11-30-2012
It's an issue Gordon Smith has been predicting would come back to haunt radio for years to come. As Pandora CEO Joe Kennedy tries to force government to lower what his unregulated company pays to make his business model work successfully, the radio industry is being held upside down by its ankles so the government can shake more money out of its pockets. Here's the most chilling statement from this weeks "fairness" hearing. Democratic Representative Mel Watt said "the exemption for terrestrial radio is about 90 percent of the problem."
NAB CEO Gordon Smith disagrees with Watt and predicted on Jim Bohannon's radio program that if government slaps radio with a performance tax, it will just result in less music. All radio stations should be paying close attention to Smith and the NAB and get as involved as possible before its too late. Smith said it's just a matter of economics. If radio had to pay a performance fee on terrestrial royalty tax on music it plays over the air, a lot of stations would just go away.
Conversely, Smith says, when you look at digital radio that is streamed on digital devices, we do pay a performance tax on that. "Those radio stations that stream, they do it for brand extension and promotion. They are not making any money on that therefore that whole segment, in time, will just plateau. If there's a performance fee imposed on terrestrial radio, there will just be a whole lot less music. And there would be radio stations that would go away, or convert to talk radio. It's just a matter of economics. Rightly or wrongly, we pay a royalty to the creators of the music, not all the different bands that play the music. Their economic relationship is with the labels, with selling tickets at concerts, souvenirs and being famous and we don't charge them for that. They would not have a promotional vehicle without terrestrial radio."
As one reader at radioink.com put it, "I have no problem paying the artists performance royalties. So where do I send our rate card so I can be paid for my air time. I guess I can ask the record label reps when they call our station asking us to play this artist or that artist."
Another reader asks the question, Can any of these legislators get their head around the business model for radio? "Their comments make them seem out of touch and unable to grasp simple economics. Performance royalties are fine but performers receive promotional value and historically were partners with advertisers and radio folks in providing the mechanism for free emergency alerts, news, sports. If they pull out, and we know advertisers are pulling out - how does radio continue to provide all this for free?"
Smith said It's a tragedy what the Internet has done to the recording industry. "You see file shares where people don't pay for music. Outside of Wal-Mart you don't see places to buy music because people just get it off the Internet. A lot of people don't buy music any more. That has disrupted their business model. We maintain there is still promotional value of radio playing their music. We don't charge them for it. There's no Payola. In fact, you'd sell no music if you did not have radio. Artist after artist thanks radio for playing their music because that's how they become famous."
You can listen to the full Bohannon interview with NAB CEO Gordon Smith HERE
(11/30/2012 8:05:50 PM)
I didn't realize that Radio Ink ran humor pieces.
(11/30/2012 4:08:04 PM)
Bill Goldsmith's comment could have stopped with a period after (The Us is the only) developed country.
All of the other countries in the world have been trying to emulate the US system of broadcasting for years.
The US system has made record companies, indies, artists, publishers, composers, and songwriters many billions of dollars and rich and famous,
without any compensation to itself. Radio's FCC payola rule says radio must select music according to artistic merit. It works!!!!!!!!
(11/30/2012 3:15:40 PM)
I'll allow as to how internet streamers are getting screwed. But for radio operators to jump all over the traditional fees...
What a pack of irritating complainers.
Were they breaking crystal glasses at the poo-bah gathering with all the extremely high-pitched whining...?
(11/30/2012 3:03:29 PM)
Translation: We will continue to try and weasel out of making payments to Sound Exchange as long as we can.
Reality: Music Radio is dead without music. Pay up you cheapskates.
The bottom line: radio has made many artist very wealthy. I consider us a promotional outlet. The current model has worked well for radio the artist since the beginning.
I agree, Maybe we should go back and bill those who made great fortunes thanks to the promotion of their music on radio.
If every radio station stopped playing music. It would have a major impact on the music industry.
Don't bite the hand that has gave you tremendous success, and will continue to support you in the future.
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