Music industry set to bite the radio hands that feed it

The recording industry is looking to goose the federal government into putting its big fat thumb on the scales as it pushes for monetary compensation from broadcast radio stations.

Government interference in private lives and private businesses often takes the form of picking winners and losers, and word on Capitol Hill is that Rep. Melvin L. Watts (D.-N.C.) is preparing to re-file his bill that would force broadcast radio stations to pay a performance tax at rates set by the government and coerced by the government, but then forwarded to the music industry. Most Americans will be surprised to learn that broadcast radio stations pay nothing in performance royalties. Part of this is tradition of earned media, where artists, bands and celebrities barter themselves and or their creative product for the marketing power of broadcast radio. Think about it this way: A comic or band on tour comes into a radio studio and chats with the disc jockey about their upcoming show in the local area. In the course of the conversation, the comic tells some jokes from his routine or the band plays songs from its set.

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Why did they do it? They did it for the promotional value. Instead of buying an ad, they “earned” the media exposure. Playing records is really the same deal. At the 2003 induction to the Rock and Roll Hall of Fame of The Police, guitarist Andy Summers said, “I want to point out there is a man here by the name of Oepidus, who played “Roxanne,” and without him we would have never got started.” The disc jockey, born Edward Hyson, was the program director as Boston’s WBCN, a legendary FM station, and his advocacy of The Police is just one example of a broadcast radio turning an obscure song into a hit and obscure singers and bands into superstars. This is really an example of the symbiotic relationship that has developed naturally. It was a relationship that was almost destroyed by the Alan Freed payola scandal of the 1950s. Freed, along with Dick Clark and other rock and roll deejays took money from record companies or promoters to make sure certain songs got regular airplay. The federal government outlawed the practice, which it termed, instead of a bribe, an unidentified sponsorship. But, no matter how it was labeled the scandal itself guaranteed that the earned media would become the regular practice. The scandal also validated in a backhanded way the phenomenal value of airplay by a broadcast radio station. In the 1950s, Chicago jock Phil Lind testified to Congress that he received $22,000 to play just one song. Fast forward to 2005, when Sony’s music label paid a $10 million fine for its unidentified sponsorship of its songs. Without government interference, private players can figure it out. Radio station giant Clear Channel signed a deal with recorded music giant Warner Music that worked out a lower rate for CC’s Internet music channels, which pay a 50 percent performance royalty, in exchange for payments for broadcast over its legacy radio stations. One might think that other music companies would follow Warner’s example and cut deals themselves, but why negotiate when you can get Congress to pass a law giving you what you want? When the Watts bill is filed and debated, we will hear about the bankrupt singers and bands who blew through their riches, and are now destitute. But, in reality, the very fact that their songs are being played at all keeps supporting their careers—a perk they could very well lose all together if broadcast stations have to pay for the right to promote them. Earned media has worked for decades for broadcast radio and the music industry, there is no reason to start over from scratch.