No, Getting Your Music Played On The Radio Is Nothing Like Slavery

from the want-to-try-that-again? dept

Every couple of years, like clockwork, the RIAA gets its friends in Congress to introduce some form of a performance rights bill, that would require radio stations to pay compulsory licenses to performers of the music they play on the radio. Every year it goes nowhere because the radio owners' big lobbying group, the NAB, is about equal in power to the RIAA. So the two sides fight it out, donate a lot of money to Congress, and nothing changes. There's generally a lot of FUD thrown up in the process, along with some crap about "fairness" when that's not what they're really pushing for at all. It's all about more revenue for the record labels and that's it. If you're unaware, playing music on the radio already requires payments to songwriters/publishers, but not to performers. The reason being that being on the radio acts as promotion, allowing the musicians to make it up elsewhere. We know that this happens because of the widespread practice of payola, in which the labels pay the radio stations to play their music. If it wasn't worth it to get on the radio, the labels wouldn't regularly get involved in payola scandals. And yet, they do, because radio play (even today) remains great advertising for music.

We thought things had reached a new low four years ago when Rep. John Conyers sponsored one of these bills and insisted that radio stations playing musicians' music was the equivalent of slavery. Apparently, the RIAA liked that line so much it fed it to a different Congressional Rep. this year. RIAA darlings Jerry Nadler, Marsha Blackburn and Ted Deutch have joined Conyers in releasing the latest version of a performance rights act, this time called the "Fair Play, Fair Pay Act of 2015" and the RIAA's spin doctors somehow decided that having Rep. Nadler use the slavery line was a good idea:

Previously, radio complained about the economy, asserting that they simply couldn’t afford to pay performers. But as far as the radio industry is concerned, “it's never the right time,” Nadler said. “What other industry says, ' We can’t afford to pay our workers; We want them to work for free,'” he cracked. “We got rid of that argument here in the U.S. in 1865," referencing the abolition of slavery legislated by the 13th Amendment.

I'm sorry, but in no possible way is promoting someone's music on the radio the equivalent of slavery. To say so is not just insulting and offensive, but it's ridiculous. You can argue about the appropriateness of royalties, compulsory rates or anything else -- but to argue that getting played on the radio without direct compensation (despite all the indirect compensation) to slavery is just flat out ridiculous. Nadler doesn't get paid each time he goes on TV to talk about whatever bill he's supporting, does he? Is that slavery? No, it's promotional, just like music being played on the radio.

Just the fact that Nadler has to resort to this silly and tired argument again, despite it flopping five years ago, should tell you all you need to know about this weak attempt by the RIAA to squeeze out more money without doing anything different.

Filed Under: congress, fair play fair pay act, jerry nadler, john conyers, marsha blackburn, performance rights, performance rights act, radio play, slavery, ted deutch
Companies: musicfirst, riaa, soundexchange

RIAA Claims That It Is 'Standing Up For' Older Musicians That It Actually Left To Rot

from the wtf? dept

The RIAA is not exactly known for its positive treatment of musicians. If you're at all familiar with the art of RIAA accounting, you'd know about how they structure deals to totally screw over musicians, doing everything possible to make sure they never get paid a dime. Yes, many are given advances, but those advances are "loans" on terrible terms in which the labels add on every possible expense that needs to be "paid back" before you ever see another dime. Very few musicians ever "recoup" -- even after the labels have made back many times what they actually gave the artists. For the most succinct example of how the labels make out like bandits, profiting mightily while still telling artists they haven't recouped, here's Tim Quirk, who a few years back explained how it worked with his band, Too Much Joy (TMJ):

A word here about that unrecouped balance, for those uninitiated in the complex mechanics of major label accounting. While our royalty statement shows Too Much Joy in the red with Warner Bros. (now by only $395,214.71 after that $62.47 digital windfall), this doesn't mean Warner "lost" nearly $400,000 on the band. That's how much they spent on us, and we don't see any royalty checks until it's paid back, but it doesn't get paid back out of the full price of every album sold. It gets paid back out of the band's share of every album sold, which is roughly 10% of the retail price. So, using round numbers to make the math as easy as possible to understand, let's say Warner Bros. spent something like $450,000 total on TMJ. If Warner sold 15,000 copies of each of the three TMJ records they released at a wholesale price of $10 each, they would have earned back the $450,000. But if those records were retailing for $15, TMJ would have only paid back $67,500, and our statement would show an unrecouped balance of $382,500.

