The Internet Radio Equality Act (H.R. 2060) is before congress, but it still has a ways to go.  With the press and Internet blogging that’s been going on, we may well have a shot at sensible performance fees and a grand future in cyber and WiFi space.

It was a close call.  How close?

Let me demonstrate with a couple of examples.  I’ve been involved with “Beach Music” radio in one form or another since 1976.  It’s been a roller coaster ride of the first order:  fabulous highs and demoralizing lows.
There were a couple of eras in which we produced five minute shows called “Beach Music News” that ran on more than 75 radio stations in the Southeast.  There were other radio syndicators with various flavors of Beach programming who were on up to 3 dozen radio stations and we had three shows on 55 stations.

The number of radio stations that are full-time Beach stations can be counted on one hand.  The number of stations with weekend Beach shows are a fraction of what they used to be. 

Not coincidentally, the number of jobs available to Beach bands are miniscule in comparison to 20 years ago, as well.

In a pitch, this is the point where the listener often starts to freeze up, thinking, ohmigod, is he going to ask me to support Beach Music? 

The good news is that I’ve never been a big believer in asking for “support.”  I believe that people participate with whatever they care about and they let the rest die.

I have seen many many Beach Music stations die in the last 2 ½ decades.  There has been only one that I know of that was resurrected from the dead. 

It generally happens the same way.  After the station changes format people begin to lament, “we didn’t know what we had,” “will there ever be another,” “I thought there were a lot of listeners,” etc.

This brings up the question again, “Do listeners need to support the station?”  The answer of course is, “No.”  It’s not the listeners’ job to support the station.

Radio airplay has been touted for a hundred years (beginning twenty years before it was available) as “public broadcasting” and “free”.  Those are the facts. 

And when radio is treated in this way, the programming that folks like often disappears—then it isn’t free anymore.  Nor is it public.  It’s non-existent.

  
Whose job is it to recover lost entertainment and information that is attractive to an audience?  It’s not anyone’s job.   Radio stations exist in a “free market” and they can change their programming whenever they want within a few guidelines provided by the FCC (Federal Communications Commission) and the FTC (Federal Trade Commission).

What’s the crux of all this?  What is the challenge?

Simple.  Radio stations are not always competent at generating the level of advertising revenue they need to justify what they do (this isn’t limited to Beach Music formats, it applies to all of them).

Those of you in sales understand this the best.  Contrary to common mythology, sales don’t happen because the “price” is right, or the price is “competitive,” or because (in this case) the radio station has the highest “ratings.” 
Sales come from one thing only—relationships.

 
The truth is, it takes quite a while to develop relationships.  Imagine.  A typical small radio station has four salespersons.

 
Imagine the station is located in a metropolis with 30,000 businesses.  How long do you imagine it will take for those four salespeople to develop meaningful relationships with enough businesses to generate adequate advertising revenue?

Again, a fairly simple answer here.  One you can corroborate easily by paying attention to the ads on a station. 
The big stations in the market run lots of ads they get through ad agencies.  Their strategy is to develop relationships with the agencies based on their ratings—their listenerships.  Thus, they can make ‘friends’ with one ad agency representative and have access to potential advertising with a number of different companies. 

The small stations (like the one we propose here) don’t have relationships with ad agencies because they don’t have high ratings.  They have to develop their relationships one business at a time.  Research on marketing shows it takes 5 calls for a salesperson to develop enough of a relationship to generate an advertising contract with a business.

This doesn’t describe the dozens and dozens of businesses in which 5 calls didn’t do the job!  Or 10 calls.  Or 15.  It just claims that the successful relationships take five calls.

 
Nor does this statistic describe everything else that has to go into those calls, the number of salespeople who fail to generate enough ads to survive, and the dozen or so other influences that can make or break their advertising outcome.

Is any of this the job of the listener?  Absolutely not!   Listeners can simply be passive and let the station sink or swim.  If the desired format (in this case, Beach Music) should disappear forever from a city, they would simply be Beach-less.

