that collects and distributes royalties, half to artists and half to record labels, is advocating for an increase in the amount of royalties that webcasters, satellite radio providers and other forms of modern technology broadcasters pay. After all, if licensing firms such as ASCAP, BMI and SESAC can collect song publishing royalties from broadcasters, satcasters, webcasters and whoever else, why can't they? But at least the music publishers are reasonable. If SoundExchange gets their way, royalties paid by webcasters to the recording industry will more than double, in addition to a $500 per channel per year fee. If this gets the go-ahead by the Copyright Royalty Board, and it possibly could, the very small hobby webcasters will be pushed out of business. Even multi-stream providers such as Pandora and Live365 will be bankrupted.

Terrestrial radio broadcasters are grandfathered in, and thus excluded from this money grab (though they pay royalties to ASCAP and BMI). They're not required to pay the RIAA-mandated royalties, unless they themselves stream their content over the web. But if SoundExchange gets their way, they too may have to cough up money. If that happens, well, I hope you really like talk radio.

And if you're one of the roughly 30 million people in the United States who listens to internet radio and are looking for sympathy and compassion from the Recording Industry Association of America (RIAA) or SoundExchange, well, don't hold your breath.

In fact, John Simson, executive director of SoundExchange, relishes the idea of paring down the webcast field, if it's beneficial to the artists.

"Is 10,000 stations the right number?" he asks. "Does having so many Web stations disperse the market so much that it hurts the artist? What's the right
number of stations? Is it 5,000? Is it less? Are artists better off having hundreds of listeners on lots of little stations, or thousands of listeners on larger stations?"

And if your webcast is a non-commercial hobby, well, find a new hobby. Simson says small operators who play music and don't try to sell ads "will have a hard time paying the rate" -- a change about which he's not shedding tears. Of course, he's living in a bit of a fantasy world, as webcast advertising is really in its infancy, and the vast majority of streaming stations are basically worth no more that the equipment they use. After all, AccuRadio is not AOL.

Many see a Utopian model where webcasting, like terrestrial radio, can work with the music cartel in a collaborative fashion. Meaning that the music getting airplay serves as promotion for the industry's goods, resulting in increased sales. Heck, the labels don't even have to bribe them to play their music! It would be a perfect world. Too bad the world really isn't perfect.

"The attitude that really has to change is the idea that the people playing this music on the Web are somehow doing artists a favor," Simson says. Artists want their music to be heard, of course, and the industry likes the concept of Web radio, but Simson rejects the concept that small webcasters are doing artists a favor by giving them exposure. He wants blood. And it doesn't matter how they get it.

Simson and his ilk are basically empty suits - lobbyists and lawyers doing the bidding of the RIAA (though they claim they are currently independent of them). Most of these goons aren't really true artists (though Simson did try to make it in the 70s as a singer/songwriter before chucking the dream and going to law school). They probably don't really care if musicians get paid or not. Most likely, they probably don't really care about music in general, as their minds have become clouded by figures and retainer fees. These people represent the dark, extremist side of the Music Mafia, the supercharged id of the industry psyche.

The music cartel thrives on control. And the very nature of the internet gives way too much power to the fans, power that the industry just doesn't want to fully cede. They'd much rather decide what we listen to, rather than us going out and discovering music that we might like better. The peer-to-peer file sharing boom earlier in the decade scared the bejeezus out of them. Sure, illicit file sharing is wrong on many levels, but this practice made the cartel paranoid of virtually anything on the internet controlled by parties outside their system of control. And that includes webcasting.

Just to warn you all, I'll be making much mention of file sharing, as it has been the 800lb. gorilla in the room throughout this rocky relationship between music and technology, and an example of how the industry dropped the ball with something that could have benefited them. But it most certainly has very little to do with the practice of webcasting. Although the industry has connected the two in the past, streaming music programming over the internet is really no different than terrestrial radio, only it's nature lends itself to niche programming and a more personal feel than corporate-owned radio. And it is definitely much more legit than music file sharing. Artists had every right to be hostile toward the likes of Napster, Kazaa and Grokster (though Metallica screwed the pooch in their poorly received response to it), but I'm sure all of them wholeheartedly approve of and support independent webcasting. In addition, many of them actually want to work with those nefarious peer-to-peer operators to legitimize their efforts and actually help the artists promote their works, while at the same time respecting their rights. But the music cartel, for the most part, is very timid.

