How The Recording Industry Changes Its Own Story

from the anything-for-the-money dept

We’ve already discussed how silly the Performance Rights Act is — and how it’s basically an attempt by the record labels to get their own bailout courtesy of radio stations. There are all sorts of problems with it, and Jess Walker does an amazing job explaining just how ridiculous the Performance Rights Act is. In doing so, he highlights one point that is quite a common trick in the RIAA’s bag of tricks, but which doesn’t get enough attention: how it changes the story to flip things around to its advantage over and over and over again. Case in point: the RIAA is arguing that it needs to get royalties to performers for radio air play to “even out” the situation, since radio is the “only” platform where performers don’t get royalties. For example, they point to internet radio and satellite radio, where artist do get paid.

So, the RIAA claims, this is unfair… after all, why should they get paid for all of those, but not radio?

Except, the RIAA conveniently wants us all to forget history. That’s because it was the RIAA who argued that satellite radio, internet radio and other forms of broadcasting were different from terrestrial radio, and therefore required different royalty structures. In other words, the only reason why this “unfair” dichotomy exists in the first place is because the RIAA lobbied for it by claiming that satellite radio and internet radio were different.

Now it wants everyone to forget that and pretend that it’s some weird “anomaly” that terrestrial radio doesn’t include performance royalties? Don’t buy it. This is the sort of thing the industry has pulled off for years — pushing one country to extend copyright laws, and then moving to other countries and working up a lobbyist campaign about how that country isn’t keeping up with other, more reasonable countries, concerning copyright laws. Have you noticed what’s happening in Canada these days? That’s a direct example of this sort of thing.

Walker also takes on other points to show how silly and dangerous the Performance Rights Act would be. It benefits no one but the record labels. It harms radio stations. It harms independent musicians. It harms big musicians as well (since most of the money doesn’t go to them, but to the record labels). Who does it help? The RIAA, of course:

And for what? Imagine, as a thought experiment, that this bill were passed and, simultaneously, payola were made fully legal. Does anyone doubt that more money would flow toward the radio stations than away? Radio remains the primary means by which the music industry promotes its product. By pushing for this fee, the labels are essentially asking their advertisers to pay them for the service of selling their stuff.

Ah, you say, but what about the independent artists who don’t get big promotional pushes from the major music labels? Surely they’d benefit from a new revenue stream? Actually, they’ll be even worse off. The economic mission of most commercial radio stations is to deliver audiences to the sponsors whose spots are aired between tunes. So programmers have a built-in preference for music whose mass appeal has already been proven. If you increase the cost of playing a record, that just intensifies the incentive: The more you pay to play a song, the more conservative you’ll be about which songs you play. The marginal cost of playing each track is the same, but the commercial payoff is greater for established artists.

Generally speaking, the more it costs to run a station, the more risk-averse it will be. That’s one reason low-power and Web outlets are more experimental: They don’t have as much money on the line. But those stations–the ones that go out of their way to play diverse and unfamiliar material–are precisely the ones that have the hardest time paying the song tax. The proposed law acknowledges the problem by introducing a sliding scale, with the least profitable outfits paying $500 a year. But while that may be chump change for a big broadcaster, it’s a pretty big piece of the operating budget for a low-power, volunteer-run community or student station.

Nor is it the only cost the law will impose. “The record labels are completely out of touch as to how college radio stations operate,” Warren Kozireski, president of College Broadcasters Inc., recently complained on his organization’s website. “The extensive record keeping requirements that will be required by the Copyright Royalty Board alone will add hundreds, if not thousands of dollars to the true cost of a performance fee.” It’s relatively easy to do that book-keeping if you have a narrow playlist and rarely deviate from it, as is the case with most large commercial radio stations. But if you have a library of thousands of albums and 45s, many of which were never reissued on CD, and if you allow your DJs to choose which ones they play–or even to bring in still more music from their personal collections of rare soul or jazz or bluegrass or electronica obscurities–then tracking the data suddenly becomes a full-time job.

Worse yet: Though the rhetoric around the proposal focuses on the benefits to musicians, much of the money won’t make it to the artists in the first place. In part that reflects the fact that the fees go not just to the performers but to the copyright owner, which frequently means the record company. But it also reflects the corruption in the industry, which legislation like this has probably abetted.

As we’ve seen time and time again, if the RIAA supports it, it’s not good for consumers. It’s not good for musicians. It’s not good for anyone but a small selection of record labels. Hopefully, Congress recognizes this for the pure money grab it is and shuts it down.