With a couple of exceptions.

1-Remember the station I mentioned earlier that came back from the dead?  Listeners in that city asked questions similar to those posited earlier.  What happened?   Weren’t there enough listeners, there were a lot of us who loved the station?  Wasn’t there enough advertising? Etc.

Eventually, the administration, in concert with many concerned listeners, reconsidered its position on Beach Music.  Of course they did!  The idea of a community of listeners who are concerned about the financial viability of the station is …. Unthinkable.  Especially when considering that every listener either works in a business or owns one.  Almost all businesses need new clients to make up for the attrition of clients who slowly disappear.
When listeners become concerned with the commercial health of a radio station, the station has a network of friends.  Unbelievable.  Radio stations usually have to do it by themselves.  Live or die. 

Let me assure you.  A salesperson who is aware that the community-at-large is concerned on how well he/she is doing in relation to the station’s revenues is a salesperson who is going to be pumped every time he or she hits the street.

2-We did say a ‘couple’ of exceptions.  The other is Internet radio.  The salvation of many cities and listeners who have little or no access to Beach Music programming.  (And to the many who do have ‘some’ Beach Music programming but it’s extremely limited to one narrow perspective or another).

Internet streamers of Beach Music count in the dozens and dozens.  Most of them make little or no money.  A lot of them will disappear even without changes in the cyberscape.  Others will persevere if there’s a level playing field where hard work and commitment have a clear shot at success.

There are quite a few of those folks.

They will survive, if.

If enough people get active now and contact their congresspersons to support the Internet Radio Equality Act (H.R. 2060), and if enough people become active directly, or indirectly, in terms of advertising.  (If you think it’s tough for four sales people to develop relationships with 30,000 businesses in the city where they live, how tough do you think it is to develop relationships in cities that you’ve never seen?  E.g. The Endless Summer Network is in countless communities, hamlets, and cities in the Southeast with thousands upon thousands of listeners—far more than most local radio stations.  But developing relationships with local and regional businesses is even more daunting).

Time to get involved if you want to put your personal commitment to work for the possibility of permanent access to the music you love on the Internet.

Links to your congresspersons and some documents that will make that a quick and easy process are below.
Regards,

John Hook

http://www.savenetradio.org

Copyright Royalty Board (CR Choking the Golden Goose

When’s the last time you read the story of the Golden Goose?  Or if you’ve never heard the original, now’s your opportunity.

The Copyright Royalty Board is an arm of the Recording Industry Association of America (RIAA), constituted by member performers.  The CRB, through an associated company, SoundExchange, keeps track of webcasting and collects royalties to be distributed to performers and background singers (who do not receive royalties from traditional licensing companies such as BMI, ASCAP, and SESAC).

Without going into the details of the claims made by the several sides of this debate (and subsequent laws that come from it), suffice it to say that as of March 2, 2007 it appears as if MOST webcasts will disappear from the Internet.

What do we mean by ‘most’? 

In all likelihood, the webcast(s) you love and listen to—the ones that provide the programming that neither commercial nor non-commercial terrestrial radio stations offer, nor do the special TV music channels, or satellite—will soon be history.

The CRB has come out with new royalty rates, retroactive to January 1, 2006, that will absolutely put most webcasters out of business overnight.

There’s a big question as to whether the large webcasters will be able to survive (e.g. one projection on the back royalties that AOL will owe for the past 14 months is $20,000,000) !!!

Once the CRB has killed webcasting, where will they get the golden eggs to divide between their performer and background singer members?

Where will those same artists find outlets to expose their new performances (one can be certain that it won’t happen on traditional radio stations or satellite—each is aimed toward mass audiences, not specialty audiences).

If you love Beach Music—cross your fingers.