(My son) kept saying it was wrong to steal the music (downloading from Napster)... (I said) If he wants to fight for my rights he could call up BMI and ask them why my broadcast-related payments were so low during the years The Who were in the top 10 AOR playlists. He might ask them why during the 1989 Who tour, when we paid a huge sum of money to BMI for the right to perform songs I had written, they eventually paid me (after a lot of complaining from my manager) a tiny portion of that sum, excusing themselves because their main payout area that year was Nashville. - Pete Townshend

Now, getting money to the very people who create the music is one thing. Only thing is, SoundExchange has had pretty mixed results in their distribution efforts. Last year, they posted a list of artists that have unclaimed royalties, giving a December 15 deadline to claim or forfeit. And who gets that forfeited money? Gee, one can only guess. Though, how hard could it be to find the Mormon Tabernacle Choir? Here's a hint: they're in Utah. Or the Chicago Community Choir? The list is utterly hysterical. How about Clayton and Mullen? You know, the guys who did the theme for the first Mission:Impossible movie? Remember them? Hmm... I wonder where they are now. Well, it certainly can't be too difficult to find the rhythm section from U2! Ace Frehley? SoundExchange must think the former KISS guitarist is living under a bridge or something (oh wait - that's Peter Criss). Or, I wonder if New Kids on the Block know that they had money coming their way? Well, they'd have to look under 'M', since it's spelled "Mew Kids on the Block." Hey, isn't that Coolio on the list too? Or, speaking of washed-up 90s acts, how 'bout Gerardo, a.k.a. the "Rico Suave" guy? Well, he shouldn't be that tough to find. He's currently a friggin' record label exec for Interscope, part of one of the Big Four labels! As for any of the other artists on the list, I'm sure anyone with half a brain in their heads could go online and find contact information for many of them in mere minutes. No wonder why a budding competitor, the more reasonable Royalty Logic, is fighting against their questionable tactics. Of course, SoundExchange used their government clout to stick it to their budding rival.

"In a game where the ‘other' guys in suits and ties and 4 super-corporations control the bottom line in this culture, my stance is to dismantle that dominance and add parity across the board. The lawyers and accountants who've assumed the exec positions stand to lose the most when that happens." - Chuck D

So, am I advocating that artists should go pound sand and be thankful that they get any airplay at all? Absolutely not. But the recording industry should realize that, as hard as they try, they cannot work against technology. It didnt' work with the sheet music publishers and their wars with radio in the 1920s and 1930s. It didn't work with recordable tape and the rise of FM radio. And it didn't work with digitally compressed audio files and the internet. What did happen in every case is that the technology helped them grow even more. Even today, the recording industry is starting to make money via legitimate digital distribution of their music via iTunes and the like (and it took someone with the clout of Steve Jobs to finally make it work), after the fizzling of half-assed industry-controlled efforts such as MusicNet and PressPlay. Illicit downloading, believe it or not, may have actually helped them, as albums from Radiohead, Eminem and Coldplay shot to the top of the charts even after being fully leaked in advance online.

"In Mozart's time, word of mouth built an audience. People found him and heard him play. Then someone came along and said, 'We can sell this experience.' Right there, you've got trouble. Music comes from the spirit, but where does the guy selling the music come from?" - Prince

The music industry and its lobbyists and lawyers have to realize that new media (as in satellite radio and webcasting) is really helping them stay alive. Here are ten suggestions for the recording industry on how all parties involved can coexist:

1. Just like radio airplay, webcasting, satellite, Muzak and whatever other distribution technologies out there can actually help promote your stuff. And they can help sell it. Heck, AccuRadio, with 20,000 listeners at a time tuning in to 320 different music streams, claims that they help to sell $40,000 worth of CDs per month via direct links to Amazon.com. But with over 300 streams, the new rates will drive them out of business. Is this what they really want? Record labels have had no qualms in the past actually bribing stations to play their useless crap, so why take it out on the little guy who actually wants to play it? And it won't cost the labels baggies of weed, suitcases full of cash or hookers to do it. Tell the lobbyists to be reasonable about this whole royalty business and stop being so anal about it. The money will come. Trust me.

