Congressman Buys Recording Industry Argument That Radio Is Piracy

from the and-here-we-go-again dept

For pretty much the entire history of radio, everyone has known that getting your songs played on the radio was promotional. It helps sell albums. It helps sell concert tickets. There is no better way to prove this than to just look at the history of “payola” whereby record labels would pay radio stations to get their music heard. Obviously, the recording industry put tremendous value into being on the radio and was willing to pay for the privilege (even if it was illegal). In the US, radio stations have to pay royalties to composers and publishers — but not performance rights to the musicians. That’s because Congress also recognized that radio was a benefit to those artists.

Yet, in the last few years, with the recording industry execs desperate for more cash and unwilling to embrace business models that actually take some work, they’ve been running to Congress demanding that radio stations now pay performance rights to the labels. They even came up with a silly study that attempted to prove that radio play decreases sales. Late last year, it got so silly that one of the recording industry’s many lobbying groups, called musicFIRST, claimed that radio is a “form of piracy.” musicFIRST has been hiring big name lobbyists, like former House Majority Leader Dick Armey to push this view, and (of course) some politicians have obliged.

Rep. John Conyers has once again introduced a performance rights bill which is mistakenly described as creating “parity.” It’s only “parity” if you think that doubling the tax on playing music on the radio is “parity.”

This is, once again, nothing more than the recording industry trying to get the government to force others to hand over money, because the labels are too lazy (or clueless) to learn how to embrace some of the new business models that are earning musicians plenty of money. And Congress has no problem helping to prop them up.

It’s worth noting, of course, that among the top contributors to Rep. Conyers recent re-election was the American Intellectual Property Law Association as well as DLA Piper, the big law firm that (oh look!) Dick Armey has been working for… It’s also worth pointing out that Conyers, as head of the House Judiciary Committee, just so happened to have recently abolished the subcommittee on intellectual property — which (hmm…) would have almost certainly been chaired by Rep. Rick Boucher, one of the few folks in Congress who actually has been known to fight for the rights of consumers, and against the RIAA, when it comes to copyright. This gave Conyers, rather than Boucher, control over new IP related legislation.

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Companies: musicfirst, nab, riaa

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Comments on “Congressman Buys Recording Industry Argument That Radio Is Piracy”

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Anonymous Coward says:

Financial Week

Barney Frank: TARP’s comp curbs could be extended to all businesses
Would be part of broader bill limiting hedge funds, credit-raters, and mortgage securitizers; ‘deeply rooted anger’
By Neil Roland
February 3, 2009 ET

Congress will consider legislation to extend some of the curbs on executive pay that now apply only to those banks receiving federal assistance, House Financial Services Committee Chairman Barney Frank said.

“There’s deeply rooted anger on the part of the average American,” the Massachusetts Democrat said at a Washington news conference today.

He said the compensation restrictions would apply to all financial institutions and might be extended to include all U.S. companies.

The provision will be part of a broader package that would likely give the Federal Reserve the authority to monitor systemic risk in the economy and to shut down financial institutions that face too much exposure, Mr. Frank said.

Also included in the legislation: registration requirements for hedge funds and proposals aimed at curbing conflicts of interest at credit-rating agencies such as Standard & Poor’s.

McDermott Intl., an oil exploration and oil shipping amounts other things, solved the issues you write about a number of years ago. For years American law was so unfavorable to shipping that shipping firms simply register their fleet in more favorable locations, Panama and Liberia being two of the most favorite. McDermott took this to the next level and reentered the entire firm as a Panamanian firm with US subsidiaries. Most of their command and control remained in the US but certain tax and corporate functions moved to a small office in Panama. What this did do was remove the Arabian operations from control by US courts as these operations are not the foreign subsidiaries of a foreign company who corporate head quarters is officially in a foreign country.

