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Black Radio Fights Performance Royalties

by Neda Ulaby

November 24, 2009 -

New legislation in Congress could drastically change music-industry economics. As it currently stands, musicians in the U.S. aren’t paid when their songs are played on the radio unless they wrote the songs, too. Only songwriters get radio royalties, not the folks who play and sing their tunes. Two bills moving through the House and Senate would change that, by making radio broadcasters pay royalties to musicians, too.

Radio broadcasters hate the idea of performance royalties — really, really hate it. They’re speaking up in Congress and on air.

Cathy Hughes is the legendary founder of Radio One, the country’s largest chain of black radio stations. For months, her stations have played her announcements against the performance-rights bill. Hughes complains, on air, about all the work it would take to comply.

“If the performance tax is passed, all radio stations will have to count how many times a song is played each day and each week,” Hughes says in an on-air announcement. (The bills do not really propose a tax.)

Natalie Hopkinson says there’s no escaping Hughes. Hopkinson is an editor for the popular online news blog The Root, which is geared toward African-Americans. She says just about everyone who listens to urban radio has heard Hughes’ point of view.

“Radio One holds more than half of the top 30 black radio markets. They dominate,” Hopkinson says.

Is This A Racial Issue?

In an essay on The Root, Hopkinson writes that she resents Hughes’ attempts to paint proposed financial regulations as a racial, gender and social issue.

“You know, she’s the little woman. You know, she’s going up against the big recording industry,” Hopkinson says. “No, you own 53 stations and this is a huge, huge, massive, multimillion-dollar company that is still bringing in quite a bit of money.”

NPR was unable to get Hughes to comment. But James Winston, who heads the National Association of Black-Owned Broadcasters, says his organization’s members can’t be blamed for not wanting to pay royalties.

“Our revenues have been going down. We recognize we got problems,” Winston says.

Across the industry, ad revenue has dropped 23 percent in the past year alone. Listeners are turning from radio to MP3 players, computers and cell phones. Winston says there’s a giant paradigm shift across the entire music industry, but radio isn’t trying to squeeze more money out of the recording industry.

“Miss Hughes didn’t start the fight. It began with hearings in Congress, where these older performers — most of who happened to be African-American — were brought forward to tell their tales of woe that their songs were being played and they weren’t being compensated,” Winston says. “Now, nobody asked, ‘Well, what deal did you have with your record company? Why weren’t you being compensated by your record company for these records?’ Instead, everyone pointed their fingers at broadcasters and said, ‘You’re the bad guys.’ ”

It’s wrong to think in terms of good guys and bad guys, Hopkinson says. She says she doesn’t want to see radio — especially black radio — making the same mistakes as the recording industry.

“They’re just fighting over the scraps left over at this point, and I really think Miss Hughes’ time would be better spent figuring out a new model and a way to evolve,” Hopkinson says.

Supporting Local Artists

Chuck D has some ideas. He was working at a college radio station back when he founded Public Enemy in the 1980s. He says that, in order to survive, black radio should grow local talent.

“I would love to see artists in Indianapolis and artists in Louisville and artists in Chicago, be able to get played in their own town,” he says. “I mean, so what if the artists can’t get played in L.A. or New York? If they’re coming from Tulsa, Okla., they should be able to be played in that five-state radius.”

But broadcasters would still have to pay those musicians royalties, as Chuck D says they should. He says he’d like to see people who own radio stations be a little less defensive about performance rights. (It should be noted that NPR has expressed concerns about the bills to Congress.) But he says that black broadcasters, like Cathy Hughes, are competing against more powerful networks that lack a real connection to black communities.

“I’m not saying Miss Hughes doesn’t. But in order for her to stay in business, she has to be able to keep her head above the other corporations that probably don’t give a doggone about the black community,” Chuck D says.

In the end, it’s corporations that will largely profit from a change in collecting performance royalties from radio stations. Fifty percent of the money will go to the rights holders — usually record labels — 45 percent to the stars who sing the songs, and 5 percent to the musicians who back them up

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Understanding College Radio

NACA and the College Gig
How to Navigate The Educational Market

By Will Morgan

The college gig, in one respect, can be thought of as the generic store brand in the music industry supermarket – only a few people seem to be aware of it, despite its relative value. As a culture of advertising-inundated consumers, we instead reach for the big names on the shelf, or for the purposes of this example, the principal venues with established reputations. And more often than not, especially if you’re a musician, these items are beyond our means, financially and otherwise. Like any business, a musical career requires growing before we can expect to reap the rewards, and a college gig can often be the answer as to where to begin.