We’ve always said at ESN that we would not go to a subscription service.  Nor will we.  Even if we did, it wouldn’t make any difference, i.e. you don’t want to hear how much each listener would have to pay for this or any other webcaster to simply be able to break even.

Even advertising sales would fall short.  Early projections demonstrate that most webcasters would have to immediately increase their revenues from 150—300% simply to continue the streaming services they offer now, let alone make any kind of a living.

Economists who have testified before the CRB in the past year have been rather cavalier in their dismissal of small webcasters, saying that they are too small to be of any importance and should be ignored.

Isn’t it odd that this is exactly what the RIAA (parent of the CR purports to be protecting on behalf of performers?  (Because the performers and background singers are ‘too small’ to be ‘significant’?  That’s why they aren’t covered by the traditional licensing services).

 Is this symptomatic of today’s mindset in the country and thus reflected in our government?

Do we believe that the little guy and gal don’t really matter economically? 

If so, then why does the government annoy the little guy and gal for yearly taxes?  Why do major record and media companies count the little guys in Nielsen ratings, Arbitron ratings, and CD and MP3 download sales?

Ignoring the little guy is popular when it serves the purposes of organizations that conjure control strategies in order to force their agendas onto a ‘free economy.’

Testifying economists make allusions that the economy doesn’t ‘need’ the small Webcasters in order for the webcast industry to grow.  These are the people who did not invent the internet nor did they anticipate its form of radical democracy that has turned the world upside down (re: the many communist countries which go to enormous expense to prevent their people from tapping into the internet because it permits a free economy of thought as well as business growth).

Those who desire to control the growth that permeates the internet both misunderstand growth and how it is in the fiber of human action – not ancillary and subject to arbitrary agendas.

In the Beach Music World, the Endless Summer Network has always been on the side of the ‘small’ performers, writers, arrangers, composers, booking agents, nightclubs, managers, producers, and dozens of others related directly or indirectly to the Beach Music industry.

We play hundreds of songs by the aforementioned that are never played by traditional media outlets.   The marquee of internet webcasting is an invaluable resource for performers of all genre of music. 

Unfortunately, this Goose is so very tasty there are some who want to control Internet Goosedom to fill their tables and no one else’s.  Certainly not those of us who comprise the Internet World—which is all of us.

Fessa' Hook 3-6-07

Beach Music Sales and Downloads – The Current Situation

Following the n-teenth e-mail asking for Internet sites offering a wide selection of Beach Music downloads, we decided it’s time to give you a “state of the union” report on where things stand and why they stand the way they do.

Firstly, to answer all those e-mails simultaneously, there are no such Internet sites.  There are sites that offer a limited number of Beach Music selections.  Those are generally limited to a few Band sites in which they offer their own tunes (that they own or license).

As for who to blame for this sad fact, hmmmm, perhaps we should attribute some of the initial disappointment to Napster.  After all, they showed us what an “ideal” download site might be like.  Not a possible site, but an ideal site, if there weren’t any limitations-- traditions, or laws--to prohibit such a site.

After all, who wouldn’t like to go to one location to select ANY song they desire?  In the post-Napster era we can still ask a similar question, ‘Who wouldn’t like to go to one site to select any song they desire and pay $3.00 to get it?’

$3.00 ?!?!?   You bet your sweet tootie.  I come from the Record Collector Era.  Like all serious collectors I know the difficulty of finding rare tunes and the prices they bring, e.g. in the early 1980s an enterprising Beach Jock started playing the Four Tops’ very first song, on Chess Records, from 1956, “Could It Be You.”  A number of Deejays started seriously scanning all the auction lists every month trying to get a copy.  I bid $100.00 many, many times and NEVER won a copy (despite the fact that the collector price guides put that record’s value at $6.00).

Would I have paid $3 to get a copy of “Could It Be You” that I could play?  I would have paid $5, $10, $20, easily.

So today’s charges of 88 to 99 cents per song are minimal at the least.