If Mr. Barney Frank and his circle of anti business cohorts are not very carefully the US will wind up with current American corporations being subsidiaries of firms with corporate headquarters located in the Bahamas, Panama and other tax and corporate friendly countries. There is nothing that says US citizens have to work for a US company located in the US and there are a lot of pretty nice places in the world that would love to have the taxes generated by executives in the million plus range.


Why is this of interest?

Simple, radio network servers can be off shores just as easily as corporations.

Derek Kerton (profile) says:

Parity or Systematic Dinosauritis?

One of the problems with government is that they will always support a dated, dinosaur industry over nascent, innovative ones. Even if the newer industry would be much better for the economy and benefit more people.

That’s because the new industry has no lobbyists, no big money, no power brokers, no existing relationships, no alumni in positions of power, no “they’re killing jobs” argument they can make.

Politicians back the old industry time and again for two consistent reasons: they are sell-outs to incumbent industry, and/or they don’t understand the subject matter and are fooled by the incumbent’s FUD.

So we get this weird paradox of right-wingers, who supposedly are free-marketeers, supporting incumbent industries by proposing more and more laws to bolster them up. Hah! Some free market! Meanwhile, the true right-wingers, like Ron Paul, get shut out of the discussion.

I’m a left-of-center kind of guy, so I don’t mind a regulation once in a while, but for God’s sakes, they shouldn’t be supporting the incumbents. All the advantages are already theirs, if they’d just start competing.

Joel says:

How is this a government issue?

Why don’t we let the RIAA charge what they want in order for radio stations to play their music, but they should be required to enforce their business model, not the government. We’ll quickly have all talk radio or stations that play only fair use clips of songs to promote them because they can’t afford to play the whole song. Radio stations will then look to indie labels that are reasonable, and we’ll have a music revolution. The RIAA will get what they want and have a quick trip to the unemployment line because consumers and artists will find something that actually works.

Joel says:

Re: Re: How is this a government issue?

That’s the point. This shouldn’t be something mandated by the government. The RIAA should be entitled to collect fees from people playing media they own the rights to, but the burden should be on the RIAA, not some legislation. So, in that perfect world, we let the RIAA set their pricing however they want, and other, non-RIAA labels with indie artists/writers could set their pricing to something reasonable, and we end up with the market adjusting until the RIAA price themselves out of existence because nobody will pay what they are asking.

tubes says:

It is time for the recording industry to embrace the changing times & quit using the government to force terrestrial/satellite radio also internet radio & internet streaming video services into paying royalties. I have always felt it was wrong for them to force satellite radio, internet radio & internet video streaming to pay outrageous royalties that is putting a lot of these services into bankruptcy. If that happens then there is a loss of one more promotional tool. Radio is a promotional tool to sell albums. Radio is basically a FREE form of advertisement for them.
They technically should be paying terrestrial/satellite radio, internet radio & internet streaming video services. For example, if they were to advertise a new album on television they have to pay the station that is advertising it for them. There is no difference.

brwyatt says:

This is why I don't support the RIAA.

Because of all this crap, I REFUSE to buy music from lables that are part of the RIAA. I also refuse to support the MPAA (although I am admitedly guilty of going to movie theaters). I will support independent artists and lables, as well as independent movie makers.

I also *generaly* support the game industry, specificaly companies such as Valve who treat their customers as people and not crooks.

The less like a human being a company or group treats me (and their other customers), the less likely I will support them, and if they produce something good, then I may find other ways to obtain it. I would be more than willing to pay for it if A) the money actually went to those who created it (unlike the RIAA), and B) they treat me like a person (like Valve).

Ironic how the companies/organizations that treat their customers as crooks tend to create “crooks” out of their customers.

Music Industry Guy says:

Why Not

I kind of understand where people might think that this is a bad thing but in actuality it is not. This might be one of the most positive things that record labels are trying to do right now. And this has nothing to do with the RIAA 🙂

Let me try and explain this from a positive point of view…Section 106 of the US Copyright law grants 6 rights to people who exclusively own the copyright of a song (Reproduce, Adapt, Perform, Internet, Display, and Distribute)…that would be the Music Publishers and the songwriters. Nowhere does it give an exclusive right to the ARTIST (that is if the artist did not write the song). Why should the music publishers and the songwriters get all the performance royalties when the artist is doing just as much work if not more than the mp and sw? There should definitely be a performance right specifically for Sound Recordings that go to the artist. After all, what would the songwriters and music publishers be without the people who BUY the songs (aka the artists)?