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47 Comments
Ima Fish (profile) says:

payola were made fully legal

That’s a great idea. I know it’s great because I’ve been saying the same thing for years.

Exactly why do we need a single solution mandated by law?! Let a free market sort this crap out. Let the musicians, the labels, performers and the radio broadcasters work out contracts about who is willing to pay whom. Different solutions would be created based upon different situations. And the government would have no reason to be involved.

The problem is that the music industry has been tied to the government’s teat for so long, it no longer even understands how a free market works. Its solution for every problem is to get a new law passed or to file a lawsuit. When new laws and lawsuits are the only means to save your business model, it’s probably time to give it up.

some old guy (user link) says:

Re: Re:

Payola is not taking place in a free market. You are forgetting that the airwaves themselves are a government granted monopoly. You do not have “competition”, it is not a free market. As such, the “free market” cannot decide the going rate for payola (which CAN be decided on the web where there is now regulatory control of radio spectrum).

Because the free market cannot dictate the price of payola, it is up to the government to regulate it. The government chose to make it outright illegal, which appears to be in the best interest of consumers.

Ima Fish (profile) says:

Re: Re: Re:

Payola is not taking place in a free market.

Sure, it’s not currently taking place in a free market only because it’s illegal. Once the laws are removed, then it could become a free market.

Because the free market cannot dictate the price of payola

You’re assuming your conclusion. Why could a free market not exist where musicians and labels contract with radio stations for payment associated with airplay. It happens all the time on TV. A production company produces a pilot for show and then takes it around to the broadcasters. NBC, for example, decides it likes it so it pays to buy a full 13 episodes and agrees to put it on its fall schedule. The production company produces the episodes. NBC airs them, on public airways, and everyone is happy.

The government chose to make it outright illegal

The government can do a lot things, but that does not mean it should do such things.

which appears to be in the best interest of consumers.

Yet another assumed conclusion. How am I harmed by the legality of payola?

Anonymous Coward says:

Re: Re: Re: Re:

Sure, it’s not currently taking place in a free market only because it’s illegal. Once the laws are removed, then it could become a free market.

You aren’t being very clear as to which laws you are suggesting should be removed. The ones granting the FCC the authority to regulate spectrum and thus restricting competition? If so, then I would agree with you.

Why could a free market not exist where musicians and labels contract with radio stations for payment associated with airplay.

Such a market does exist, and it’s called the payola system. However, it’s not a free market because of local gov’t granted spectrum monopolies.

It happens all the time on TV. A production company produces a pilot for show and then takes it around to the broadcasters. NBC, for example, decides it likes it so it pays to buy a full 13 episodes and agrees to put it on its fall schedule. The production company produces the episodes. NBC airs them, on public airways, and everyone is happy.

And that happens all the time on radio, too. I’m sure why you think it doesn’t, but that isn’t the payola system either.

Ima Fish (profile) says:

Re: Re: Re:2 Re:

You aren’t being very clear as to which laws you are suggesting should be removed.

God, do you have any understanding about how pronouns work? We’re talking about payola, so when I use “it” it means payola.

However, it’s not a free market because of local gov’t granted spectrum monopolies.

You’re assuming your conclusion Explain why musicians and labels contracting with radio broadcasters in good faith for airtime, and vice versa, is not a free market. The only thing keeping musicians, performers, labels, and broadcasters from doing exactly that are laws against payola. Those laws, those payola laws, are the only thing interfering with a free market. Remove the payola laws and a free market would be created.

but that isn’t the payola system either.

Ima Fish (profile) says:

Re: Re: Re:3 Re:

but that isn’t the payola system either

I have no idea what happened to the second half of my posting, but here I go again…

Producers and TV broadcasters contracting in good faith for airtime, how is that not payola? Payola for radio is when musicians pay for airtime. From some reason no one has ever explained to me, that’s illegal. But when it happens on TV, it’s called advertising and is perfectly legal.

Anonymous Coward says:

Re: Re: Re:4 Re:

God,

Nope, you have seriously confused me with a higher being.

do you have any understanding about how pronouns work? We’re talking about payola, so when I use “it” it means payola.

Hmm, I didn’t ask you what “it” was. You said, “Once the laws are removed, then it could become a free market.” Now, “it” there appears to me to reference the market. If not, then perhaps it is you with a problem using pronouns. And that still doesn’t identify exactly which laws you were talking about. I would have thought the laws keeping it from being a free market.