2. Recording industry lobbyists such as Simson claim that the music on webstreams are 'perfect digital copies.' That's nonsense. Music on webstreams is highly compressed and non-lossless. Meaning that they are degraded. Most webcast at rates of 128K or lower, in various streaming formats. That's roughly the equivalent of FM, without the excess compression and occasional static. The closest one could get to CD quality would be at a rate of 320K, which has minor degradation. But very, very few stream over 128K, due to exhorbitant cost of bandwidth and the inability for most people to listen to it. Again, webcasting is not the same as file sharing. Far from it.

3. The RIAA claims that people can 'rip' streams and make their own digital copies with widely available software. This is true, but the rips are still highly degraded. And doing this just to get a few individual songs is a real pain in the ass. I've never heard of anyone doing this. Besides, it's just as easy to record off the air (maybe even easier) to your computer with an external FM radio and an inexpensive connector plug from Radio Shack, if someone really had the time and energy to do that.

4. Choking legitimate royalty-paying webcasters out of business will jump back to bite the music industry in the ass. These are the ones who go out of their way to support you, via 'buy' links on their site where someone can actually buy the song they're hearing with a mere click. Getting rid of the webcasters who are succombing to your extortive tactics will only open the door wider to lower-tech 'pirate' webcasters who don't pay royalties. Think these people are going to put 'buy links' on their site for people to purchase the stuff they play? Think again.

5. The music industry also has to realize that most webcasters out there aren't in it to become zillionaires. The webcasters realize this. They do it as a labor of love, and some, like Bill Goldsmith of Radio Paradise can scrape a living out of it, all the while paying his royalties. And revenue streams for webcasters are far from becoming reality. Most webcasters spend more money than they make, but they do it because they believe in it. They're looking to support their favorite artists, not exploit them. This isn't the same as peer-to-peer providers like Kazaa selling advertising and spyware on their heavily-trafficked sites and services and pocketing all the loot. Music execs are more likely to rip off their artists than webcasters are. And they have.

"They wouldn't recognise art or artistic integrity if they bounded over and bit them on the arse... The real truth is that record companies have been screwing the public for years and they're now terrified that they might lose the odd dollar here and there."
- Dunstan Bruce, Chumbawamba

6. The availability of online music, whether it be in webcasting, legitimate and illegitimate downloading or on-demand streaming is not what's really hurting the music cartel's bottom line. Sure, they're groaning about that 20% loss in sales over the past year, but have any of these people really looked to see what could be the real root of the problem? After all, the movie industry, also waging their own war against internet piracy, experienced a 5% increase in business in 2006, despite $10 tickets and $7 buckets of popcorn. Rather than blame everyone else, has the music industry taken into account other factors such as the increased competition from other media, including the widespread success of the DVD format for movies? Or the pricey video games available for all those gaming consoles (with several high-profile system launches in the past year)? Lots of stuff out there competing for that same dollar. Or the rise in sanctioned downloads from services such as iTunes? How about the tight playlists that dominate our corporate airwaves, depriving listeners of hearing talented artists rather than the current 'flavor of the month'? Or have they taken a look in the mirror at the very product they're pushing? There's lots of good music out there, but they seem content at merely pushing the mass-appeal mediocrity that they think is an easier sell. Blaming it all on the internet is short-sighted. And if new media is hurting your bottom line, perhaps you should learn how to take advantage of the vast marketing opportunities available with it and stop trying to fight technology. Remember, technology will always win.