In other words, musicians don't get paid anything in most cases, while the labels can earn a tidy profit for years and years, still insisting the band hasn't recouped. It's why a band can sell a million albums and still owe $500,000.

I bring this up, because of the latest ridiculousness from the RIAA, claiming that it "stands behind" artists who aren't making enough money. We've already written about the latest lawsuit against Pandora, in which the RIAA/Soundexchange are saying that Pandora isn't paying pre-1972 artists (despite the fact that the RIAA itself refuses any attempt to put those recordings under federal copyright law, which would mandate compulsory licenses). We've also covered the ridiculousness of the RIAA releasing bizarre statements from artists like Steve Cropper, pretending that programmers still get paid for code they wrote in 1962.

But now it's reached truly ridiculous levels. musicFirst, a lobbying group put together by SoundExchange and the RIAA (potentially violating some laws), has put out an astoundingly ridiculous blog post, in which it discusses these lawsuits over pre-1972 sound recordings, by arguing that it is standing up for pre-1972 artists and not letting them "fade away" (a weak reference to a Buddy Holly song).

What a shady move. Fans will go to record stores to pay for this timeless music, but billion dollar corporations won’t pay a dime. And these services sell those same fans stations like the “60s on 6” and the “Buddy Holly station” yet refuse to give one dime of subscribers’ payments to the artists that made the music on those stations.

No matter what the outcome is in courts of law, Sirius XM and Pandora will pay a hefty price in the court of public opinion and in Congress. We love and respect our pre-72 artists and we will stand up for them. We will not let them fade away.

Oh really? You won't let those artists fade away? Then I assume you'll be going back and paying all of those artists you screwed over for decades, right? Let's start with Lester Chambers, for example, who got some attention a couple years ago, for how the RIAA totally fucked him over and let him fade away: Of course, it wasn't the RIAA, SoundExchange or musicFirst who helped him out. It was the internet, led by Reddit founder Alexis Ohanian, who helped Chambers raise over $60,000 on Kickstarter for a fantastic new album (it really is great, if you haven't yet heard it) -- and that money went to Chambers, not to a label who then refused to pay royalties. Or how about all of those artists who are seeking to take back their copyrights thanks to the copyright termination clause, which the RIAA is fighting tooth and nail against -- the same copyright termination clause that the RIAA's number two guy tried to secretly delete from copyright for musicians, while he was a Congressional staffer (months before taking his $500,000 salary at the RIAA, where he's remained until today).

So, whether or not Pandora and Sirius XM are right or wrong in how they handle the streaming royalties on pre-1972 works, the idea that the RIAA is somehow out there "protecting" older artists and not letting them fade away is a sick joke.

Filed Under: artists, lester chambers, musicians, royalties, support
Companies: musicfirst, pandora, riaa, sirius, soundexchange

In What World Is Having Three Judges Set The Price Of Streaming Music 'Free Market Capitalism'?

from the just-wondering dept

Greg Sandoval over at The Verge has an interesting post about "Pandora's PR problem" concerning its attempt to get out from under ridiculously draconian royalty rates that are clearly unsustainable. I agree that Pandora has failed on almost every aspect of the PR front, though the article seems seriously one-sided on a few points. First, it compares Pandora's situation to Spotify's, where Spotify has also been criticized for its royalty rates at times, and yet its reputation isn't quite as bad. Recently Spotify has signed some "big" name artists to publicly support its platform. Of course, the way it did so was to throw a ton of money at those artists. And there's a strong argument that Spotify's current royalty rates are even more unsustainable than Pandora's -- it's just that Spotify has a long runway and is choosing to put off the eventual day of reckoning it's going to have to face over royalty rates for internet music. Furthermore, the article seems to ignore the fact that much of the "controversy" and PR failures by Pandora are actually the result of a coordinated campaign, set up by a RIAA front group, focused on flat out lies and bogus attacks.

Of course, Pandora isn't blameless in all of this, but I put a lot of blame on Pandora's stupid decision back in 2009 to agree to the ridiculous rates it now realizes are impossible to sustain (something that many people pointed out at the time). But, the craziest part of the article is the claim that Pandora's attempt to lower rates somehow goes against free market capitalism. Sandoval mentions this argument twice. First, in noting that some "conservative" groups made this argument:

Citizens Against Government Waste, a conservative think tank, accused Pandora of trying to undermine the free market.

