Future of Music Newsletter #17

Hello friends:

We would first like to express our condolences over the recent passing of Billboard magazine editor Timothy White. Tim’s passing on June 27 was a devastating loss to the musicians’ community. Tim had shown incredible courage in world of publishing by keeping a watchful eye on an industry that ultimately supported the magazine’s livelihood. He will be sorely missed.

As DC heats up, so does Congress. There’s been a surprising amount of activity on music/tech matters in the past six weeks, with a number of legislators stepping forward to promote policies and call for investigations. While we are heartened by the increased level of interest, we’re also aware that these matters take a long time to be resolved. And, in a year of a questionable economic "recovery" and more corporate scandals breaking every day, we know that policymakers have more on their plates than they can possibly digest. The FMC pledges to carry on, issuing research papers over the next two months on both radio consolidation and health care for musicians, organizing our 3rd Annual Policy Summit, and building coalitions with other organizations to support policies that will benefit the majority of musicians and citizens. But now… HEADLINES!

On June 20, the FMC released a portion of the results of a public opinion survey that we commissioned regarding citizens’ satisfaction with commercial radio. The survey found strong public support for policies to counteract the effects of radio consolidation.

The survey is part of a larger research study we’re doing looking at the effects of radio consolidation on musicians and the public that we’re working on in partnership with Media Access Project and the Rockefeller Foundation.

The telephone survey, conducted May 13-20, 2002, asked respondents a wide variety of questions about radio; from basic listening habits, to opinions about programming and available content, to opinions about the role of Congress in addressing issues such as radio station ownership consolidation and "pay-for-play" issues.

Here are some specific highlights:

- Consolidation of radio station ownership is not popular. Eight of ten favor congressional action to protect or expand the number of independently owned local stations

- By a better than ten to one ratio – 76 percent to 7 percent – radio listeners believe that DJs should be given more air time for songs they think will be of interest to their audiences rather than be required to mostly play songs of artists backed by recording companies

- If it can be substantiated that radio stations are paid to give air time preference to the music artists supported by record companies, the public approves by a 68 to 24 percent ratio for Congress to consider passing laws to ensure that all artists have a more reasonable chance of having their songs heard

- Half of the respondents – 52 percent – say radio would be more appealing to them if it offered more new music, less repetition and more music of local bands and artists

- By a ratio of six to one, radio listeners prefer a long, rather than a short, playlist that provides them a greater variety of songs and less repetition during the week

- Seventy-five percent would like to see low power FM (LPFM) stations expanded in their communities, especially if they offer (a) the music of local bands and artists, (b) talk shows on issues of local interest and (c) health, science or fitness programming. Additionally, 74 percent favor legislation to expand the number of LPFM stations in the United States.

You can read the survey results that we released here.

And a few of the stories in the press about it:

Will Congress tackle pay-for-play?
Radio-station owners are shocked — shocked! — as the music industry’s payola scandal widens. Record-label execs aren’t buying it (and neither should you).
By Eric Boehlert
Salon.com, June 25, 2002

Survey Shows Opposition to Radio Consolidation
Radio listeners want local disc jockeys to have more control over programming, and they oppose federal laws that encourage more consolidation among radio conglomerates, according to a recent survey conducted by the Future of Music Coalition, an artists rights group based in Washington.
By Laura Holson
New York Times, June 20, 2002

Survey shows radio listeners turned off by payola, playlists
Denouncing everything from the shrinking number of independent stations to music playlists influenced by payola-like practices, a survey of radio listeners across America was released Wednesday that adds to the growing list of voices expressing dissatisfaction with the state of commercial radio.
By Greg Kot
Chicago Tribune, June 20, 2002

As noted, this survey is just one component in our larger study of the impacts of radio consolidation on musicians and the public that we expect to release in September 2002. Stay tuned for more!

In another policymaking arena, the Librarian of Congress James Billington released his decision on the webcasting rates on June 20. Briefly, the Librarian rejected the CARP’s findings and cut the performance royalty rate in half; from .14 cents to .07 cents per song, per listener.

You can read the executive summary of the Librarian’s decision here:
http://www.copyright.gov/carp/webcasting_rates_final.html

Overall, reaction to this decision has been negative from all sides. The RIAA denounced the rate reduction, saying that is "simply does not reflect the fair market value of music as promised by the law". The musician unions hoped for an even higher performance rate. Small webcasters, on the other hand, considered the rate reduction trivial and pointless when many argue that the installation of this per-performance rate, which is retroactive to October 1998, will hasten the destruction of the emerging webcasting world and will force many small webcasters out of business. Kevin Shively from Beethoven.com said, "While some large, deep pocketed companies may feel that a 50% reduction is a victory, the decision by the Librarian of Congress does little or nothing to avoid the bankruptcy of the vast majority of Internet radio stations — the stations that the majority of the Internet radio audience listens to. The absence of a percentage of revenue option in the decision creates a barrier to entry into the industry which is impermeable to all but the largest corporations.