Why, then, aren’t there such sites?  (Get ready for the ride of your musical life.  It’s called – Will They Ever Learn What We Want and Provide it In a Way that We’re Both Satisfied?)

Historically, record companies focus on their current releases as their big money makers.  Although some of them developed back catalogues of ‘oldies’ that generated revenues for almost 4 decades, those catalogues weren’t their prime strategy for profitability.  That became paramount when the new baby boomer generation reached its first peak in 1964 (any surprise the Beatles were so big in the year that 16 year olds became the largest demographic group in the U.S. for the first time in history)?

However, you may have noticed that Baby Boomers are no longer in the main spotlight, despite the fact that they comprise the single largest demographic group in the U.S. and have all the money.  (Record companies are not the only folks who behave as if Baby Boomers are decrepit and senile.  This belief is a throwback to the thinking of the 50s and earlier—when people over 40 were assumed to be counting the days while they tottered around waiting to fall into their graves).

From the time the Top 40 took hold in the mid to late 50s until the mid 90s, record companies could justify their attention to current releases (not from the listener and fan perspective, as most Beachdiggers experienced).  The successful companies worked with a formula in which they balanced the costs on one side of the ledger (recording, manufacturing, promotion, and distribution) to anticipated profits on the other side.

The value of oldies catalogues came when the companies realized they had already invested all they needed in recording, they simply needed to repackage, promote, and distribute the product—songs—they already owned.

There was a downside, however.

Baby Boomers have Paid Dearly for the Music They Love

Through One Technological Advance After Another

Actually, our parents were the first to have to shell out extra money to enjoy their music.  When the 45-rpm came along in 1949-50, it didn’t change the possibility of enjoying popular music—for a while.  Record companies continued to issue new songs on both 78 and 45 rpm.  At the same time, the new polyvinylchloride discs were found to be very good for the microgrooves which extended the length of time that could be put on each side of the disc.  For the first time the term ‘album’ became a viable alternative.  Until then, ‘albums’ were generally foldout books which generally held four 78s--eight different songs.  The new microgroove 10” discs held 8-10, and the 12” discs expanded the possibilities to 14-16.

The need for new technology became important to music fans as the 50s unfolded.  To play 45’s and 33 1/3 rpm LPs required new players.  Especially when the record companies put so many songs on the LPs by fans’ favorite groups that were never released on 45.  The new players with settings for 33 1/3 and 45 rpm were paramount (and they had to have 78 rpm to play the collections already in the home). 

Simultaneously, the automobile was rapidly becoming a central feature in the new urban American life.  Almost all autos had radios, but most radio stations in the mid 50s did not play Rock and Roll, and Rhythm and Blues stations were extremely scarce.  The answer?  New technology:  the under-the-dash 45-rpm record player.  They were expensive, but mandatory if fans wanted to hear their music while riding in the car.  Beachdiggers were one of the groups who had to have those players if they wanted to hear ‘Beach Music, i.e. Black Music’ like the Clovers, Dominoes, Drifters, Chuck Willis, the Checkers, Bo Diddley and so forth.

At first glance, it might look like there weren’t any more challenges until 8-tracks made their appearance in the 70s.  Not so.

Stereo arrived across the board in the 60s.  (There were some earlier experiments in stereo—some good, some not—but stereo slowly became a standard through the 60s).  

Stereo, to be really appreciated, required new players and sound systems.  It required two speakers.  More money to fully enjoy the music we loved.

The mid to late 60s:  big, blockbuster, consumer Reel-to-Reel tape decks were out.  Many of the best coming from overseas.  Imagine!  You could buy reel-to-reel tapes of your favorite artists, with what seemed to be much higher quality stereo.  Tape decks evolved rapidly to 2-track and 4-track.  (A reel-to-reel tape of your favorite songs from the 50s and 60s could be recorded in Mono on a 4-track, so that you could end up with up to 4 Hours On One Tape!!!)   The reel-to-reel recorder/players evolved and so did the tape—it became higher quality and thinner to allow for much more music on every reel.  These little toys cost a lot of money.