And then again in quoting an analyst who makes the same argument:

Michael Pachter, a research analyst with Wedbush Securities, believes Pandora will eventually thrive but that its attempt to legislate lower costs is misguided. "The bill is idiotic," Pachter said. "It's insulting to Congress to say you want regulation to lower your costs at the expense of artists. Did you see who was on stage with Obama helping him campaign? Jay-Z and Bruce Springsteen. That's the Democrats, and how many Republicans are going to want to legislate against capitalism and the free market?"

But neither of those claims makes any sense at all. When it comes to royalty rates for web streaming there is no free market. In fact, the status quo is so far away from the free market or capitalism as to be laughable, and it seems like anyone claiming that it represents some sort of free market is either being purposely misleading or is totally uninformed.

The rates for web streaming sites like Pandora fall under what's called "non-interactive digital music streaming" -- and the rates for those are set by a three judge board, known as the Copyright Royalty Board. If someone can explain to me how a selection of three judges flat out setting prices is a "free market," that would be good to know, because last I checked, the government setting prices is kind of the opposite of a free market. Of course, the last time the CRB set those rates, they set them so high that it was impossible for anyone to pay those rates. That's how completely clueless the CRB tends to be. So, in response, Pandora and other webcasters did negotiate lower rates, but those rates were still impossibly high. Some might argue since Pandora's current rates are those "negotiated" rates, it is a free market, but that's clearly not true either. The "fallback" that the record labels had in those negotiations was "fuck you, here's what the CRB says the rates are, pay up or go out of business." When they have those CRB rates as the fallback, their negotiating position is obviously quite strong, and the results are obvious. The "negotiated" rates are impossibly high. Pandora's big mistake was agreeing to those rates (even though it felt it needed to if it wanted to actually live to fight another day).

No matter how you look at it, that's not free market capitalism. Coming up with a way to change those rates may not be free market capitalism either, but to argue that moving away from the existing rates goes against free market capitalism makes no sense. So, if either Citizens Against Government Waste or Michael Pachter can explain how three out of touch judges with no market experience setting the official rates is "free market capitalism," it seems like, perhaps, they shouldn't argue that Pandora is trying to "legislate against capitalism and the free market."

Filed Under: capitalism, copyright royalty board, economics, free market, michael pachter, music, royalties, streaming
Companies: citizens against government waste, musicfirst, pandora, riaa, soundexchange, spotify

Pandora's Fed Up With The Lies The RIAA Has Been Spreading About It: Presents Some Facts

from the let's-rethink-this dept

We've pointed out that, recently, the RIAA and various front groups and attack-for-hire firms that it funds have been really turning up the attacks on Pandora, the hugely successful internet service that already pays significantly more in royalties than pretty much anyone else out there. This strategy is very much in the RIAA's tradition of attacking any successful internet company in the belief that 100% of the benefits of any successful internet company should flow to the RIAA.

In this case, the RIAA and its front groups have done a masterful job of misleading a group of artists into parroting RIAA talking points pretending that Pandora's royalties are too low, not too high. Most of these claims are based on a either base ignorance, or conscious deception, often focused on comparing apples to oranges. In some cases, this involves comparing totally different businesses (like Pandora to retailers), or, at times, it means comparing Pandora's "per play" royalties to the "per play" royalties of other services like terrestrial radio or satellite radio. Of course, that's insanely misleading, because the real metric is never "per play," but per listener. With Pandora, a single play is to a single listener (or, possibly a few people in a room or a car). But, terrestrial and satellite radio plays are broadcast, meaning that they usually have tens or even hundreds of thousands of listeners per play. Comparing "per play" rates is just a really dumb metric. There's a separate issue in terms of how some have misrepresented the various payments, implying that Pandora's payments are much, much lower than they really are -- something that an eager media picked up on without even the slightest bit of fact checking.

It would appear that Pandora has finally had enough of the smear campaign and the attacks and has posted a detailed response to these attacks, highlighting how wrong almost every talking point has been concerning Pandora, and how this level of dialogue has done a lot more harm than good.