For many artists, the college booking process seems to be one shrouded in mystery, and understandably so. Schools do not share the same business mentality as standard venues, and hosting concerts is only a small part of their ongoing effort to keep students content. Not knowing how to approach this unique niche of the touring market can be discouraging for artists. Yes, landing a college performance requires a methodology unfamiliar to many, but it is certainly a revenue source worth tapping into. And thankfully, there is a set of fairly well-established guidelines and channels that will enable you to make the most of eager students and deep pockets.

In effect, there are two standard avenues for getting a college gig. The first is the do-it-yourself method: direct solicitation with press, flyers, music and the like. The second is through cooperative agencies, the most predominant of which is easily the National Association for Campus Activities, or NACA. The Association for Campus Activities (APCA) has also emerged as another helpful organization. So which plan of attack should you choose? The artists who have negotiated the process and the booking agents who understand the collegiate business mindset will quickly point to four important influencers in making the decision – money, reputation, attitude, and entertainment value.

NACA, as its website notes, “links the higher education and entertainment communities in a business and learning partnership.” In other words, the organization serves as a meeting ground for artists and colleges, thereby facilitating the booking process. Among NACA’s offerings are the Artist Matching Service, Block Book It Now (an online service that allows neighboring colleges to view each others’ schedules and book the same artists), and, perhaps most importantly, the Regional and National Conferences. Clearly, performance opportunities abound. Syd, a Boston-based singer/songwriter who estimates he has booked “a couple hundred” shows through NACA’s service, refers to the organization half-jokingly as “musician’s crack.”

Understanding NACA

Joining NACA is costly, but it can also yield you an “astonishing amount of money,” notes Syd. Those artists who decide against membership cite expenses as the main factor. An associate national membership (designed for companies doing business in the college market) costs $632/year at press time. Membership provides access to all the organization’s services and enables you to apply to both regional and national NACA conferences. Syd’s college booking agent, George Hornick from Wally’s World of Entertainment, affirms that conferences are the driving force for membership and are definitively the best way to book shows, especially if you land a showcase opportunity. Terri Mazurek of Peppermint Booking, whose roster includes Ellis, a Midwestern singer/songwriter who has had great success with NACA, echoes Hornick’s sentiment: “If you showcase well, it is THE best way to get attention in the college market.” And indeed, a little research will reveal just how lucrative one conference performance can be. Following Syd’s very first showcase, he ended up scheduling 50 college dates that same day, all paying $500 each. These results are not uncommon.

Be advised, though, that getting a showcase requires serious investment. To attend the conferences as an artist, you must first have a booth and pay the Campus Activities Marketplace fee. Then you must also pay the showcase application fee and, if selected to perform, you must pay a showcasing fee as well. Herein lies the financial trade-off that typifies NACA. Also keep in mind that showcasing slots are not reserved solely for musicians. College representatives are looking for acts that can entertain students, meaning comedians, magicians and other performance artists are also vying for coveted performance slots.

How to Succeed

Be personable and active. Even if you do not land a showcase, it can still be worthwhile to pay the booth fee and make an impression with your music if you have a positive demeanor. Not only does a certain amount of flexibility and a good attitude make you more pleasant to work with, but it will also confirm to prospective college buyers that you can interact well and potentially entertain an audience. This personal effort can have very tangible results, i.e. increased bookings. Mazurek notes that “many students have heard of Ellis because … they just met her at a conference and liked her,” and points to the fact that for “about half of her bookings, the schools are calling me directly asking for her; she has a very large number of repeat bookings.” Hornick mimics her comments, remarking “when it comes to somebody like Syd, his personality and his music have proven invaluable in the NACA eyes. To the students on program committees, they find that endearing.” He continues, “Not only is he talented, but he can also keep a set of students entertained for a period of time. NACA is all about entertainment. Students want to be entertained. To some of them, a musical act is right there with the magician, the novelty, etc.” Syd agrees: “Everyone who’s decent, or charismatic I should say, will have success with it.” In this respect, it becomes apparent how college gigs differ from standard venue performances, in that entertainment value and accessibility are paramount.