By the 70s, 4-track had become 8-track which launched a whole new series of musical platforms--8-track tapes and 8-track players.  We had to have them.  Three new expenses, the tapes, the home players and the car players.  Meanwhile, fans had hundreds of 45s and albums they loved that were not on 8-track so they had to maintain their old players for those as well.

Ah, the 70s.  Stereo systems took on new shapes, sizes, and tremendous expense.  The quality of recording and playback exploded.  By the late 70s, the disco era ushered in the 12” single—much more music, greater breadth and depth in order to enjoy a song even more than before!  ($  $   $  $  $  $  $)

Emerging from the shadows was yet another technology—cassettes.  Which brought with them new recorders and new players.

Cassettes were the beginning of loud protestations from the record industry.  Fans, they proclaimed, were thieves (putting their music on cassettes and sharing them with friends, letting them copy them).

By then, a music devotee who’d been around since the 50s might have a player for 45s, 33 1/3s, 78s, Stereo, reel-to-reel, 8-track, cassette, auto and home players duplicated, with a huge stereo system, special tools to clean 45s, 33 1/3s, plus special cleaners for 8-tracks and cassettes.  If you lived it, you know the costs and time involved.

Surely there couldn’t be anything else.  Unless of course you liked to watch your favorite performers, in which case the new VHS and Beta players on the horizon were going to be a must.  The first RCA VHS cost $1000.00.   I thought it was a fantastic investment.

(Are some of you wondering when I’ll get to Quad and Surround Sound.  Heck, just toss them in anywhere…they both cost lots more money).

(You know where this is going next…don’t you?  CDs.)

When CDs arrived in the 90s, I was just about worn out as a music enthusiast and a DJ. 

By then, I carried albums, 45s, and cassettes to every gig.  My home looked like the show was about to start any minute.

At first CDs were easy to resist, but eventually the record companies really started digging into their archives to put more product on the street…and they began phasing 45 rpm records out in a hurry—albums followed them by the end of the decade.

Remember, when I mentioned that 4 Tops song, “Could It Be You,” earlier in this article?  By the mid 90s, record companies were putting some extremely serious collector’s items on CD.  Dozens of them.  Then hundreds.

I have never caught up.

When I first saw a CD with “Fried Chicken” and “Good Old 99” by the Marylanders, I think I stopped breathing.  That was a $500 record at the time.  I certainly didn’t own it.  I own the songs now, though.

CDs changed the face, and the body, of collecting forever.  Within a decade the collector’s world has shrunken to a tiny microcosm of what it once was.  I had a collection of jazz albums, every one was valued at $100 +, that was worth nothing almost overnight.  The same happened for all the worlds of collectibles.

That doesn’t mean there aren’t collectible records out there that still aren’t on CD.  But that world has changed so dramatically that almost all the collectors and dealers I once knew around the world are gone.

Given all these inventions it should now be a perfect world shouldn’t it?  Especially when you factor in MP3s, Ipods, ringtones, and all the new, new technology.  

Sorry.  No.

In a way, it’s becoming worse.

Let’s step back a moment.  Back to the 1980s, when enterprising companies like Ripete Records in South Carolina stepped to the fore to provide as much Beach Music as people could want.  Ripete today is easily the Premier Beach Music provider to the region and the world.   There were others who tried.

One 80s company ferreted out some great tunes by an artist who, although not new to the Beach music scene, had recorded a number of songs that were unknown in the Southeast, not to mention the rest of the world.

Said company called the Record corporation which owned the rights to that artists’ songs, asking to license and issue them on an album, maybe cassette and some 45s too.  (CDs were far into the future).  The record company declined, said it was too much trouble.

Those songs have never been released on other than the original 45s.  Never on albums, 8-tracks, cassettes, CDs, or reissue 45s.  Never.

