RSSNAB to Congress: Aren't Record Labels Exploiting Artists?
By Scott M. Fulton, III | Published October 8, 2007, 4:20 PM
The president and CEO of the National Association of Broadcasters is urging Congress to open an inquiry into the long-standing relationship between recording artists and their record labels. David Rehr's objective is to determine whether the reason artists claim they've been treated unfairly over the past several decades is not because terrestrial doesn't pay them, but because someone else doesn't.
Last July 31, in one of the more extraordinary exchanges to take place in a US House of Representatives conference room in recent memory, a single spokesperson for the broadcasting industry found himself debating giants of American music. There, ICBC Broadcast Holding's Charles A. Warfield, Jr., told the House Subcommittee on Courts, the Internet, and Intellectual Property that radio was largely responsible for the popularity of most American recording artists since the 1920s -- a fact that, for a time, was actually in dispute -- and that radio broadcasters should not have to pay the recording industry for the right to popularize its artists.
"As you will recall, during the recent hearing there was significant discussion about ways to improve the financial circumstances of performers," wrote National Association of Broadcasters President and CEO David Rehr last Wednesday in a formal, open letter to the Subcommittee's Chairman Howard Berman and Ranking Member Howard Coble. "However, many questions went unanswered. To bring the full picture of the recording industry to light, we respectfully request that you and the Subcommittee members hold additional hearings that address all aspects surrounding this issue, including the relationship between performers and their record labels."
Lawmakers are debating proposals from the recording industry and its representatives to lift the exemption on performance royalties that currently applies to terrestrial radio. For decades, radio stations have not had to pay the specific types of royalties that record labels would distribute to performers, though they do pay royalties to songwriters and to the labels themselves.
With recording labels still strapped by flagging revenue, but with their recent success in increasing royalties paid by Internet radio broadcasters, the industry is looking to extend that success to the terrestrial radio field as well.
With Warfield's testimony having been drowned out quite literally, at one point, by a partial parody rendition of "Amazing Grace" by Judy Collins, there's a good chance his point didn't come across, not for having failed to try. Now the NAB seeks a new hearing that could possibly reveal the long-standing historical relationship between record labels and the performers whose work they publish - a relationship which, though possibly amazing, may lack a certain grace, Rehr suggested.
Rehr seeks a hearing that would preferably bring together the heads of the four largest recording industry rights holders - Sony BMG, Warner Music, Universal Music, and BMI - along with executive heads of the RIAA would give subcommittee members an opportunity to call into question what had been treated as fact during last July's hearing.
"If the goal is to improve the circumstances of performers and build the cadre of music into the future," Rehr continued, "the relationship between performers and record labels also bears examination."
As recording artists testified, the broadcasting industry continues to make a substantial profit, little or none of which is shared with them. But Warfield made the case last July that the vast increase of public awareness in music that comes from radio has always resulted in greater sales, which then benefits the artists and performers, albeit indirectly. If performers aren't seeing the benefits, then perhaps they should take a closer look at the contracts they struck with their recording labels.
Responding to a question from Rep. Sheila Jackson-Lee (D - Tex.) -- who admitted that as a lawyer she represented the surviving members of The Ink Spots in legislation -- Warfield said in July that the "performance tax" (the NAB's term for performance royalties applied to terrestrial radio) "would go to what is referred to as artists and record companies, who in the existing system benefit greatly from the free on-air airplay of their product. Record sales result from that, which benefits the artists as well as the record labels at this point; whereas the composers of the music...do not receive that type of a benefit, which is why there are payments being made to them."
Later, Warfield -- a former recording industry executive before joining a radio station ownership group -- added that with regard to artists' claims that they don't feel they've been treated fairly, "I would put that back as a responsibility of the record labels. Why have the record labels allowed that to happen with artists that have helped make them as successful as they are today? [Why is it] the responsibility of the broadcasters to cover, I would say in some cases, the misdeeds of the record labels?"
Among the questions the NAB's Rehr would have Congress ask the recording industry, as he presented in his letter, are, "Over the years, how much did the various record labels benefit financially from the sales of the performer witnesses at the July 31, 2007 hearing? How does that compare to the compensation actually paid to the performers who testified on the 31st?"
Long live Radioheads... Death to the RIAA.
