From the Corner Office

It seems these days that lots of people with personal agendas have decided to pick on American radio.  Radio's ongoing symbiotic love/hate relationship with the music industry has turned confrontational.  First, the CRB decision on internet royalty rates has provoked a face-off about the proper formula and dollar value of performance rights for internet streaming.  Now, the Music First Coalition has raised the volume on their demand that radio pay a performance tax on every song we play on the air.

Perhaps some folks are driven by a real concern for starving musicians, but the majority of the noise is coming from corporate coalitions of media companies whose size far outstrips even the biggest radio operators.  Radio is simply the new fertile ground for profits, since the record industry, in its shortsightedness, totally misplayed the migration of music from CDs to digital.

The radio industry has been a vibrant partner to the music industry, and both businesses prospered when they were vital. Of course, there is always tension about which new records to play, but that dialogue was healthy for both businesses. As the music business changed, many of the people who created that dialogue were eliminated or intimidated by legal investigations. As revenues for record labels dropped, the dialogue ceased and the recrimination began. 

With the possible exception of country music and some niche labels, consolidation has taken a far worse toll on the music industry than on the radio business. Rather than cultivating and growing new talent, the record companies sign short-term deals with new artists, record some songs, then release them to radio hoping that something will stick. If there's some airplay of  the first release, then the pressure on young artists for a second release is enormous. The radio business still takes risks with new artists and songs, and continues to spend dollars researching audience taste trends. And the record industry expects us to continue to sort through and popularize their product; but now, they simultaneously demand a large piece of our revenues for the privilege of doing their research for them.  Why doesn't the radio industry just send the record industry a bill?   Wait - that would be payola!

Who sent out the memo that webcasting was another target for riches and profits?  The Sound Exchange people somehow succeeded in convincing the Copyright Royalty Board that webcasters were on the verge of huge profitability between now and 2011, and that artists should have their very large piece of the pie.  Sure, there's lots of buzz on webcasting and local radio contributes almost 40% of the total listening, but no one I know is making a substantial profit at it, and those who are in the black are reinvesting back into the technology. This is an immature business with a number of impediments to success, and radio has committed to it largely as an add-on service for our listeners.  We radio people have learned that the law of the internet is that some success does little more than run up added costs in bandwidth, servers and software.

What made radio the new sugar daddy?  Perhaps the consolidation of the past decade has made the radio industry appear to be big business. Maybe our own pre-occupation with the valuations of radio stations, rather than their operation and success, contributed to the appearance of big money. However, the good times of the late 90's are only a memory. And of the 11,000 radio stations in the USA, something less than 30% of them are owned by large corporate operators.  The rest of us are small businesses, and subject to all the stresses and strains that a technology revolution places on a small business.

Radio broadcasters have been busy making substantial investments in our products, delivery systems, measurement systems, and online presence. Why?  Because we know that we have to be where the audience is, and provide our services as the audience desires them.   Radio knew that it had to step up to improvements like passive audience measurement, HD multicasting and  data services, but we are making those investments willingly in order to keep up.  Radio is the American home town connector; it's our companion, friend and neighbor who has common goals, troubles, and dreams. When things get really rocky and there's trouble, the radio is there.  Radio is a first responder to human tragedy and suffering as well as a vital catalyst in the local community for good. But radio is also a business of small businesses, with resources that have to be prudently directed at areas of future growth.  If we cannot even explore these future opportunities without someone having their hand out at every new headline, radio will not have much of a future.

If we in radio stay on the sidelines and allow these burdens to be shifted to our local stations, I will make a sad prediction: Stations across the country will have no recourse but to shut down their webcasts, reduce their local staffs, and add more commercial load to their hours. 

Yes we will all hurt radio, but the American listener will be the real loser.

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