I don’t know, this is just my opinion, but in the long run the artists end up making less than the music publishers and songwriters. As time goes on, the artists make less money from artist royalties from sales of CDs while the music publishers and songwriters make a killing from places like movies, soundtracks, TV shows, radio, commercials, bars, restaurants, DJs, nightclubs, and anything else that uses (i.e. “performs”) the song. 10 years down the road if a song is played on the radio (for example anything by Britney Spears), the songwriters and music publishers are still getting paid for that while the artists (the people that made the song famous in the first place) aren’t getting anything.

Of course, this is all under the assumption that the artist had someone write the song for them. I do not believe in artists double dipping (i.e. getting an “Artist Sound Recording Royalty” as well as a “Songwriters Performance Royalty”).

James Keegan (user link) says:


As a session musician I would love to see some performance royalties. I played on one of the highest selling albums of all time and all I made was a session fee. But when all is said and done, I’d be happier if the government kept their noses out of the whole business (this seems to be a theme for me). Radio stations “technically” pay BMI/ASCAP fees to cover the legal and financial aspects of the business. Payola was and is the biggest problem the music industry has. Piracy my butt! The day of the independent is here and flourishing. Radio is dead! The small artist finally has a means to produce quality work and keep all the proceeds in their own pocket where it belongs.

Tony (user link) says:

I am so sick of the RIAA. F the RIAA.
They have done nothing since the beginning of the digital revolution except complain of how they are getting screwed.

At first it was “Player Piano Rolls”; then it was tape recording; then it was vcr’s; now it’s s digital recording.
What’s next? Singing in public? Placing limitations on how long you can remember songs.

F the RIAA and F the senile, clapped-out old men in the senate and congress who only know how help those who “raise money” for them

hegemon13 says:


Wow, the labels really do want to commit corporate suicide, and quicker rather than slower. Radio is, after all, how they control the musical tastes of the nation. Can you imagine how quickly they will crash and burn by losing that control?

And they WILL lose control if this passes. Why? The most profitable radio stations, those with the lowest overhead on content, will be those that play non-RIAA music. Suddenly, the stations playing the most music with the fewest advertisements and the most freedom in their programming will be those playing independent labels.

I swear, the RIAA can’t see past the rims of the glasses, let alone the ends of their collective noses. Thank goodness for that. Let them burn. Good riddance.

Sandy says:

Actually . . . .

You would see a rapid improvement in radio quality if terrestrial radio had to pay performance rights. The dinosaur model is that people think that radio is currently in a position of promoting music, outside of college and commercial free radio that is, which I believe should be exempt from paying perf. rights. The way radio works now, you pay a radio promoter per add (addition) to play-lists. The radio stations are paid by the promoters to be able to represent them. Payola. And then a huge number of stations are owned by mega corporations, like Clear Channel, reviled by musicians and indies just as much as Ticketmaster. So, the major corporations have this cash cow and lobbyists in DC pitching their position.

What happens when radio is forced to pay performance rights? Well, it gets a whole lot less interesting for the Clear Channels of the world and they stop buying up all the stations, giving lower level broadcasters of the world an opportunity. Without the lobbying power of mega-corporations they have less control of the market. With less control of the market there is a greater chance that the owners might actually become more receptive to their audiences.

Oh, and with radio, like television, there is a saturation point where you just can’t shove any more commercials down people’s throats. Believe me, radio and TV alike are already there. Fear of having “too many” commercials is pointless, as there are already too many.

Sandy says:

Re: Radio is piracy now?