The first falsehood being disseminated is that Pandora is seeking to reduce artist royalties by 85%. That is a lie manufactured by the RIAA and promoted by their hired guns to mislead and agitate the artist community. We have never, nor would we ever advocate such a thing. I challenge the RIAA to identify a statement from Pandora that says we seek to reduce royalties by 85%. On the contrary, all of the key principals including Cary Sherman (the head of the RIAA) and Mike Huppe (the head of SoundExchange) know that we have been advocating for solutions that would grow total payments to artists. The 85% sound bite preys upon the natural suspicions of the artist community, but it is simply untrue. And although we compete directly with AM/FM radio, which pays zero performance royalties, we have always supported fair compensation to artists.

It has also hit back on the claim that Pandora has been seeking to cut songwriter fees, explaining that it had come to a direct agreement with ASCAP on higher fees, and then ASCAP went back on the agreement and started playing games -- such as withdrawing tracks, but refusing to tell Pandora which tracks, such that it risked huge statutory fines if it played the wrong tracks. For all of ASCAP's claims that it is protecting artists, the reality looks like it was harming artists' best interests in trying to kill Pandora:

The next issue concerns the publishing side. Historically, Pandora has paid essentially the same rate as all other forms of radio, a rate established unilaterally by the performing rights organizations, ASCAP and BMI, in the late 1990s. In November of last year, following a lengthy negotiation, Pandora agreed with ASCAP to a new rate, an increase over the prior amount, and shook hands with ASCAP management. Not only was our hand-shake agreement rejected by the ASCAP board, but shortly thereafter we were subjected to a steady stream of “withdrawals” by major publishers from ASCAP and BMI seeking to negotiate separate and higher rates with Pandora, and only Pandora. This move caused us to seek the protection of the rate, also recently negotiated, enjoyed by the online radio streams of broadcast radio companies. It’s important to note that these streams represent 96% of the Internet radio listening hours among the top 20 services outside of Pandora (talk about an un-level playing field). We did not enter this period looking for a lower rate – we agreed to a higher rate. But in a sad irony, the actions of a few small, but powerful publishers seeking to gain advantage for themselves has caused all songwriters’ royalties to go down. Any characterization of Pandora as being out to cut publishing rates flies in the face of the facts.

And, amazingly, the RIAA and others have been successful in spinning this, falsely, into saying that Pandora was looking to cut back on what it paid songwriters.

The depths to which the RIAA has sunk in its attacks on Pandora are really quite despicable, but it's par for the course for them. Anything successful in the music space created "outside" the record labels is bad and somehow "building on the backs of our copyrights." They won't rest until they've killed each off. The past decade and a half are littered with the remains of internet and tech companies who built great products in the music space that fans loved, each one systematically killed by the major record labels and the RIAA, who demand ever higher royalties.

Filed Under: internet radio, lobbying, music royalties, royalties, songwriters
Companies: musicfirst, pandora, riaa

RIAA Lobbyists Turn Anti-Pandora Desperation Level Up To 11

from the are-they-serious? dept

We've written a few times about MusicFirst, a front group set up by the RIAA (potentially illegally), pretending to lobby for "artists'" interests, but which is entirely about pushing the agenda of the RIAA in increasing royalties. It was originally set up to target terrestrial radio rates, but has had a real hard on for Pandora lately. In April, we wrote about the group's nutty argument that Pandora was deliberately not selling ads to avoid profitability. They honestly claimed that all Pandora had to do was sell additional ads and profitability would be no problem -- leaving out the simple fact that, if Pandora could sell more ads, it would. The ad business is a terrible business, and it's not easy to sell into it. Yet, these lobbyists pretend anyone can just snap their fingers and the ad dollars come rolling in. More recently, they argued that Pandora's attempt to seek the same internet streaming rates that other companies get was "a sick joke." Again, they weren't seeking lower rates as others -- but rather the exact same rates that competitors like iHeartRadio had. And they were told it was a sick joke?

The latest is really just blatant stupidity. MusicFirst commissioned a study from Jeffrey Eisenach, and apparently they gave him the instructions to do anything possible to make Pandora's rates look "low," because the results of the study don't even pass the most basic laugh test. I honestly, expected some reasonable argument, but got the following:

Other Retailers Pay as Much or More Than Pandora: Measured as a proportion of revenues, several major "online" retailers, including 1-800 Flowers, Netflix, and Overstock.com, and "brick-and-mortar" retailers, like Best Buy and WalMart, pay about as much as or more than Pandora for the products they purchase from others and resell to consumers.