Artists... Please follow the success of Radioheads cut with the studios out of your profits... This is proof positive. Artist can produce there own stuff, put it out on the internet for free and in the open on sites like Youtube, and myspace and allow their fan base grow and grow till the requests for CDs can not keep up anymore with demand. Thats direct market. 100% profit for the artists... Thats the way it should be... Studios taking 89% of the profits from the artists sales, and suing the artists fans... that was their mistake... Now the artists are fighting back with a language the studios understand all too well... Taking all the profits for themselves. And jumping from the sinking ship... I look forward to the day the RIAA and all the profit hording studios cease to exist. Least then the money will finally get to those that create the music we all love, and those artist will be so inclined to make more of the same...
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|Nice idea, but 100% profit of a free give away is 100% of nothing. The problem now is that there are too many people who can make albums in their bedrooms and sell them just like everyone else on itunes, napster etc. That's not necessarily a bad thing, but that means a lot of competition, and acts that used to have tons of record co. cash to promote their stuff, are now feeling the squeeze because it's not cost effective anymore.
I'm sure it won't be too long before we see U2 or Celine Dion giving away their new CDs for free. The real money for them is in performance revenues, so why should they care?
I'm all for the artists making and selling their own stuff, but in Radiohead's case it's a publicity stunt. They're really just another record company stooge act like Green Day, Lenny Kravitz or all those other talentless losers who are getting desperate because we almost have a level playing field for the artist, and music lovers aren't having bad music forced on them anymore. The consumer now has a choice..wow, what a concept.
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|Did you see that people are paying up to like, $250 for that album?
If we ever needed proof that we don't need to play "blame the other guy" games or beg the government to regulate yet another industry to solve such problems, this is it.
These guys have something here...and it's something even the "start-up" bands can latch onto and use, without feeling they have to sign with some big label to do it.
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|True that 100% of nothing is nothing. However, there are a lot of people that get a taste through that nothing and then go on to buy, which is something.
There is a careful balance to play. X is X if solely sold, but Y of X is cX (where c is some factor greater than 1) if sold and given away. Believe it or not - it does work. Take a look at They Might Be Giants for one example - they do this.
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|Particle Man FTW!
...gonna go build a birdhouse in my soul now.
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|My prediction came true in about 4 hours!
http://www.telegraph.co....10/09/nradiohead108.xml
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|Still not a bad idea, even if it's only , in your opinion, crap bands right now.
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|Yes I think this is a good development. Let the freeloading begin!
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|People are paying upwards of $250 for radiohead's offering.
Not everyone is a freeloader.
That, and the publicity this generates will very likely pay off in future merch and concert ticket sales.
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|$250 is obviously too much, but I agree with you that it's a good idea. I only hope that something I like is offered in this manner. I'm not holding my breath, but it's good for everybody, especially given what the RIAA's charging these days.
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|Heh...Truth.
$250's a bargain compared to $222,216.
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|I wonder what would happen if terrestrial radio stations stopped playing music they would have to pay royalty for and started playing other peoples music, artists trying to break into the market etc. Just wondering if the record companies and the RIAA would still have the same attitude if something like that started to happen.
I also wonder, I know that the big record labels have a monopoly but how relevant is that monopoly today. What I would like to know is how hard would it be to get your music out there for millions to hear, lets say a service terrestrial radio station could offer if they don't already, and what about services like iTunes, how hard is it to get your music with them to make a few bucks ?
I also wonder about artists, don't they have managers and stuff to help them with basic stuff. I remember some years back on interview with the Dixie Chicks (MTV I think, it's been a while) and the interviewer wanted to know how much money they were making, he mentioned that they had sold X millions cd's (I can't remember the actual numbers so I'm going with X :) ), at $15 a pop (more in some cases) for XXX million dollars. I don't remember their answer exactly, it was kind of avoid it. But later the Dixie Chicks were in the news because they sued their record label for more money and won.
Now what I'm wondering is why did it take some kid on MTV (or whatever it was) to point that out to them ?
These are just some questions I don't answers to, but can't help but think about them :)
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|In this day and age labels should not even around! How much does it cost to record and album. If your already doing shows you should some money sell your music on your OWN web site!!
the labels have ALWAYS screwed the artist!!
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|"How much does it cost to record and album"
A lot if you want it done properly.