"As the technology changes and the distribution channels evolve, artists are going to become free,"
Clint Black


7. Take care of your own. People have to wonder if your aim to collect royalties for deserving artists is true when the artists themselves are getting burned on expected royalties. Take the Bay City Rollers (...please!). They were pretty big in the 70s, and sold roughly 70 million units sold around the world. Yet all they've gotten in royalties in the past 25 years is a measly $254,000. Tsk, tsk. Or the Chambers Brothers. They released a bunch of records but scored only one real hit. And what a hit it was. "Time Has Come Today," written by Joe and Willie Chambers themselves, still gets tons of airplay, has been used in over 30 films, included on at least 125 compliations and even used in commercials. Yet, they haven't gotten a penny for it, or anything else they recorded in the 60s and 70s either. Is this how you take care of your own? Where does all this royalty money go anyway? We hear so many horror stories of artists getting screwed out of their money by unscrupulous execs, to the point that some of the very same people who built the business through their hard work died penniless through record company incompetence. Rhythm and blues pioneer LaVern Baker was still performing to her dying day while in a wheelchair with both of her legs amputated due to diabetes. Why? She needed the money for her artificial legs. Funny, I've never heard of a record exec falling on hard times. The industry screaming about webcasting cheating deserving artists is utter hypocrisy! So walk your talk. Practice what you preach. If it is indeed the artists' money, give it to them. And that means the money you stole from them too.

And if the recording industry is so concerned about the plight of the artists, allow the many musicians out there to be able to participate in the same health plans and perks that RIAA and label staffers have access to. NARAS, another music industry trade concern and host of the Grammy Awards, provided their former president Michael Green with a million dollar country club membership, a Mercedes and hush money for a sexual harassment suit. Musician Victoria Williams couldn't even get medical treatment for multple sclerosis on her own.

"The RIAA represents the interests of the majors. The interests of the majors are contrary to the interests of artists. The RIAA does not represent the interests of artists, and to suggest this is fundamentally dishonest." - Robert Fripp

8. The music industry will not gain much sympathy by alienating the people who support it most. Meaning people who listen to and buy your products. Calling your supporters thieves and slapping lawsuits on them will not endear them to you. Neither will cutting off their favorite listening options (i.e. webcasts) or inconveniencing them. And certainly not filing lawsuits against stroke victims and 7-year olds. Stop telling kids to drop out of college so they get a McJob and send you $3,000 or whatever you claim they owe you. And the 'settle-o-matic' feature on your website for the guilt-ridden and paranoid downloading crowd is piling it on a bit thick, don't you think? Let's face it, none of that money will ever see the hands of the artists whose music was snagged. Piss off your supporters (aka music fans) even more and they might do something rash, like form really bad opinions of you, boycott you, or even worse - ask questions you don't want to answer, such as why your artists only make less than a buck on their CD that sells for $15-18. Shaking down your fans is a big, big mistake.

"Record companies as we know them will soon be gone. There are too many other ways to distribute music, and once those are established there will be no place for record companies and their pigeonholes. They can take that as a threat if they like. It will be a big change. But as an artist I love change. Who needs ‘em?" - Keith Richards

9. Let go. Stop trying to be the gatekeeper to the entire music universe. I doubt this whole charade really has much to do with artist royalties. The labels have been shafting artists for decades. Rather it's a method of control. The industry wants to be the ones to decide who makes it and who doesn't, in order to target their cashflow and give the beancounters and shareholders something to wrap their minds around. They want all the power, and the ability to decide who gets airplay and promotion and who doesn't. With only a select number of radio station owners out there, and a heavy reliance on corporate-mandated playlists, this makes promotion very easy. Much more simplistic to shove bland, shitty mass appeal bands like Nickelback and Hinder down everyone's throats than Bright Eyes, who has recently garnered quite a bit of attention and rave reviews despite little mainstream airplay (except for non-commercial radio and webcasting) and being distributed by a small independent label out of Omaha.