Yes, you read that right. They're comparing Pandora to retailers, rather than other streaming sites. But, Pandora is not a retailer like 1-800 Flowers. I mean, you have to be scraping the absolute bottom of the barrel to try to prove your point when the best you can come up with is this totally different and unrelated business of reselling flowers pays a higher rate to its wholesale providers than a streaming radio station pays for licensing its songs. That's not even comparing apples to oranges, because at least both of those are fruit. Even apples to orangutans would be comparing two living things. This is comparing apples to ornamental knickknacks.

Two of Pandora's Major Online Music Competitors Pay More: "Pandora has made much of the high proportion of revenues it pays out in royalties, but there is nothing surprising or uneconomic about a retailer passing through a high proportion of its gross revenues to the ultimate producers of the products it sells – indeed, at least two of Pandora's major competitors, Spotify and iTunes, pay out higher proportions of their revenues (70 percent) in royalties than does Pandora."

Of course, once again, iTunes is not a competitor (well, other than the streaming service they just launched, but that's not what's being discussed here). But, of course, iTunes uses music as an enticement to get people to buy iPhones, not to make money directly off of music. And, using Spotify as an example here actually cuts against their argument, since the rates Spotify pays are insanely high as well, took over two years to negotiate, and yet some musicians are still whining that it's not enough.

Pandora Has Realized Hundreds of Millions in Profits for Investors: "Pandora's initial investors, including venture capital firms and Pandora's executives, have already realized hundreds of millions of dollars in profits since the company's 2011 Initial Public Offering." In addition, "Company founder Tim Westergren sold shares totaling nearly $15 million between January 2012 and June 2013"

Um, then why didn't the RIAA invest? This argument gets thrown out sometimes by people who don't understand the difference between revenue and equity. Capital gains from investment -- especially for startups -- is entirely different from revenue, yet people who don't understand the difference between income and equity like to compare the two as if it means something. It doesn't. It just makes them look ignorant. You get capital gains from taking an investment risk (many of which don't pan out) and it is not related directly to revenue. The fact that someone who put in a lot of equity is able to capitalize on that is very different from arguing that a business is profitable. If you don't understand the difference between equity and revenue, you really shouldn't comment on it, and it's pretty sad to put it in an official "study" as it just seems to scream ignorance about how these things work.

Basically, there's no "there" in the study. The best they can do is pretend that Pandora is in a totally different business to attack it. It kind of shows just how desperate the RIAA is getting.

Filed Under: jeffrey eisenach, licensing, lobbyists, royalties
Companies: musicfirst, pandora, riaa

Legacy Recording Industry Claims Pandora Is Playing A 'Sick Joke' In Seeking The Same Rates Others Pay

from the really-now? dept

The ability of the record labels and RIAA front groups to flat out lie about the internet is really quite incredible. There's been some buzz recently about the crazy fact that Pandora just bought a small terrestrial radio station in South Dakota. Now, you might wonder, why would an innovative company that basically seems to be focused on making terrestrial radio stations obsolete need to own such a station... and Pandora is rather upfront in its answer: because the music collections societies, like ASCAP and BMI discriminate against internet companies, in direct violation of an antitrust agreement that ASCAP signed. Furthermore, ASCAP not only won't offer Pandora the same rights, but it engaged in highly questionable negotiation practices, such as refusing to tell Pandora what songs it was pulling the rights to, such that Pandora risked huge statutory awards for copyright infringement:

During negotiations, ASCAP and the publisher increased the pressure by refusing to provide Pandora the list of tracks that were being withdrawn, exposing Pandora to copyright infringement liability of up to $150,000 per work. At Pandora’s scale, such liability would be enormous. Faced with such potential liability, Pandora negotiated an agreement that resulted in increased rates. Shortly thereafter, additional major publishers took steps to withdraw their catalogs from ASCAP, again with respect to Pandora.

ASCAP created additional ways to circumvent its antitrust consent decree. Our motion also describes how ASCAP refused to provide Pandora a license under the same terms as the iHeartRadio service, for only one reason: iHeartRadio is owned by a terrestrial broadcaster.