The small business webcasters spurring the vast majority of the growth and innovation in streaming media will be pushed aside creating a massive consolidation in the industry and making Internet radio virtually indistinguishable from terrestrial radio. As a result, Internet radio will lose the very distinction that caused its rapid growth in the first place creating many more losers than could ever win from this decision."

The FMC agrees that the decision handed down by the Librarian of Congress is fundamentally flawed. Since the beginning of this process, the FMC has urged the Copyright Office to consider developing a multi-tiered rate and licensing structure that distinguishes between the various webcasting business models and encourages the growth of this emerging media. We also proposed payments based on percentage of revenue instead of a per-listener payment. This not only reflects payment models currently under use in the terrestrial world, but also is scalable according to the abilities of webcasting stations to generate revenue.

Read our summary proposal filed with the Copyright Office here

We had previously filed these documents with the Copyright Office on webcasting rates and reporting requirements:
http://www.futureofmusic.org/news/CARPrecordingreqs.cfm
http://www.futureofmusic.org/news/CARPreplycomments.cfm

Articles about the Librarian of Congress’ recent decision on webcasting rates:

Webcasters’ Fees Slashed in Half
By Brad King
Wired, June 20, 2002

Curtain Call for Webcasts?
Some Decry Order to Pay Royalties to Musicians
By Christopher Stern
Washington Post, June 21, 2002

Internet Radio Criticizes Rate on Royalties
By Amy Harmon
New York Times, June 21, 2002

U.S. Official Cuts Proposed Royalty for Online Music
Radio: Webcasters, musicians and record labels are displeased with the decision, which requires a per-song fee.
By Jon Healey
LA Times, June 21, 2002

Webcasting pioneer: Royalty rates set high to cut competition:
A Webcasting pioneer who helped strike a key deal that influenced the rate all other Internet radio stations would pay the recording industry admits he let it be set high to drive out competitors.
By Dawn C. Chmielewski
SJ Mercury News

We’d also encourage you to check out the Radio and Internet Newsletter here for daily updates: http://www.kurthanson.com

Jenny Toomey
Jenny Toomey has continued coordinating research for the FMC Health Insurance Initiative and has weighed in with some recent articles on radio consolidation and the CARP rate. She’s also been burning up the telephone and DSL lines confirming panelists for the 2003 policy conference and choosing books for the syllabus of the class she will be co-teaching at Georgetown in the fall with GiGi Sohn in anticipation of that event. In her spare time she’s been studying the history of Nicaragua and thinking about the intersection of Consolidation and Globalization. She’s also trying to retrain her typing fingers to play Tsunami songs for the impending Ladyfest DC reunion.

Michael Bracy
As referenced throughout the newsletter, it’s getting "muy caliente" in Washington DC. Now, beyond introducing 2 year old Sophie to the magic of potty training and trying to keep up with 4 year old Eliza’s obsession with US soccer star Landon Donovan, Michael is gearing up for the next major battle in media reform, in the shape of Senator Feingold’s legislation. Michael applauds Senator Feingold and his staff for the thorough, professional process they undertook to both identify the problems caused by radio consolidation and coming forward with specific, credible remedies. He also appreciates the interest that others in the policy community, media, and citizens across the country are taking in these issues, and promises that he will attempt to return every single message he receives over the rest of the summer. Every single one! Finally, Michael wants to thank all the FMC supporters who have called and emailed their support this past month - we will do everything we can to not let you down.

Walter McDonough
Walter McDonough has been very, very busy.

Kristin Thomson
Kristin Thomson has been busy juggling various projects, including the radio study, website management, conference planning, health insurance data management, and a little bit of graphic design for good measure. Kristin, like Jenny, has been trying to dredge up Tsunami song chords from her memory for the upcoming Ladyfest DC, and has been helping Ladyfest Philly (March 2003) with general organizing and logistics.

Peter DiCola
Peter DiCola continues to work on the FMC’s study of radio consolidation. For the last few weeks he’s been investigating data on every station in the U.S., learning the details of what happened when a small number of large firms took over radio. He’s also been wondering why the Roman Catholic church owns a "smooth jazz" station in San Juan, Puerto Rico (WORO — "Radio Oro").

Brian Zisk
Besides virtually appearing in Vienna at The Music Information Center Austria’s Micafocus Event, Brian’s been talking with musicians, press folks, government folks, and industry folks about the myriad of issues currently or potentially on the FMC’s plate. He’s looking at the upcoming Policy Summit, and plotting and planning on how to make it as effective as possible.

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