But that would be too complicated for the industry. Much easier to promote and market what they know - crass, predictable crap. Like the Pussycat Dolls, a Las Vegas burlesque troupe who are in a rather unique situation - they are record company employees! Yes, you read that right. Rather than being 'works for hire' or indentured servants like every other act out there, they were hired and are employed by Interscope, meaning that the image, songs, musicians, videos, promotion, etc. are provided by the label, and all the girls have to do is show up in the studio, on the video set, on stage and to the reality show (yes, the reality show). Well, two out of three ain't bad. Supposedly, it's only one girl singing lead and backup on all the songs on their record (though two more out of the remaining five are given credit for backup vocals). Have we learned nothing from the whole Milli Vanilli fiasco? They also market this group heavily toward young girls, going so far to team with Hasbro to produce a toy line. Hmm... Las Vegas burlesque marketed to 11-year olds? Is this where they got the idea? But that's another rant for another time.

The labels are killing themselves with their increased reliance on mass appeal mediocrity. Think of it this way: In 25 years, who's going to be elected into the Rock n' Roll Hall of Fame? Certainly not Justin Timberlake. The innovative artists are the ones on the ground trying to do it themselves. Heck, there could be another Led Zeppelin out there, waiting for their big break. And likely, in the modern day environment, with the RIAA holding the keys to the gate, controlling distribution, support and radio airplay, it will never happen. And they're still a bit uncomfortable with fan-driven webcasters and sites like Myspace taking matters into their own hands. That's a chink in their armour! An affront to their authority!

"Somewhere along the way, record companies figured out that it's a lot more profitable to control the distribution system than it is to nurture artists. And since the companies didn't have any real competition, artists had no other place to go. Record companies controlled the promotion and marketing; only they had the ability to get lots of radio play, and get records into all the big chain store. That power put them above both the artists and the audience. They own the plantation." - Courtney Love

10. If you don't do it, someone else will. There's a reason Prince left Warner Brothers, Garth Brooks left Capitol and Public Enemy left Def Jam to strike out on their own. And there's a reason Ani DiFranco shunned the major labels and currently enjoys complete artistic freedom and over $4 per album in royalties by distributing her own music. Just last week, Paul McCartney, perhaps the most famous musician still alive, left EMI after more than four decades, even turning down a reported £25 million advance (or $49 million - like he needs the money!), to sign with Starbucks' upstart independent label, because he felt they could more effectively promote his new music. Yes, that Starbucks. It's about control. It's about freeing themselves from restrictive indentured servitude contracts. It's about determining their own destiny, outside of the Big Four. It's about trusting their destiny to a company that actually cares about promoting their new product.

Today, there are many more avenues available to artists that didn't exist in the past. No longer do major labels and corporate-controlled radio stations have to get involved. Artists and independent labels can simply cut out the middle man, by going to independent webcasters and sites like Myspace and Last.fm. The extremely talented Terra Naomi scored a major label deal with Island Records via a widely seen homemade music video on YouTube. These are more direct grassroots marketing channels that artists can utilize themselves, meaning less control for the music mafia. They're being rendered obsolete. No wonder why the industry is so timid of the internet!

Here's what can happen if the major labels just open their minds and support new media. A Chicago band, OK Go, was sitting on an album that was getting virtually no attention. Unimpressed with the predictable promotional efforts of their label, Capitol Records, they created a silly music video in their backyard for one of their songs as a joke (at a cost of roughly $5), emailing it to friends and acquaintances while never really intending to officially release it. Capitol could have sued for many, many copyright violations when the video spread and became a massive success on YouTube. Or they could have put their foot down when the band started handing out homemade DVDs featuring the video at their shows. Instead, figuring they really had nothing to lose anyway, Capitol stepped aside and just supported the band's efforts. OK Go got even more creative, shot another low-budget homemade video (this one intentional) and uploaded it to YouTube, without the knowledge or consent of the label. The result? "Here It Goes Again", another hilarious effort featuring a single long take and a choreographed routine on treadmills, was a web phenomenon, viewed over 13 million times on YouTube alone. It also won a Grammy for Best Video and resulted in a sales spike of 180% and widespread airplay for a year-old album, a very rare feat. To their credit, the Capitol brass gave in, let the band to their thing and even supported it, going so far as to allow the music on a medium they loathe - on-demand internet access. Yes, this stuff does work. The internet is a powerful tool that can be utilized to give a much-needed shot in the arm to a sagging music industry. This is even bigger than MTV! Killing the goose that laid the golden egg is sheer lunacy.