Explain why musicians and labels contracting with radio broadcasters in good faith for airtime, and vice versa, is not a free market.

Because the airtime being sold to them is provided as a result of gov’t provided monopolies. And in one direction it’s payola, and in the other (vice versa as you called it), it isn’t.

Remove the payola laws and a free market would be created.

No, remove both the payola laws and the gov’t provided monopolies and a free market would be provided. The payola laws exist only to limit, somewhat, the abuse of the gov’t provided monopolies. The only thing worse than a gov’t provided monopoly is an unregulated one, which is what you seem to be advocating. And you want to call that “free market”? That’s really warped.

Producers and TV broadcasters contracting in good faith for airtime, how is that not payola?

First of all, that’s not exactly how you previously described it. So, you’re trying to back pedal now, huh? Here’s some music to go with that.

Now previously, you said, and I quote,”It happens all the time on TV. A production company produces a pilot for show and then takes it around to the broadcasters. NBC, for example, decides it likes it so it pays to buy a full 13 episodes and agrees to put it on its fall schedule. The production company produces the episodes. NBC airs them, on public airways, and everyone is happy.”

In that case, NBC is buying programming to broadcast and that happens all the time on radio, too. The fact that you seem to think that it doesn’t really shows your ignorance.

But when it happens on TV, it’s called advertising and is perfectly legal.

Umm, I hate to tell you this, because it’s only going to make you look doubly ignorant, but they have advertising on radio too. Have for a long, long time.

Payola for radio is when musicians pay for airtime. From some reason no one has ever explained to me, that’s illegal.

You know, I doubt if anyone could explain anything to you.

You really ought to research things a little more before shooting you mouth off like you did. It could save you a lot of embarrassment.

Osno says:

Once again, we have the rare opportunity to see if this new law will be good or bad by comparing how this “equivalent” stations have done in the years that the other performance rights law was working. If the artists did well and the stations survived, then it may be a good thing. If the stations shut down and the artists didn’t receive anything of the tax, then this new law is probably wrong. I think the second happened, but I have partial information on the subject. Can’t congress find good data and use it?

Chronno S. Trigger (profile) says:

Re: Re:

“Once again, we have the rare opportunity to see if this new law will be good or bad by comparing how this “equivalent” stations have done in the years that the other performance rights law was working.”

You mean like comparing it to the law that the dying sat industry is under? The law that the fewer and fewer web radios are under? The law that the recording industry has recently increased and claims it’s not enough?

“If the artists did well and the stations survived”

Artists aren’t a part of this argument. They’ve been screwed over by their record labels so long they know how to survive despite them.

“Can’t congress find good data and use it?”

What, congress doing work? When the hell was the last time you saw that? And when they do get the true data, the lobbyists twist and distort it with their own “data” so that no one who can’t think for themselves can decipher it.

Ima Fish (profile) says:

Re: Re:

we have the rare opportunity to see if this new law will be good or bad…. Can’t congress find good data and use it?

You seem to have no understanding as to why laws should be passed. We don’t pass laws merely to see what happens in the future.

There is absolutely no need for a law to be passed when the market can solve the “problem.”

Right now, the RIAA, performers, musicians, and labels can negotiation with radio broadcasters in good faith for payment. Nothing is stopping this from happening.

However, the music industry does not want to negotiate in good faith. It wants its terms imposed on radio broadcasters under force of law. There is simply no reason for such a draconian measure.

This law is nothing more than unfunded corporate welfare to the music industry.

Rob (profile) says:

Strangely enough, I kind of like this idea, assuming of course that only music released on RIAA supported labels would be affected (if this is a blanket tax levied by the government then I could not be more opposed to it, but it is unclear from the article whether or not that is the case.)

I like the idea of the big record companies pushing themselves further and further towards obsolescence. This might give the little guy a chance to step up. When the radio station has the choice between paying $1,000,000 to play the latest turd that U2 put out, or play a track for free from a local independent artist, the second option will become far more attractive.

Does anybody else have any further insight into how this law would actually work? Like I said before, if it was a blanket law for any and all copyrighted works with one flat fee, that would be bad. If this only applies to the RIAA, I think it could be a good thing. I have not seen much worth listening to come from the major labels since the early 90’s, and I think many people would agree were they exposed to more independent music, which this law could potentially help.

Rebel Freek (profile) says:

Re: Re:

I have a feeling it will be much like the royalties that bars and other venues payout to have anyone preform there, a blanket royalty system because “you dont know if the content will be infringing”.