Consider an agent. The trick with student activities committees, college program boards, and the like is that they are largely student-run, meaning personnel turnover occurs very frequently. Also, because they still have all their academic worries outside of booking entertainment, “it’s not the most prioritizing thing in their life,” as Hornick puts is. If you are a self-represented artist, trying to maintain relationships with one college, let alone hundreds, can be a job unto itself. Certain agents work specifically with colleges, making sure their relationships remain intact through all the transitions. Again, the conferences are prime territory for strengthening these bonds. Additionally, those agents that have clients with proven track records are very appealing to schools because they can then book not just one, but many acts through one contact.

Use NACA as a springboard. While college gigs can certainly pay well, they do not create the same benefits as a real venue performance. Take advantage of the fact that you have generated interest among a seriously buzz-driven community and aim for playing at a local venue next time around to draw paying fans. Mazurek warns, “if you don’t follow up these shows with ticketed concerts at nearby venues, you then have a whole audience of folks who are now used to seeing you for free. They may not pay to see a show down the road.” She continues, “there is a danger of becoming just a ‘college artist’ and the students may not take you as seriously. It is important to have a balance of college shows and ticketed club shows.” Hornick concurs that “[artists] should use it to financially supplement their tour,” but that having success in the college market shouldn’t be the ultimate goal.

The Grassroots Option

Colleges are not bound in any way to book exclusively through NACA once they become members, and if you can present them with a compelling package, you can have just as much luck as NACA-associated artists. Granted, this method requires significantly more grunt work. Choosing this process is where having an already established reputation can help, as name recognition will often move you to the top of the pile. You may also want to choose this path if you or your group might have trouble competing with the various novelty acts that go through NACA. In this case, you save on membership and showcasing fees by directly soliciting schools. When asked how she approaches colleges outside of NACA, Mazurek replies simply “lots and lots of calls to schools, keeping in touch, and letting them know about open dates of our acts.” Sending flyers and one-sheets is effective when followed-up on. Developing and maintaining an up-to-date list of college contacts will allow you to conduct mass mailings easily; there are various resources for gathering all this information (see the directory that follows). Allegedly, Dispatch, certainly one of the most ingenious groups when it came to grassroots work, made their now well-chronicled entrance into the school market by making a huge list of private schools and contacting each one.

Food for Thought

Both methods take a lot of work and a certain amount of money. Do not spring for either until you are sure you are ready and need to do so. Syd advises curious musicians to bide their time and establish a following prior to joining NACA. Also, in this digital age, industry insiders are beginning to notice changes to the standard formats of booking college shows. Mazurek highlights this shift: “[Conferences] seem to be somewhat less effective recently, with more student reps finding their artists via the internet [MySpace, artist sites, etc.]. It used to be that a successful showcase would result in 40 to 50 bookings, but now it seems like ’success’ is 20 bookings.” Hornick agrees: “There’s not as much co-op buying going on at conferences. Now, you’re lucky to get a couple blocks.” He concludes with an observation indicative, perhaps, of the whole college booking process, stating, “It is a long-term investment; you have to put in three years of sticking with it in order to get turn-around.”

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Finally, for the first time ever, Internet radio stations have a royalty deal that is reasonably viable and extends for a reasonably-long period of time.

The specific part of the Internet radio industry that this particular deal saves are the webcasters who are (A) larger than hobbyists — i.e., who have aspirations of earning more than $1.25 million in revenues per year — but (B) are not wholly-owned divisions of multi-billion-dollar companies (e.g., AOL & Yahoo and CBS & other terrestrial broadcast groups).

In other words, the set of webcasters who may be able to benefit from this agreement includes webcasters like Pandora, AccuRadio, Digitally Imported, Radioio, and potentially dozens of other companies — really, anyone who wants to get into webcasting as a real business.

For all of those webcasters, being stuck having to pay the CRB decision’s per-performance rates would almost certainly have been a death warrant — they were the equivilant of 70%, 100%, or even more of some webcasters’ total revenues. (In AccuRadio’s case for the first 6 months of 2009, the CRB rate would have been over 200% of our revenues!)

