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September 22, 2014

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3/18/02 Does RIAA Really Want To Waken The Sleeping Giant?
Unlike many, I don’t believe that recording artists should be denied royalties for their performances. Somewhere along the way, artists never received payments from their songs that were played on Radio. Then again, Radio has made those same artists — and their record labels — more money than royalties ever could. Until MTV came along, Radio was the only mass-distribution medium for music in America, and it enjoyed a very stable quid pro quo relationship with the recording industry. It remains the primary music exposure vehicle as MTV becomes more about youth culture and less about music. Artists still are dying to have their music played on the Radio, because Radio creates an interest in artists, and it sells product.

So why is the Recording Industry Association of America (RIAA) so hell-bent on destroying online Radio, both terrestrial and Internet-only? Its strong objection to downloading songs from the web for free is obvious: That’s outright theft. But there is a clear distinction between downloading songs and listening to songs that a station streams online. Even while the Copyright Arbitration Royalties Panel has levied a lower payment structure for Radio stations streaming their signals on the web, compared with web-only services, there’s a deep-rooted illogical play here, suggesting deeper RIAA motives.

Why is the RIAA pushing such unreasonable fees for streaming music on the Internet? Despite the appearance of cooperation, I sense a behind-the-scenes push by very powerful record companies to get payback for missing out on Radio royalties. If the RIAA intended to have a spirit of cooperation, that spirit would include supporting the Radio stations, with which it already has an established and quantifiably healthy promotional relationship, as well as entrepreneurial Internet Radio companies. Do these record executives not understand — after decades of seeing Radio deliver record buyers — that online listening promises more of the same?

Instead, the RIAA threatens to destroy the second generation of the goose that delivered billions of dollars in golden eggs last year. The CARP ruling will force terrestrial stations and web-only services to stop streaming music by imposing not only usurious fees, but restrictions and reporting requirements that are unreasonable, practically impossible, potentially in violation of privacy laws, and ultimately not good for business.

The RIAA knows that it’s impossible to get money from non-existent businesses; and that means, therefore, that the RIAA is out to kill the online Radio industry. After all, things were better in the good old days when margins were high, people only purchased CDs, and the labels were the only game in town. I’m convinced the RIAA’s public face of cooperation and the labels’ participation in download sites (with minimal recordings) are a ruse to ward off anti-trust claims.

Radio needs the record industry to provide entertainment to its listeners, just as the music business needs Radio as a promotional vehicle. What would happen if Radio — for just one week — refused to play any music? Sure, Radio’s ratings and cash flow would take a substantial hit, but imagine the bottom line of the folks who tell the RIAA what to do.
Better, yet — imagine what would happen if Radio insisted on charging a fee.

Radio: If these people are unwilling to compromise and offer a reasonable plan for conducting business, use the big hammer. You have access to 99 percent of consumers every week. You influence airplay. You influence CD purchases. You are the sleeping dragon that could swat the RIAA with its tail. Do not for a moment think that the record industry can live without Radio.


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