Major labels aren’t going away, but until they figure out how to lead the Internet rather than chase it, the mainstream music scene is destined to just get even duller and safer than it already is. - John Flansburgh of They Might Be Giants

So, what can we as the general public do to save internet radio? Well, fighting the music industry lobby and the politicians they have sucking at their hind teats is intimidating, but it can be done. You can go to this link at Congress.org, copy the text letter there and by just entering your zip code you can send the letter directly to your congresspeople. You can also find more information about the Music Mafia shakedown of the internet at these sites:

Save Our Internet Radio
Save the Streams - includes petition
Kurt Hanson's Radio and Internet Newsletter
Another petition

Or you could even let the SoundExchange shakedown artists themselves know how you feel about their fatwa on webstreaming and other heavy-handed tactics. You can email Simson here and contact the rest via this web page.

And yes, the Music Mafia and new media can coexist. And flourish. If only they stop fearing it and stop trying to kill it. And work with the public, rather than against it.

5 comments:

Clay said...

I don't listen to commerical radio (except for sports talk in the mornings) since I discovered Pandora.com, I have found, and bought music from artists I've never heard of before.

The music industry is just that that relies upon focus groups and target demographics to promote music instead of, like Prince said, allow music to come from the spirit.

ltr said...

I'm just starting to get into Pandora, and I'm even creating a few stations (real off-the-wall stuff, but extremely entertaining). Once I perfect them, I'll post links to them here. These stations are going to sound pretty kick ass!

Great site!

And this whole thing about grabbing as much in royalties as possible is extremely shortsighted, and will jump back and bite them all in the ass. I've seen evidence as to how internet radio really helps to sell music, and the industry is stupid if they think their scorched earth policy will pad their bottom line.

Emacee said...

I'm still trying to figure out what this has to do with progressive talk radio.
I have a hard time shedding tears for public radio. They get money from the government. They don't pay money to the government (i.e., taxes). Listeners send them money. And they still sell spots (i.e., corporate underwriting). And they are crying in their beer about how they should get a break on music fees?
Besides, the time for music on public radio stations has long passed.
And how come these stations are not complaining about the high fees NPR charges stations for programs?

ltr said...

I don't confine myself to writing about progressive talk radio. If you actually read this thing instead of merely posting your inane opinions and rants, you'd realize this.

Emacee, if you don't like what I put here and you just want to use my blog as your own personal toilet, then I suggest you go elsewhere. Obviously what I post here doesn't meet with your approval, and nobody here really likes you anyway. I think it's best that you just go away and not post here anymore.

Emacee said...

LT,

I do not agree that I shat all over your piece, nor do I concede my opinions are inane because they differ from your's.

I agree that the music industry's action is ill-advised. They (along with AFTRA) almost killed radio station audio streams once. They seem to be trying to do so again.

The RIAA think they have a monopoly on music. They don't. If they make their product hard to get or too expensive, other sources will open up. Apparently they have not learned from the experiences of ASCAP (which resulted in the birth of BMI) or the AFM (which killed off big bands). The established recording industry could well put themselves on the sidelines by failing to embrace new technology (as terrestrial radio is also doing).

FTR: I agree with most of your observations but my predictions are not as dire. I think they will do more harm to themselves than to Internet audio (the toothpaste is already out of the tube).

As I follow this story, I see public broadcasters demanding special protection for themselves. I say they already get more than enough privileged treatment. I am a fan of much public radio programming but their over-paid managers seem to abhor the idea of a level playing field with the rest of the biz.


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