“In maybe the most audacious increase in lobbyist spending history, Clear Channel Communications Inc., which owns nearly 1,200 radio stations and some television stations, had a clear interest in the relaxation of media ownership rules to expand its holdings into more market areas. In 2001, Clear Channel spent only $12,000 on lobbying the government. By 2003, the year of the FCC vote, it spent $2.28 million, an increase of 19,000 percent in just two years’ time. That same year, Clear Channel’s CEO, Lowry Mays told Fortune magazine what he thought of the publicly owned airwaves entrusted to his company: “If anyone said we were in the radio business, it wouldn’t be someone from our company. We’re not in the business of providing news and information. We’re not in the business of providing well-researched music. We’re simply in the business of selling our customers products.”

Neverhood says:

go for it

Please, by all means, let the recording industry demand money from radio stations. It is legally their product and they should be allowed to kill the market for it any way they like.

In the mean time it will provide much easier access to the promotional value of radio for musicians and distributors who understand that it is a good idea to let a radio station promote you for free.

And the death of the classic recording industry will be that much quicker.

Rahul says:

Seems like a more complicated issue to me than the writer of this article makes it out to be. Though I’m sure he’s right about the corruptness of the system playing a major role in this legislative act.

The prevalence of internet, and more importantly, social networking sites is starting to trump the radio when it comes to spreading new music. With MySpace Music sites, which allows musicians to create their own pages with full songs, and even sell those songs, for free. Likewise, YouTube is a perfect platform for musicians to get their music heard. Just this weekend I was introduced to new (to me) musicians through YouTube. And new websites like provide even more opportunity for users to share music. The basic function of is similar to Twitter, however the main question posed to users at is “What are you listening to?” In this way, users can share their favorite music with friends, listen to their friends favorite music, and also links to amazon to allow users to purchase music.

So my point is, there are many websites that provide musicians with a free way to spread their new music, which means radio is no longer the optimal way to get new songs heard. Who listens to the radio anymore anyways? I know I pretty much always listen to my iPod in the car.

Mike (profile) says:

Re: Re:

So my point is, there are many websites that provide musicians with a free way to spread their new music, which means radio is no longer the optimal way to get new songs heard. Who listens to the radio anymore anyways? I know I pretty much always listen to my iPod in the car.

I’m not clear why that means radio stations need to pay extra.

You’re saying that there are many more ways to promote music. So what? Doesn’t that make it *easier* for musicians to make money these days?

Rahul says:

Re: Re: Re:

Yes, that does make it easier for musicians to make money these days.

I had written my last post under the assumption that record labels still pay radio stations to have their music heard, which I feel could have been stated more clearly in this article. I’m still unclear on whether or not this is still common practice since the Betanews article clearly refers to “payola” as a 1960’s practice; while a Techdirt article written in June clearly states, “The record labels have always paid the radio stations to play their bands”, which implies that it is still common practice.

Another point not explained well at all by Mr. Masnick was that the bill “is mistakenly described as creating parity.” He should have explained, as the source article does, that the new bill being proposed is to force radio stations to pay all the same royalty fees that streaming stations have been already been paying, even though legislation was passed 2 weeks ago by the Copyright Royalty Board to basically allow the streaming stations to pay the same (lower) amount that radio stations have been paying. Basically that means the bill is trying to balance a scale that the CRB balanced 2 weeks ago (meaning it would, in effect, tip the scale in the other direction).

While I now agree with the writer of this article in regards to this new bill proposed by Rep. Conyers, I totally disagree with the biased way this article was written. I had thought Techdirt was a more unbiased source than that, I now see that I was very mistaken. Since I had to read the article at Betanews in order to understand the issue properly, I might as well skip the middle man next time and not read Techdirt.

My earlier post was not to say whether or not this bill should pass since I knew I didn’t fully understand the issue (though I guess there were some unintended implications), but to more or less say that radio stations are becoming useless where music distribution is concerned. And also that the internet makes it possible for new artists to forgo the record label and do all the work themselves.

Anonymous Coward says:

Bloody Pirates !

