Monday, August 06, 2007

Cutting The Nose Off The Goose That Ate The Seed Corn

Pardon my deliberately mixed metaphor, but, boy howdy! I go out of the country for a while and come back to a movement afoot in Congress to force radio broadcasters to pay a performance royalty. Has the collective body of performance artists in the US taken an RIAA pill to make them as brain dead as that erstwhile organization? Do they realize just what the logical implications of that measure could be?

Let me state for the record that I am against broadcast, Internet or any other advertiser-supported "broadcasters" being forced to pay performance royalties. It will be amusing to watch the NAB and others argue for one position while arguing against the other, but not surprising given each sides' vested interest.

But that's not the point. If songwriters and performers want to extinguish the mass market for new music in the US, I can't think of a better way than to support this proposal. Why? Because, instead of unearthing a mythical pot of money, this rule will force a series of rational economic behaviors which will tighten playlists, increase costs for both stations and record labels, and reduce the amount of money spent on development of new acts.

Think about it. Radio and the music business have had a long-standing symbiotic relationship: the radio stations supply free airtime, the labels (or artists themselves in some cases) supply the content. Radio benefits from not having to pay to fill the airtime, and the music industry benefits from free advertising (yes, that's what playing a song on the radio is, in effect, advertising for the artist and songwriter).

Suddenly, the performers (and labels, if they own the performance rights) want to be paid for their content. Doesn't it make sense, then, for radio to be paid for its airtime? If one side is going to break this deal, then it's only fair for the other side to respond in kind.

Music radio programmers today don't worry about "what will the song cost to play". You can bet, once they have to, that the bean-counters are going to put pressure on programmers to minimize the "expense" of the music they play. And music radio, as practiced today, is risk-averse enough - resulting in few adds over the course of the year. This tends to play into the hands of established acts. Are the chances of a song by a new act being added to a playlist going to increase, given the proposed explicit economic risk added to the current "loss-of-listener" risk? I don't think so. And forget about that impromptu Gentle Giant retrospective - got to get a sponsor first.

Another way the bean-counters might respond is to raise revenue to offset the increased expense. Some argue that radio ad rates have been rising in the face of audience erosion, and are too high already. This would result in more pressure to play less music in general. Unless, of course, the radio stations start charging record labels to play the music to cover the performance royalty expense. While some readers may be thinking "payola", I'm thinking rationality. Radio airplay of music is advertising. Why shouldn't the labels pay, if the radio stations have to pay and the advertisers won't?

But, one might argue, wouldn't the labels tend to concentrate their new "airplay" budgets on their most successful acts, or ones they were trying to make successful? Exactly. Just have they have been doing with other forms of promotion for years. They are just as risk-averse as radio stations, and tend not to focus on their back catalogues. Does this favor the average artist? Hard to see how.

And, finally, given the complexity and overhead costs of tracking performance royalties, some stations might just abandon music formats altogether.

I could go on - but you get the point. Somebody wasn't thinking when they woke this sleeping giant. Now we're going to see how ugly the giant really is.

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