All of this is in direct violation of the antitrust agreement ASCAP has with the DOJ, in which it's supposed to make sure that ASCAP can't use its monopoly power over compositions to discriminate against certain players. Yet, ASCAP is clearly trying to discriminate against internet streaming services, by charging them significantly higher rates.

So, Pandora has bought the station in order to get the same rates as other streaming radio stations that are owned by terrestrial stations. As Public Knowledge points out:

This is a perfect example of the twisted incentives and strange results we get from a music licensing system that is based on who wants a license instead of just what they want to do with the music they’re using. This makes no sense. The law should treat like uses alike. Regardless of how high or low you think performance royalty rates for webcasting should ultimately be, there is no logical reason to give preferential rates to certain companies just because they arrived at the negotiation table first.

And this is only about composition rates, not even getting into the rates that Pandora has to pay for sound recordings, which is infinitely higher than terrestrial radio. Buying the radio station won't help on that front, because the internet streams are charged differently than terrestrial radio no matter who owns it, but just the fact that it's paying different rates than everyone else seems ridiculous.

And, of course, the incumbents try to twist all of this. First up, we see that BMI has sued Pandora for buying the radio station. I'm not joking. I can't see on what possible grounds a lawsuit would make sense. Are they saying it's illegal for a company to seek to get the same rates that BMI offers radio stations?

But, even worse than that is the reaction of the RIAA front group, MusicFirst, a lobbying group set up by the RIAA and SoundExchange solely for the purpose of lobbying against internet companies and seeking ever higher rates for those companies, to make sure no internet music company can stay in business. That this is short-sighted and stupid never seems to occur to MusicFirst, who is always quick with a blog post arguing that internet companies are up to no good. In this case, it accuses Pandora of playing a "sick joke" in making this purchase:

This has to be some kind of sick joke. Pandora bought an FM radio station to game the system in order to pay songwriters less?

Pandora continues to find new ways to give artists and songwriters a raw deal from the bottom of the deck. In their race to the bottom to see how little they can pay music creators, they have stooped to misleading legislation, bait and switch petitions, and now fronting as an FM radio station.

Oh really now? It's a "sick joke" to try to get the same license rate that ASCAP and BMI offer terrestrial radio stations? How so? It's a "sick joke" that the company doesn't think it's fair for ASCAP and BMI to discriminate against internet streaming radio services? The only "sick joke" is MusicFirst pretending to represent artists as it seeks to kill off new and innovative internet services that are helping artists build bigger fan bases. No wonder the RIAA-funded MusicFirst has to resort to silly claims like this. The RIAA has never wanted to adapt to an internet world, and is, once again, looking to spread completely bogus propaganda in an attempt to stifle internet progress, which tends to help independent artists, such that they don't need the RIAA labels any more. What's incredible is that the RIAA, which set up MusicFirst, has it pretend to represent the interests of "artists" when it's never been anything more than a big-label front group. If there's any "sick joke" it would be MusicFirst's pretend concern for artist's rights, that just so happen to align entirely with the interests of the big labels.

Meanwhile, David Israelite, the lobbyist for the music publishers has piled on as well, claiming that this is about Pandora "going to war with songwriters."

David Israelite, CEO of the National Music Publishers Association (NMPA), tonight interrupted his state-of-the-industry speech at the group's annual meeting in Manhattan to lash out at Pandora's decision to acquire a radio station in South Dakota. "Pandora is going to pursue lawsuits and gimmicks," Israelite told the hundreds of songwriters and composers in attendance. "Pandora is hoping to fraudulently sneak in the back door. Any shred of credibility that Pandora had is gone. They are at war with songwriters "

Once again... huh? Asking for the same rates that radio pays to stream music online is "going to war"? How does that compute? It's as if the music publishers, collection societies and the RIAA can't help but lie because they have such distaste for Pandora actually figuring out a service that people like online, when they've spent so many years trying to ensure that online services fail. If there's any "war" going on here, it's the legacy recording industry against online services that fans seem to love.