This agreement has three main benefits for those who choose to elect it:

  • It cuts the CRB per-performance rates for 2007-10 by approximately a third to a half.
  • It establishes per-performance rates for 2011-15 — with annual increases, to be sure, but nowhere near as huge as the kind of annual increases the CRB was coming up with, and without the risk and expense of participating in another CRB proceeding for that period.
  • And it gives smaller webcasters a chance to grow into these rates — with a “percentage of revenues” royalty rate for a webcaster’s early years (about 14% until they hit $1.25 million in annual revenues, and 25% for about a year thereafter). (Note, however, that this provision expires at the end of 2014.)

Given the fact that the deal for large pureplay webcasters is a “greater of“ the per-performance rate or 25% of revenues, that still means that Internet radio will pay a far, far higher royalty rate than broadcast, cable, or satellite radio pays.

Our hope is that, over the next few years, Congress will see fit to change the laws affecting radio royalty rates so that all forms of radio that have to pay a sound recordings performance royalty pay the same rates (and if those rates are set by a future CRB, the rates would be set under the same legal standards).

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According to major label vet Ted Cohen , “the main problem centers around the minimums [that services pay labels for the use of music],” he wrote. “The economics just don’t work. A ‘mea culpa’, I was a big proponent of per-track minimum rates for both paid subscription and ad-supported services when I was at EMI. I WAS WRONG!”

Those involved in, and observers of, online music industry are coming to the conclusion that free-to-use, ad-supported services simply aren’t working.

According to major label vet Ted Cohen (pictured), “the main problem centers around the minimums [that services pay labels for the use of music],” he wrote. “The economics just don’t work. A ‘mea culpa’, I was a big proponent of per-track minimum rates for both paid subscription and ad-supported services when I was at EMI. I WAS WRONG!”

The idea that current advertising revenue won’t come close to meeting the costs labels demand for licensing music isn’t new at all. And now labels and businesses may soon be reaching a point where something has to give.

MySpace Music is acquiring most of the assets of streaming music service iMeem, reportedly for around $1 million in cash. Both are struggling to meet the premiums they pay for the use of music. And the U.S. launch of European music-streaming darling Spotify is being held up by the major labels, which want the service to convert free-listening to subscription. “As an ad-supported service the economics don’t work at all,” a label spokesperson said. “They’re going to have to convince us they can convert enough people from free to paid subscriptions to make it worth our while.”

(While none of the major stories of the past few weeks directly involves non-interactive webcasting, the revenue/cost issues facing Internet radio likely have similar roots. This only emphasizes the need to address the issue of licensing costs.)

Cohen concludes, “It seems that the only way to achieve success for both the services and the rights holders in our current economic situation is through deals based on revenue-sharing that are structured with complete transparency. We need to break the cycle of mistrust, be bold, share the risk, share the reward.”

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Representatives from the National Association of Broadcasters (NAB) met with members of Congress and the Recording Industry Association of America (RIAA) to reiterate the negative impact that local airplay royalties would have on local radio stations that provide free airplay to its 235 million weekly listeners.

NAB Joint Board Chairman Steve Newberry (President/CEO of Kentucky-based Commonwealth Broadcasting), and NAB Radio Board Chairman Charles Warfield, (President/COO of ICBC Broadcast Holdings) along with representatives from the National Association of Black-owned Broadcasters (NABOB) and the Spanish Broadcasters Association attended the meeting. Rep. Mike Conaway (TX-11), an original co-sponsor of a countering resolution known as The Local Radio Freedom Act, also participated in the meeting.

NAB Executive VP Dennis Wharton said in a statement, “Out of deference to key members of Congress, NAB representatives met today with representatives of RIAA and the music industry to discuss pending performance tax legislation. NAB representatives, along with representatives of minority-owned radio stations, reiterated our strong concerns over the negative impact that the bill would have on the ability of free and local radio stations to continue serving our listeners.”

Meanwhile, Utah Democrat Jim Matheson (UT-2) became the 253rd member of House of Representatives to co-sponsor the Local Radio Freedom Act, a bipartisan resolution that opposes “any new performance fee, tax, royalty or other charge” on local radio stations for music aired free to listeners. To date a bipartisan group of 253 House lawmakers and 27 U.S. Senators have publicly expressed opposition to the RIAA-backed legislation. (11-17-09)

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