Why the Record Labels Are Wrong

by Tony Coloff, 05.19.2009

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Record label lawyers have convoluted the whole local free radio/record artist business model.

They want to change the model that has worked enormously to labels' advantage over 80 years to an ill-conceived notion that amounts to another unfair, congressionally mandated bailout to record labels, on the backs of local radio stations, rather than compete in the free market for exposure and for sales of product.

1. No artist has a "right" to a performance on a U.S. government-licensed local free radio station. Radio DJs and music directors are required by law by the Federal Communications Commission to select artists for public exposure solely on the basis of artistic merit. No payola. No plugola. Radio does not get paid for the exposure it gives. And radio doesn't charge the listener for the service it provides, nor charges the labels for the promotion exposure or repetition exposure.
2. Further, radio is not a user of music like the myriad other users of popular music. Local free radio, due to its mass audience and 98 percent audience exposure rate, every week, in each local area, makes music popular and is the unique developer, exposer, promoter and great popularizer (through many repetitions) of new and old music, to multiple new and old generations of listeners.
   
   Nobody would remember or care about a long-dead Buddy Holly — and the record label wouldn't have just put out a new CD of his old music — if it weren't for the free local radio promotion, free local radio play, free local radio exposure and free local radio support of the Buddy Holly Tribute and Buddy Holly music in the North Iowa area for over 25 years. Local radio made it happen, not overpaid record label lawyers.
   
   Evidence: Thousands of silver and gold awards to thousands of radio stations for creating record sales. See it at jacobsmedia.com/goingforthegold.
3. Records and CDs are just dead pieces of plastic without local radio. My radio station receives nearly 250 record label promotional CD tracks and MP3s every month. If my station doesn't give the record free advertising and exposure, it's just another dead piece of plastic that didn't get exposed, wasn't liked or accepted by the public, and doesn't sell.
4. Established artists are only as good as their next release. When their artistic merit dips, they are off the playlist, and another artist gets the free opportunity for free exposure and popularity.
5. Record artists already are paid. The artist is paid with free advertising and free exposure every time a radio station plays their music. That exposure should be paid for as advertising, as every other business pays for their advertising of their product.
   
   The artist is paid every time they sell a CD or online iTtunes track. If it's not enough, the artists should be going after more of a cut of label record and label online sales.
   
   The artist is paid every time a radio station promotes the artist's next concert appearance and interviews them. Free concert promotion sells tickets.
   
   The artist is paid every time the station talks about them and keeps their exposure alive.
   
   
   

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   In addition, most record artists are also paid as composers through payments that are already made by local free radio. They are already getting paid fees for their compositions they perform.
6. Radio stations should charge record labels advertising time.
   
   If the record labels want to change the symbiotic system we have now, here is the change I see as the correct business model. Local free radio should be charging for every time it gives exposure to a record label track, just like it charges every other advertiser it gives exposure to when a radio ad is broadcast. That would be a minimum of $20 per play in my small market and successively larger on up to the medium and large markets.
   
   And if a record label doesn't pay its advertising exposure bill, they should be treated like any other advertiser that doesn't pay their bill. Their record label exposure will be taken off the air until they pay their bill.
7. I am not even going to mention the many local area and regional artists who aren't on record labels, that my station plays for free promotion and popularity at no charge, whose recordings may not always be high on artistic merit.

We create IP

Intellectual property is created by U.S. local free radio.

Question: How many times can a broadcaster be ripped off by a record label? Answer: three.

First, a promotional MP3 or record is played, advertised and promoted; the radio station gets no payment. Second, radio gives record heavy rotation for months; the radio station gives mass exposure and circulation and still gets no payment. Third, the radio station thus turns performance into intellectual property; now, incredibly, record labels demand that stations owe labels payments. What's wrong with this picture?

I feel like a waitress who gave the greatest service. But the customer doesn't pay — a gross injustice. Then, even more incredibly, the customer demands payment from the waitress. An absolute outrage.

Don't be buffaloed by legalese about First Amendment rights and so-called intellectual property.

Labels may have recorded the content (give the label 1 percent credit for entrepreneurialism), but they used U.S. local radio, for free, to create the multi-billions of dollars of sales for those MP3 or CD performances (give radio 99 percent credit for creating).

Radio created the value in the recording; local free radio should own the intellectual property. Radio should demand payment from the labels.

Labels would not have any intellectual property to sell if it weren't for U.S. local free radio creating that property value in those recordings — created it by mass exposure and mass circulation of those recordings; by burning the performances into the intellect and memories of millions of record buyers' heads through endless repetitions, into each generation.

Landfills all over the United States are littered with millions of discarded record and CD promotional copies or deleted MP3 files that were not played on U.S. local free radio. These records, CDs or deleted MP3 files are just pieces of dead plastic. They have no intellectual property value. These copies were sent to stations begging for airplay. U.S. local free radio did not play them; no intellectual value was created in them. They are worthless pieces of plastic because radio didn't play them.

Ahmet Ertegun is squirming in his grave. This great Turkish immigrant record label entrepreneur, who made billions by founding Atlantic-Atco records, would be ashamed of the sham today's record labels are trying to foist upon Congress and on the American public, who own the airwaves.

The author is general manager of KIOW(FM) in Forest City, Iowa.