Look for higher music license fees, Radio

From Inside Radio:

Months of jockeying became less theoretical and more literal yesterday, as bills were introduced in both the House and Senate to abolish what backers refer to as a “corporate radio loophole” in the royalty statute. If the bills are passed, it could cost radio several billion dollars a year in royalties….The NAB vows to “aggressively oppose” what it calls a “brazen attempt to force America’s hometown radio stations to subsidize companies that have profited enormously through the free promotion provided by radio airplay.” Spokesman Dennis Wharton says “After decades of Ebenezer Scrooge-like exploitation of countless artists, RIAA and the foreign-owned record labels are singing a new holiday jingle to offset their failing business model.” The NAB has been busily building support for what has quickly become its top radio priority. To date it has enlisted the support of 119 House members on a non-binding resolution which says Congress shouldn’t impose any new performance fee on local radio.

I’m certainly with the NAB on this one.

At the same time, the music industry doesn’t have a “failing business model,” it has an evolving one. And it’s evolving in the direction of licensing and direct advertiser support. And like it or not, one of the targets in those licensing cross-hairs is radio. This is exactly right from their perspective.

Hey, I warned you guys this would be coming months before it did.

Here’s what I see as the eventual outcome of all this:

1. Radio stations will have to pay more to license their music. Not as much as RIAA wants, but not as little as we’re paying now. The fight will eventually end in a compromise. You watch and see.

2. This – and competition from the rising alternatives to radio – will push more and more stations into non-music formats, creating a renaissance (if you will) of non-music content. Not just “talk,” but more than “talk.” And different from “music.” This will create a defensible island for radio, because we would be investing in content which is proprietary.

3. But there’s a problem: What is this content? Who creates it? Who delivers it? Who supports both the creators and deliverers – and who pays for them? Who cares about investment when business is bad? Who are the champions of radio’s future, given that so many of our leaders are more interested in championing our past? Where are the content kings of tomorrow?

4. If that renaissance occurs and we invest in our future, that future can be bright. If it does not and we don’t…

Well, I hope your company has packed a corporate radio Golden Parachute for you.

But don’t count on it.

An aside…I think the NAB could gain more sympathy and better results by arguing effectively and fairly rather than referring to their nemesis as “Ebenezer Scrooge.” When you’re as powerful as the NAB and the industry it represents, legislators are unlikely to be impressed by what appears to be a name-calling dispute between Scrooge and Jacob Marley.

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