Filed Under: discrimination, licensing, lobbyists, music publishers, radio, recording industry, royalties, streaming
Companies: ascap, bmi, musicfirst, nmpa, pandora, riaa

Recording Industry Lobbyists Accuse Pandora Of Deliberately Not Selling Ads To Plead Poverty To Congress

from the right,-and-the-labels-just-need-to-sell-more-albums dept

I'm always amazed at how copyright maximalists from the entertainment industry insist that no one can comment on their own businesses unless they're "in it" while freely commenting on other businesses they clearly know nothing about. Here's the latest example. The musicFIRST coalition, which is basically a lobbying operation set up by a few of the big legacy players in the recording industry (including the RIAA, A2IM and SoundExchange) in order to push for ever higher royalties for music, has been fighting hard against any effort to create royalties for internet companies that would allow those companies to survive. Like the Golden Goose, the labels have decided that if anyone online is making money, it's best to squeeze as much of it out of them as possible until they're dead, rather than allowing them to grow and to provide sustainable revenue back to the industry.

But their latest blog post really takes public cluelessness to new and impressive levels. It's a response to the news that Pandora's listener base has been growing. That should be celebrated, but, as Pandora has been pointing out for ages, thanks to the crazy high royalty rates that it has to pay SoundExchange (which are many times the rates of satellite radio and infinitely larger than terrestrial radio, since terrestrial radio has an exemption from performance royalties) it is close to impossible for Pandora to ever be profitable. Even worse (for musicians, the industry and the public) these crazy high rates means a lot less competition, fewer new authorized services and a smaller market overall. Pandora has been seeking more reasonable rates that would actually allow it to provide more services and to grow the overall pie even more by adding more value. However, so far, that's been cost-prohibitive given how much goes out the door to SoundExchange.

So, along comes MusicFIRST with the "solution" to all of Pandora's profitability problems: sell more ads. No, that's not a joke. They seriously seem to think that Pandora's problem is that it has chosen to take on less revenue and that all it has to do is turn the knob up and sell more ads:

As economist Jeff Eisenach testified last year regarding Pandora royalties, "the ratio of Pandora's content costs to its revenues is within Pandora's control: To raise its revenues, it need only choose to sell additional advertising" or find other ways to cash in on its popular and successful product.

Pandora is choosing to limit revenues for now by keeping advertising low and attracting customers to its free service tier.... It's no reason to plead poverty in the face of massive audience growth and "better than expected" earnings reports.

As someone who relies on advertising for a portion of my income, I wish musicFIRST had just told me all along that the fact that ad rates are so low and that fill rates are so dismal on advertising all across the internet is because I just wasn't trying enough and that I'd purposely been "limiting revenues." Why don't we just flip that one around? Perhaps the reason that the major labels and SoundExchange have been making so little money is that they're not selling enough. All they need to do is sell more and all their problems are solved. No need to go plead poverty to Congress and demand a jacking up of rates, since -- by their own logic -- they just need to sell more, and clearly, that's easy. If they're not selling more, it's because they've decided to limit revenue.

Stories like this make you wonder if anyone actually takes musicFIRST seriously.

Separately, musicFIRST trots out the lamest trope in the book in the attacks on Pandora: focusing on the value of the company and the equity its founders hold. Only someone who is deliberately misleading or completely clueless on basic financial issues would equate a company's valuation with revenue. The two are wholly different beasts. And yet, these lobbyists pretend that the equity that Pandora execs hold somehow is taken unfairly from artists. That, of course, makes no sense if you actually understand the difference between equity and revenue. Any artist could have had the same equity if they had built Pandora. They didn't, so they don't.

Filed Under: business models, interactive streaming radio, licensing, lobbyists, performance rights, royalties, selling ads
Companies: musicfirst, pandora, riaa, soundexchange

RIAA Gets AFL-CIO To Support Performance Tax: Payments In Perpetuity For A Small Amount Of Work

from the hard-day's-work? dept

The RIAA has been touting this for a little while already, but the AFL-CIO has officially signed on to support the RIAA's highly questionable performance tax. This is a bogus attempt to boost RIAA revenue by taxing radio stations for promoting their music. The RIAA has been going around claiming that radio promoting its music is a "kind of piracy", while at the same time claiming it's somehow illegal for radio stations not to play RIAA music. Yeah. Logic is not the RIAA's strong suit. Even worse, of course, is that the RIAA has blatantly demonstrated that it knows there's tremendous value in getting its music on the air. It's been involved in payola scams for decades. To basically get the government to mandate reverse payola is the height of obnoxiousness.

