For as long as we can remember, RBR+TVBR has been arguing that radio airplay has intrinsic value to the music community, to the extent that it justifies the lack of a performance royalty. But another reason has surfaced.
It came as a result of the lawsuit between Pandora and BMI over a royalty dispute.
The judge in the case noted that one of the reasons Pandora is having trouble posting a profit is not the fact that its licensing fees are too high at 60% of its income; it’s at least partly due to the fact that the service sells only 60% of its available advertising inventory, leaving the remaining 40% on the shelf.
But that’s not the reason Judge Louis Stanton says royalties make sense for internet services and not for terrestrial radio.
It’s the fact that users have no control over what music they hear on a terrestrial radio station, other than the very general choice of which station to listen tune in.
That’s as opposed to internet services, which allow the user to tailor what they hear to their own tastes.
It’s the one-to-many” concept as opposed to the “one-to-one” concept.
Stanton explained, “Radio is a form of broadcast media by which a provider transmits audio programming to a listener. Historically, a listener had the ability to tune in to a particular radio station, but could hear only the programming provided by that station.
“Over the past century, new radio delivery systems have been developed, and radio programming can now be transmitted by broadcast signal, cable satellite, or over the internet. The advent of the internet as a radio delivery platform has allowed many broadcast or ‘terrestrial’ radio providers such as iHeartMedia (a conglomerate which owns hundreds of AM and FM stations) to broadcast their conventional radio programming simultaneously to listeners’ computers or mobile devices. It has also allowed radio providers to create an unprecedented level of listener interaction with the broadcaster through customizable radio services.
“In contrast to the broadcasting of a common signal throughout a geographic area for terrestrial radio, with the internet each listener’s device can now receive its own individualized data stream. The traditional model can be referred to as the ‘one-to-many,’ as compared to the ‘one-to-one’ current model. Because they now operate on a one-to-one model, customizable internet radio services are able to offer music programming that is adjustable by the individual user’s feedback. Present customizable radio services include Pandora, iHeartMedia’s ‘Create Station’ within its iHeart Radio Platform, and Spotify Radio.”
RBR+TVBR observation: It’s great to have another arrow in terrestrial radio’s quiver as the latest royalty battle continues to heat up.
But the value arguments continues to hold water. We’ll refer back to the Sade result studied by GAO back in 2010. An artist with ten years between albums, associated with a format – smooth jazz – with a very limited station roster, managed to move half a million units with a radio-based promotional campaign. None of the other artists studied by GAO got nearly as many spins, and none of them sold even remotely as many units.
We will note in passing that we occasionally tune in Pandora while we’re working – and we occasionally purchase music that Pandora helped us to discover.
If the music industry is bound and determined to focus on Pandora’s income while ignoring the red ink it continues to bleed, it will be killing off one more discovery platform, making it that much harder for musicians to sell their recordings.
Just saying…