I would enjoy watching the RIAA drive themselves completely under, but they seem to be grabbing onto everything they can as they go under, including the average person…

Anonymous Coward says:

Re: Re: Re:

“I have a feeling it will be much like the royalties that bars and other venues payout to have anyone preform there, a blanket royalty system because “you dont know if the content will be infringing”.”

If an artist has a contract with a radio station saying that the station can play the artists music without paying the RIAA taxes then there should be no infringement. Presumably, the artist has rights to his own music (but, if he somehow doesn’t, then the artist is the one to sue for lying).

Besides, isn’t it up to the RIAA to know what content is and is not infringing? Isn’t that partly what they’re getting paid for? So radio stations should be able to call them up and ask. Or they can have a website where people can look up the info. If the RIAA can’t do it’s job and inform radio stations what music is and is not infringing (or even know) then they shouldn’t be allowed to exist.

Requiring everyone to pay for any music that’s played because one person “owns” some music is absolutely ridiculous. It’s hard to come up with a comparable analogy (it has shortcomings) but I’ll try.

Imagine I own 20 widgets (ie: cell phones or whatever) and I lose them. Should I then disallow everyone else from buying widgets because one of them might be mine? Do I have the right to restrict thousands of widgets from being distributed (ie: without paying me) because some of them might be mine.

Or if I was a widget manufacturer and say 100 widgets got stolen and sold to distributors (the distributors don’t know they’re stolen of course. This is an oversimplified model). Should I restrict the sale of all widgets simply because 100 of those should be mine? Should I require a “royalty” for every widget that ever gets sold? No, I should ONLY require profits for the widgets I sell.

It’s ridiculous to block all music distribution just because some entity might own some of it. That’s stupid, the entity is NOT entitled to profits on songs it does not own. Plain and simple. This is extortion and it’s stealing. They are stealing from artists who don’t want to be represented by them.

Anonymous Coward says:

Re: Re: Re: Re:

“Presumably, the artist has rights to his own music (but, if he somehow doesn’t, then the artist is the one to sue for lying).”

Now lets go into the reasoning for this. If someone steals something and sells it to me and I didn’t know it was stolen, can I be held accountable? No. If I bought it knowing it was stolen then I can be held accountable. Same with radio stations. If someone gives them something to broadcast and the radio station thought it’s not stolen work then they shouldn’t be held accountable, the person who gave it to them should.

The collection agency should also provide reasonable means to inform people about what they own (a website maybe). We can’t allow them to restrict everyone from playing music just because the agency won’t do this.

“They are stealing from artists who don’t want to be represented by them.”

The collection agencies are stealing from radio stations for playing songs that the agencies do not own (every time a station pays royalties to an agency for a song the agency does not own).

Todd says:

Re: Re: Re:2 Re:

My god, do you even have a basic understanding of how performance rights organizations operate? That is what you’re talking about when you say “collection agencies,” isn’t it? Guess what? They (BMI, ASCAP, SESAC) have SEARCHABLE websites with info on all of the songs they adminster. And what the hell are you talking about when you say “every time a station pays royalties to an agency for a song the agency does not own”? What does own mean to you in this situation? No, PROs don’t “own” the a copyright in songs, but they do have agreements to adminster songs.

Anonymous Coward says:

At this point in time, I have a hard time feeling bad for the radio stations. They joined the RIAA in lobbying for this tax on satellite and web radio stations. Maybe it’s now time for them to lay in the bed that they made. And I wouldn’t hold it against any web or satellite radio company that lobbies congress for the passage of this law.

Would it be bad for consumers? I’m on the fence. Since radio is free to the consumer now, I don’t see how that would change, other than throwing more ads up per hour (which I doubt would happen). If anything stations might be persuaded to break from the traditional “10 songs only; 10 times a day” format that makes your ears bleed after a while, and actually play some non-RIAA related artists.

Either way, I’m not going to lose a lot of sleep over the issue.

Tomas (user link) says:

Music Industry circa 1920

I was listening to an interesting radio program, ‘Oh My What A Rotten Song’ http://www.bbc.co.uk/programmes/b00l0yl1 looking a music hall of the 1920s. What was interesting was the anecdotes of how it worked back them. According to the people interviewed:
– The income came from sheet music and ticket entry to the music hall.
– Most people did not buy sheet music but instead learned the songs at the music hall in sing-a-long sessions.
– Newspapers would publish songs as a free gift to readers.

It seems that the concept of free music was very much a part of the music industry circa 1920.

