The CEO of Rock Blog

The Quest of a Student/Entrepreneur to Add Value in Music and Business

Labels killed the radio star..but the story doesn’t end here

A Little History

10-50 years ago, in the United States, Labels really wanted to make money by putting their artists on the radio. Everyone listened to the radio to stay up to date with what they should buy, what they should think about, and who they should listen to. When driving the Buick/Mustang to work or high school, there wasn’t that much else to do during the commutes.

Back then, radio stations convinced record labels that there was no need to pay the artists or the labels when playing songs on the radio, because every time a song was played for thousands of people to hear, the artist is getting exposure…pretty much free marketing. If anything, it was an understanding that radios can choose which songs were played, and record labels would need to persuade radio station managers, who were the gatekeepers between the label and the audience. Not so long ago, bribery was a common practice everywhere in the music industry (often called payola).

Changing Times

The problem for labels was that they never considered that technology would advance so much that anybody could own their own personal channel (tv, radio, or writing) and just ignore what they didn’t care about. So, when labels start making way less money, and artists today are more and more finding reason to do things on their own, major labels realize they should have negotiated better deals with the radio stations so that artists would have an extra source of revenue.

Too late.

Now the Performance Rights Act is passing the Senate judiciary committee, and is one step further to getting artists the royalties that they should have been asking for (in hindsight) decades ago. It already passed the House Judiciary Committee in May. The problem is, radio is just as threatened by the internet age and the recent financial crisis as labels are. Ad revenue has decreased drastically for radio stations, as they have fewer listeners and therefore less leverage.

Radio stations are undergoing resizings (the friendly word for firings) and bankruptcies. Some do not have the money to pay labels. Those that do could see their revenue undercut so much as to defeat the purpose of their being in business in the first place.

Bad timing for labels to reverse the payola idea against the radio stations.

Do I believe artists should get paid? Hell yes.

Will this bill help artists get paid? A little, but it could reduce opportunities for future artists who are on labels to get played.

I have heard that some radio stations have made the transition to talk radio in protest of this bill.

As for those who still play music, they already have a high commercial/content ratio, and that ratio will be played with once again to the dismay of listeners. Radio might prop itself up by leaning its business model on metaphorical quicksand.

I’m Mister Bright Side

The reality is that in the mad dash for cash, this bill could be passed. This is reality, and I have an idea that it could be a great opportunity in disguise for indie acts.

Radio could split into two groups: Song-playing radio and talk radio. The song-playing stations would long for things to come back to the way things were: playing songs without paying. Labels have played their hand like crazed farmers with axes chasing after the golden egg-laying chicken. Their sense of entitlement could cause demand for major label music to fall.

There are however, many artists with the right and control to negotiate radio airplay with station managers. These artists may still benefit from the older paradigm that radio will still try to cling to over the next several years, and can negotiate that station managers can play their songs on the radio while waiving any obligation to pay fees.

I am talking about the unsigned, indie artist, my friend!

Up and coming acts can benefit greatly from the listener base that radio still has, especially if they are paying little to nothing for that exposure.

I can envision some radio stations catering just to that type of artist, and soon we could have many stations in America that are no longer beholden to the corporations or major labels, but are beholden to the artist and the local fan. This is an opportunity for the local artist and station manager to turn shit (their current situation) into sugar (a new opportunity).

Agree with me? Disagree with me? feel free to sound off in the comments!

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October 18, 2009 - Posted by | Music Business

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