Why would a record company refuse to license something that an Artist poured his/her creativity into, along with the creativity of composers, arrangers, producers, recording engineers, manufacturing costs, etc?

The short answer is this:  there was a more lucrative way to profit from those ‘stiffs’ (i.e. songs that were commercial failures).

Imagine you are a record company executive and you get a call from another record company’s executive,

“Hey, how’s it going today?”

[Good]

“Super.  Let’s talk a little business.  We’re looking for some new product to work with and wondered if you guys over there had anything for sale?”

[Absolutely.  I’ve got a block of 500 songs we were just getting ready to put on the market]

“Wow.  This is fantastic.  I’m glad I called today.  What are you asking for that block of 500 songs?”

[Oh, shoot.  For you, eight million dollars.]

“Man, I can’t believe my luck.  Sure glad I called.”

[I’m glad you called, too.  We’re also looking for some new product.]

“I don’t believe this!  We have a block of 500 songs we’re going to market with.”

[Great!  How much are you asking?]

“Eight million dollars.  A bargain when you consider what’s included.”

[Hey, I’m sure we’ll take it, but send me the title list.]

As you can imagine, they swapped the blocks of songs and swapped checks for eight million dollars.  These were, by the way, blocks of old songs with which they were never able to generate any profits.  So why buy them?

The laws at the time mandated that the companies had to generate at least two albums from those blocks in order to enjoy other ‘benefits.’  Each company would find a pick-up band or a group of singers they’d bring in to record 12 songs for each album, along with the minimum number of musicians, manufacturing, promotion, etc.

They’d put out the albums and they’d fail.

Then, they could begin the depreciation process on the Eight Million Dollars.  Tax write-off. (read that ten times).

So, if someone came along who wanted to license two or three songs out of that 500-song block, it was just an irritation, not a valued possibility.

Leaping back to the present moment.   We could make a list of 1,000 songs that we’d like to put up on a download site that we know for certain the owners will never make one single dollar on.  (We don’t know whether that tax loophole mentioned above still exists.  It lived in a gray area 30 years ago and was already under scrutiny by tax officials).   However, with a minimal amount of promotion, there could be profitable distribution on those 1,000 songs.  We bet a lot of other collectors / dealers / music entrepreneurs could do the same.

Those 1,000 songs will never be heard on XM, Sirius, CD, or MP3.  They could be heard on some of the many superb, entrepreneurial webcast stations. 

On a collector’s download site they could be sold for more than 88 cents. 

Would that prevent piracy?  Well, now.  How are the legitimate download sites protecting the songs they provide?  And do their strategies prevent all piracy?

1—we don’t think they stop piracy.

2—they generate millions of dollars in downloads each year.  Thus, we have to conclude that piracy hasn’t stopped all commerce.

There is another conclusion that is obvious.  In 50 years there will be no possibility to make any money on the songs in their archives that could be making them some money now!

However, today’s record conglomerates make unbelievable (and unprofitable) demands.  They want guarantees of 2,500, 5,000 or 10,000 ‘pieces’ (or downloads), which includes the 9.1 cents per unit for mechanicals, plus an additional license for downloads.  And then, the fees have to be paid UPFRONT!

Those 1,000 songs I mentioned a few moments ago?!  I’m talking about 1,000 songs for which many record companies no longer have the masters.  So we’d have to find the best quality version we could, or use one of the many software programs around that clean and enhance old records.  The record companies often don’t have anything to do with that side of the ‘manufacturing’ and ‘distribution.’

Currently, there are no sites that offer even 1% of the Beach music of the past 60 years.  They don’t even have a Beach Music category.  There are, as we mentioned, many fine sites where there are a few contemporary cuts offered by groups of the day—especially at their own sites. 

But if you love Beach music, in all its many forms, there’s no such site. 

Who knows what’s next?

Fessa’ John Hook, copyright 2007.