I think it is the RIAA that are the pirates.
They come sailing into port, guns a blazin … without a care for whom they maim. For they are here for one thing and one thing only … to rape pillage and plunder. So, look out all you grannies, infants, and laser printers for the RIAA is sailing the high seas a lookin fer treasure.

GiveUsYaMoney says:

it seems simple enough, tax the radio, putt hem out of business and then the US Gov can sell it all off for the new wireless mobile phone companies to use for a few billion a bundle 😉

lots of nice cash to then bail out the banks, and get everyone newly financed from the cash pot.

then the publishers pay the the musicians 2pennys on the $ minus the usual % cut ot reinvest that in setting up a new corporate cloud on the free wireless networks the phone and Wimax companies were forced to provide in their contracts, use the core blank CD taxes to pay the boardroom
expenses and sundry……

etc, etc, etc full in the blanks as you se fit 😉

Mr. Anon says:

Wow. Crazy!


So let all the radio stations in the US be forced to stop playing music immediately.

What outlet will the Major Labels have then to promote their music at such a level?

As usual, they are acting like the worthless fucking shitbags they truly are.

Thank GOD for the Internet Revolution, which has resulted in Major Labels being seen as almost irrelevant.

Shiftless fucking asslickers!

Dan Kelley says:

Say NO to Record Companies

If radio isn’t doing the job anymore for musicians and the record companies, then why do record companies continue to send promotional copies of new releases to the radio stations? Why do record companies continue to advertise new releases in trade publications targeted at radio stations?

Royalties on radio only primarily benefits the copyright holder of the sound recording (usually the record company), barely provides anything to the musicians who were forced (knowingly or otherwise) to sign their rights away to the record companies – and does nothing for the up and coming artists who need a their big break from….radio

Matt (user link) says:

Um... did i miss something.

Radio stations have been paying for the right to play music for years… through royalties, isn’t that what this bill is about? charging the radio stations MORE to play the music? Payolla was illegal if I remember correctly, and was the process pursued by labels so that radio stations would play PARTICULAR artists more. You seem to suggest this is about playing Music at all…

There are plenty of radio stations without music on them, same as there are plenty with, the payment of royalties to the musicians is more about a share in the advertising revenue that the radio station generates rather then ‘paying’ for the privilege. Your regular talk-back DJ’s get a cut of the same pie but in a different format -a wage.

Just to clarify however… the RIAA are satan’s spawn and politicians are only as faithful as their next election.

Matt (user link) says:

Um... did i miss something.

Radio stations have been paying for the right to play music for years… through royalties, isn’t that what this bill is about? charging the radio stations MORE to play the music? Payolla was illegal if I remember correctly, and was the process pursued by labels so that radio stations would play PARTICULAR artists more. You seem to suggest this is about playing Music at all…

There are plenty of radio stations without music on them, same as there are plenty with, the payment of royalties to the musicians is more about a share in the advertising revenue that the radio station generates rather then ‘paying’ for the privilege. Your regular talk-back DJ’s get a cut of the same pie but in a different format -a wage.

Just to clarify however… the RIAA are satan’s spawn and politicians are only as faithful as their next election.

Mark says:

Change the rules of game

The radio stations should start charging the record industry for air time. All other businesses have to pay some kind of fee for air time, why not the record industry?
The radio stations are in business to make money like anyone else. It is time to stop the free ride of the record industry if they think it is a good idea to “bite the hand that feeds you”!

Lachlan Hunt (profile) says:

It really doesn’t make sense to me why radio broadcasters in the US are exempt from paying music licence fees for the content they play. Radio stations in other countries don’t seem to be suffering significantly by being required to pay reasonable fees.

For example, here are Australia’s licencing fees for broadcasters.

So before people start whinging about the prospect of stations being required to pay, how about analysing how the systems work in other countries first and realising that perhaps it’s not such a disastrous idea after all, as long as it’s a fair system.

eugene robert kozuk (user link) says:



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