Godzilla vs. Mothra
When oligopolies collide, the sparks fly. That's what's happening now between two dying industries: music recording and broadcast radio. Both are sinking fast, and now the music industry wants to keep its head above water by climbing on top of the radio companies.
This is, in fact, a role reversal. Big Radio has been in the past a gatekeeper for the music industry - as repeated payola scandals have shown, the record companies have paid big so that the radio chains to spin their platters, or whatever you do with a CD.
But now the music companies want to take a bite out of the radio companies' revenue streams. They want to do this by charging companies like Clear Channel royalties for play time, royalties that will nominally go to the artists. Radio stations have long paid royalties to songwriters through an agreement with ASCAP, the composers' guild. For example, the guys who wrote the song "Jingle Bell Rock" (Joe Beal and Jim Boothe) hear ka-ching nay one of the infinite times that song floats over the airwaves, but the scores of singers who have cut versions of it, from [the estate of] Bill Haley to Amy Grant to Billy Idol" receive not a cent unless someone buys the CD.
As a BusinessWeek article ("The Battle for Radio Royalties", 12/10/07) puts it, "Record companies are pushing for it because they'd get a cut. Broadcasters, struggling to sell ads and keep listeners tuned in, vehemently oppose the move."
The income is meant to replace the music companies' rapidly dwindling income from CD sales. Having already attacked (and alienated) listeners with punitive lawsuits and claims that users cannot even make copies of their own CD tracks on their own computers or MP3 players, they now are attempting to alienate the radio industry. That industry has been ailing as well, with a collapsing listener base and collapsing revenues. One big counter-argument: satellite and Internet radio stations have already been forced to agree to such royalties.
The fight is head for Congress, and both sides are getting out the big-cannons in the forms of lobbyists. Still, as the BW article notes:
The NAB [National Association of Broadcasters] will continue to lobby Congress and, if 2007 is any guide, is likely to outspend the recording industry by a factor of nearly 5 to 1 (chart). It also will remind anyone who cares to listen that free radio airplay remains one of the best ways for artists to get heard-and accuse the labels of hypocrisy for suddenly finding common cause with the talent.
Let the games begin. Which monster will perish? Or maybe it's the last gasp for both industries, as currently structured.