Of course, what does the AFL-CIO have to do with any of this? Absolutely nothing. It's pure politicking on the part of the RIAA and its offshoot lobbying group musicFIRST. The main point is to get more Congressional folks on board with the tax by saying "the unions support it!" Somewhere down the line, I'm sure the RIAA will come to the support of the AFL-CIO on some other random bill as well.

But what's really ridiculous is the statement made by the AFL-CIO explaining why they support this:

"The labor movement was founded on the principle that a hard day's work deserves a fair day's pay. That's the principle at stake in the fight for the Performance Rights Act."

But that's not even close to true. The Performance Rights Act is about the opposite of a fair day's pay for a hard day's work. It's about getting paid over and over and over and over and over again for a bit of work done years ago. And, it's not a "fair day's pay" either. A fair day's pay is a contractually agreed upon wage between two parties. This is about the gov't forcing a totally unnecessary and nonsensical tax on radio stations for promoting RIAA music. In what world is it fair to tax someone who helps promote your work?

Filed Under: performance rights, performance tax, unions
Companies: afl-cio, musicfirst, riaa

Why Is The FCC Even Giving The Time Of Day To RIAA's Bogus Radio Witchhunt?

from the waste-of-resources dept

Earlier this year, MusicFirst, a lobbying group that is run by the RIAA and pushing for a special tax on radio stations for daring to promote songs, came out with its latest in a long list of bizarre claims, demanding that the FCC investigate the fact that radio stations were supposedly boycotting musicians who supported the Performance Royalty tax. There were numerous problems with this claim. First, we thought it was rather hypocritical of MusicFirst to demand that radio stations play these artists, when it was the very same MusicFirst that was also claiming that radio was "a kind of piracy" for playing the music of these very same artists without paying a performance tax.

So, apparently if a radio station does play these artists, it's piracy. If it doesn't play these artists, it requires an FCC investigation.

Beyond that, MusicFirst failed to note that many of the artists topping the charts (including the Black Eyed Peas, who topped the charts at the time) were some of the most outspoken artists in favor of this tax. If there was some big conspiracy to not play these artists on the radio, someone forgot to tell... well... pretty much every radio station around.

That highlighted the third problem: MusicFirst didn't happen to point to any radio station that actually did this. The only one that could be dug up was a small high school radio station that had publicly boycotted artists supporting such a tax (which would have shut down the radio station), but only did so for one month and that month happened two years ago, and was a clearly supported expression of free speech.

And that brings up the final point. The recording industry has no right to demand that radio stations play certain artists. A radio station is free to play whatever artists they wish and run whatever commercial they wish. This is a pure free speech issue, and it's quite troubling that the recording industry is targeting radio stations when they have no right over this.

Based on all of this, you would hope that the FCC would simply laugh off the petition... but tragically, it's opened up a consultation on the matter and is asking for public input (found via Michael Scott). The article linked here goes through all of the First Amendment questions raised by this, and notes (thankfully) that the FCC seems to recognize those issues as well. But, if that's the case, why even bother holding this investigation in the first place?

Filed Under: bailout, high school radio, performance rights act, piracy, radio
Companies: fcc, musicfirst, riaa, soundexchange

Yet Another Copyright Lobbying Group Caught Infringing

from the always-seems-to-happen... dept

These days, it's nearly impossible not to infringe on copyright in one way or another during your regular day -- but it's always amusing when big-time copyright supporters are caught infringing (and it seems to happen quite frequently). The latest is musicFIRST, the lobbying group funded (potentially illegally) by the recording industry, which has been pushing a campaign claiming that radio is piracy and demanding that radio stations pay even more royalties than they already do.

But, of course, when it comes to licensing or paying royalties itself... well, you know... that's a different story.

Billboard has noticed that MusicFIRST appears to have quoted the entire lyrics to the Beatles song "We Can Work It Out" in a mocking press release it put out earlier in the week -- but failed to get the necessary license. Now, of course, many of us believe that quoting lyrics like that is perfectly reasonable fair use. But... the recording industry (you know, the folks behind MusicFIRST) doesn't believe that, which is why they've shut down plenty of people for posting lyrics on the web and even thrown people in jail for posting lyrics on the web.

But, when they do it? It's fine? Funny how that works...

Filed Under: copyright infringement, lobbying, lyrics, musicfirst
Companies: musicfirst, riaa, soundexchange