Mike's got no talent says:

So, I stopped reading this blog and went strictly to Slashdot because of Mike Masnick. Why? Well, not because I don’t agree with him about the RIAA, but because well…that’s all this guy writes about. And given that he is one of the most frequent writers on this blog, that doesn’t allow much variety does it? So today I came back to see after a year…I wonder if Mike’s gained journalistic talent and added some variety to his writing. The verdict? HELL NO. So far this year Mike’s written about the RIAA over 70 times. 70 times!!! Could you imagine opening the New York Times every day and the front page has an article about the RIAA practically every day? No, obviously you would not read it, just as I have stopped reading this blog. This is not an avocation to just try to get everyone to rise up against this blog. No, this is more trying to get Mike to finally wake up and add some diversity to his writings. Then maybe he will actually be worth reading instead of a monotonous waste of time.

Mike Masnick (profile) says:

Re: Re: Re:

Lets just say Mike writes 10 posts a day, 5 days a week all year. S0 10x5x52= 2600 posts in a year. Then your 70 posts is only equal to around 2.6% of the time… I dont think that equals all the time, but hey, I could be mistaken somehow…

Also, to clarify, we tend to average more like 13/14 posts per day. So the % is even lower.

But, of course, you can’t make everyone happy all the time.

The amusing thing? We actually get more complaints from people for *not* writing about the RIAA more often. We skip an awful lot of stories as not being worthwhile (the current Tenebaum and Thomas trials, for example) and people ask why we’re not covering them.

So, it’s unfortunate that this anonymous person is unhappy, but it seems that most of our readers quite like the mix of stories.

Cixelsid (profile) says:

Re: Re: Re: Re:

And congratulations on coming up with the lamest insult in the history of lameness. Not even George Bush stepping on a land mine during a paralympics race can top the lameness of it.

What you’re doing isn’t commenting, douchebag, it’s whining. You get your content for free then you complain about your free content, as though you’re a paying customer at a fucking restaurant. You’re not, you’re a whiny little poodle and nobody cares about your complaints, not here and especially not in real life. If you really were coming from . then every one of your comments probably got voted down to obscurity in the first few seconds of it appearing.

So take a lesson from the Black Eyed Peas and just shut the fuck up.

bshock (profile) says:

it's overly simplistic thinking, but...

I wonder if forcing radio stations to pay royalties for music would discourage radio stations from playing music at all, perhaps in favor of something cheaper, like talk shows.

We all know how successful AM radio talk shows have become, and what less-than-wonderful things they may be doing to political discourse in the US. When I hear the Rush Limbaughs and Bill O’Reillys and their petty imitators openly call for violence against various groups and individuals, I worry. Let’s stick with music on the radio.

anymouse (profile) says:

It's all about the moolah

To the people who don’t understand and think that the radio stations are already paying a licensing fee to play the music they play…. DING DING DING….
YOU ARE CORRECT…
1 point for you.

Now follow along (since you didn’t read the article), this can get complicated… RIAA claimed internet/satellite was ‘different’ than terrestrial radio and had laws passed that required them to pay an ADDITIONAL licensing fee (that supposedly goes to the performers, when actually the majority of the fees goes directly in their pockets) which made licensing costs for internet/satellite much more expensive than terrestrial radio. NOW they are claiming that terrestrial radio needs to pay the same licensing fees as the other guys ‘to be fair’….

To put this in perspective, lets say there are 2 5 year old kids, a 15 year old, and an 18 year old bully. First the bully shakes down the two 5 year old kids and takes their lunch money (because he can – he had laws passed to make it legal to do so), now he comes to you the 15 year old and demands that you pay up as well ‘to be fair’…. Seems reasonable right? Nope seems like extortion and anti-competitive monopolistic business practices to me, and the whole industry should be taken out back and shot (or just make them actually pay out all the money they have collected ‘for the artists’ over the years, I’m sure the end result would be the same).

CD (user link) says:

dougie5oul, Tanya Morgan: an explanation

Radio stations currently pay the PRO, which in turn pays a composition’s publisher/rights holder. Radio stations do not pay the owner of the performance copyright (the owner of the recording) which is most often a record company.

So, for example, when you hear Aretha’s version of “Respect” whoever owns songwriter Otis Redding’s publishing rights gets paid. Atlantic Records, which issued the Aretha recording, does not. The RIAA is trying to change this, as they have for years.

The RIAA does not represent, nor does it care about, artists. It represents record companies. Full stop.

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