(That’s a rough estimate…there could be WAY more reasons than that)
The RIAA (Recording Industry Association of America) has once again demonstrated their mind-blowing stupidity. Let me say first that these people apparently feel that the Internet is just some fad because, despite calls from their own artists whom they claim to care so much about, they refuse to abandon CD’s and go purely digital. This is explained in much better prose and detail than I can offer by my friend J.B. here. However, as if their refusal to embrace the future wasn’t enough, they’ve once again popped off at the mouth on their “biggest night” (their words, not mine), the GRAMMYs.
Now you may feel the urge to point out that the RIAA doesn’t actually put on the GRAMMY awards, it’s produced by the Recording Academy, to which I would say, you’re absolutely right. However you can’t talk about the music industry without talking about the RIAA, and frankly, what this rant is about didn’t come from the Recording Academy. Each year, just before the tribute video to all those who passed away that year, we’re treated to a lovely speech about how great the Academy and the RIAA is from Academy President and C.E.O. Neil Portnow. The last two years, Mr. Portnow delivered a speech talking about how piracy is bad. Essentially saying that if you download just one song illegally (read: for free), you are taking food off the table of everyone connected with the record industry. FALSE. Are you hurting their sales? Potentially, however studies have actually shown that piracy in some cases actually boosted record sales. Essentially what happens, in a nut shell, you download a song, you like it, you go buy the CD that it appears on (or in today’s world, you go to iTunes or whatever and download it). However long before Napster, iTunes, Rhapsody, etc., there was radio. And that’s what Mr. Portnow chose to reign down on tonight.
Mr. Portnow pointed out that the Academy supports all their artists, and certainly they have done great things with their Music Cares program, I would never attempt to take that away from them. But Mr. Portnow pointed out that they will make sure that all their artists will finally be fairly compensated for their work being played on radio (that’s not a direct quote, but it’s pretty close). They way he delivered that line implied that radio has been ripping off the RIAA and musicians since the dawn of music radio. This, again, is FALSE. Apparently Mr. Portnow forgot about ASCAP and BMI. Those are two entities that every single music playing radio station in the country pays a rather hefty sum of money to each year for the rights to play any song that is covered by ASCAP and BMI, which is pretty much all of them. While I am not in a position where I see how much is spent annually on ASCAP and BMI licenses, I recall my general manager mentioning once that the amount is several thousands dollars. Let’s do some quick math. I’ll give the RIAA and Recording Academy the benefit of the doubt and rule out all AM stations as music playing stations (even though there are several nation wide that still play music). There are roughly 7,000 FM radio stations, the great majority of which are music format stations. So let’s say that each station pays ASCAP and BMI $4,000 per year. 7,000 stations x $4,000/year = $28,000,000 per year. My point is this, if musicians aren’t getting money from their songs being played on radio, it’s not our fault, it’s the RIAA’s.
So already we’ve debunked the myth that John Mayer doesn’t make a dime from “Waiting on the World to Change” playing on the radio. But let’s not forget that the chief marketing wing of the record industry has and always will be radio. Think about it this way, MTV and VH1 don’t play videos during prime time hours, or even daylight hours, anymore. So you can’t turn on Headbanger’s Ball like we did years ago to hear new music. Certainly the record labels can and do take out ads in magazines and they run commercials on TV, but in this day and age, unless an ad REALLY grabs you, you tune it out as background noise. So we’re now left with one final source for the artists to turn to for help to get their product out there…radio. Study after study continues to show that good old fashioned radio, who unloads millions of dollars per year for the rights to play these songs, is still the #1 source that people turn to for music. Yes, iPods, satellite radio, and Internet radio have made a dent, but the vast majority of people still turn to radio for new music. In other words, not only is radio paying an estimated $28,000,000 per year to the RIAA, radio is driving their sales, but that just isn’t enough for the RIAA.
Late in 2007, the RIAA began lobbying Congress to pass laws forcing radio stations to pay more money for the licensing rights to play music. Radio owners are fighting it as hard as they can, but the RIAA simply has a better lobby than we do (a.k.a. they have more money…which they got from us, it’s a vicious cycle). What does this mean to you? Well, radio has threatened to abandon music formats all together as an “F-You” to the RIAA to prove that they need us more than we need them, but don’t count on that EVER happening. What it truly means is that if you have a favorite D.J., you might want to send them a “thank you” card because if these new laws go through, that D.J. probably won’t have a job much longer. Radio has long been on a trend of replacing jocks with anyone or anything that’s cheaper. Syndication has put many, many talented people on the unemployment line and if these laws pass, expect a lot more to join those already there. Owners will do what all business men and women would do when faced with a cost increase that wasn’t budgeted for, they’ll cut overhead however they can. That means people lose their jobs. Call it downsizing if you want, but it’s what will happen.
To be totally honest, this is all part of the RIAA’s ongoing overreaction to downloading music. They killed Napster. In fact, I don’t actually know of any P2P music websites anymore. I certainly wouldn’t be shocked to find out that a LimeWire or something like that still exists, but most everyone uses a pay site such as iTunes these days. So, the RIAA won and they know they did, yet CD sales continue to decline. Something that most people don’t know: the artists make the bulk of their money from tours, not CD sales, so artists don’t really care about the downward trend in CD sales. The labels though, oh boy do they care. They make their money from you dropping $13 on a piece of plastic. So since they’re now sweating, wondering how long they will continue to be employed, they have to find someone to blame. They blamed piracy, they beat piracy, and it didn’t help. So they looked around and asked “who else is putting music out there for free?” and saw radio and said “AH HA! It’s those bastards!” As J.B. points out in his blog, going 100% digital would cut production costs for the RIAA which would offset the 99 cents it costs per individual song or the roughly $10 for an entire CD, but don’t tell them that.
So once again, the RIAA remains committed to the 1980’s way of thinking and continues to believe in their own infallibility while they attempt a move which would be the real world equivalent of England stabbing America in the back.
Neil Portnow’s officially off my Christmas card list.
UPDATE: Turns out, I was waaaaay off on the numbers. After the GRAMMYs, several people at work asked my general manager about this new “performance tax” as the RIAA calls it, and he let everyone know the scoop. According to him (and he would know, he pays the bills), our group of 4 radio stations paid ASCAP, BMI, and SESAC (3rd one that I didn’t know about) $175,000 in 2007. He also says that the rate that you pay is based on your market size, so it’s actually a lot cheaper for us in market #200-whatever than it is for New York (#1), L.A. (#2), or Chicago (#3). Obviously I don’t know what the larger markets pay, but if we assume that the rates paid for all 7,000 stations in the U.S. that play music works out to about $500,000 per station then the RIAA is making….are you read for this?….$3,500,000,000. That’s a lot of zeroes. By the way, TV has to pay too, and we’re not even counting them. My G.M. called the above organizations a “perfect storm,” saying that if someone ever wrote a book about the “cartels” that control the world, these agencies would be the source funding them. He says that the money basically goes in to a vault and no one knows what happens to it from there. The massive sums of money being paid to the organizations makes accounting incredibly difficult, so tracking the money’s virtually impossible. I’m going out on a limb and assuming that it’s propping up failing record labels, but that’s just me. The proposed “performance tax” would produce another $2 to 8 billion for the RIAA, so once again we see the record industry making a move that is essentially the business equivalent of the bully demanding your lunch money.
So I beg you, write your Senators and Representatives and tell them this is incredibly wrong because it is. It’s extortion at it’s finest, indeed, Michael Corleone would be proud.