"sell your music on your OWN web site!"
Fancy setting up a (secure) web shop?
These things cost money.
(There may be a way of doing the last one for free, but I'm not an artist, so I haven't looked).
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|it's called itunes.
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|Waahhhh...
Good lord, people...
Did you sign a contract? Yes?
Did they or did they not hold a gun to your head? No?
Then shove off. Thank you.
I feel sorry for broadcasters being forced to pay for advertising the labels music to the general populace. I really do. I think it's BS. But this "won't someone think of the artists" BS is total crap.
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|If you want to be a musician you have very little choice what contracts to sign. You get one big break.
(Once you're big and out of contract then it's a different story)
You're going to get rammed and that's the face of it.
Surely even you would think it might be worth at least looking at whether or not record labels are paying the artists for their hard work?
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|I don't think it's "won't someone think of the artists" BS at all. No, in fact it's more like artists aren't thinking of themselves and are blaming the wrong party for the wrongs they feel they are experiencing. The radio industry is merely pushing back, saying "you've got the wrong end of the stick, take a look closer to home".
This investigation would - at least in theory - help to dispell some of the myths that even many artists, who experience record company relationships first hand, still seem to harbor. It's a mystery to me why someone who has signed a contract with a large record label, who should clearly know the terms of it, could honestly come in front of a congressional sub-committee and claim that the radio stations are the ones bilking them. Oh wait, no, it's not a mystery - it's the same old game, it's called "payola". Judy Collins no doubt got a big fat check for her appearance. Meanwhile artists who are paid nothing for their opinion by the RIAA seem to think a lot of this is hogwash. It's time all artists understood what was really going on. If this call for investigation actually yields something it could be the first *real* progress the industry at its core has seen in decades (I count things like iTunes and digital distribution in general as progress, but they're not led by the core - the RIAA and major labels - at all).
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|No, I don't.
They have a choice. If enough of them choose not to, the problem will be solved by the mere fact that if the labels want to sign *anyone*, they'll have to offer better contracts.
That will, of course, never happen. They sign these horrible contracts, they pay their dues, and, if they are good enough or marketed well enough, they get out of them and do better.
It's the price of fame. If it were easy, we'd all be doing it. To claim that somehow the choices they make shouldn't have the consequences those same choices would have if *we* made them (say, in buying a house?) is ludicrous.
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|???
So your answer to education artists is to tie up our legal system with BS finger pointing?
Sorry, no. That's not what it's for. Educate them on your own time, on your own dime.
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|When a problem becomes widespread enough and a solution is clearly not arising naturally from market functions, the government can and does step in to "fix" things. Whether that is something you approve of is irrelevant - it is a function our government performs and given that fact I think this is a case where it is warranted.
I'm not saying this is necessarily the best solution, but if it's affecting other policy being considered (like that regarding radio royalty fees) then it makes sense to fully investigate before making decisions. Knowing that the testimony offered in support of a particular position is based on falsehoods should certainly influence the view of that testimony and perhaps ultimately the opinion it supposedly supports. That opinion is one of many being weighed to create policy affecting pretty much all of us.
Bottom line, the industry itself is asking the government to provide this regulation so the government should do its best to be informed about the issue.
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|Many artists are told that the only way they can make it in the "business" is to sign up with a big label, even if they don't want to.
Nowadays getting one's music out isn't what it was with distribution and the like since these were physical things. In the digital age this can be bypassed and be up to the consumer if they want to place it on physical media or not. One virtual album, and cover, is the same costs as a billion of them. The profit margin can be MUCH higher than a label could offer.
A lot of up and coming artists are foregoing labels in favor of going it on their own now. If more and more of them do this the labels' stranglehold on them will die out as it should.
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|So exploiting those who don't know better is just fine by you?
Ok, I'm off to sell 'intelligence pills' to Down's Syndrome kids. "I promise these might make your kid smarter! You just have to buy a three year subscription for the excellent price of $22,990."
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|Could this the real reason why the RIAA says the industry is suffering? The indy's not signing to a label?
"One virtual album, and cover, is the same costs as a billion of them." Not 100% true. There are bandwidth costs involved, if you offer them for download on your own bands site. Could be quite costly.
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|When a problem becomes widespread enough and a solution is clearly not arising naturally from market functions, the government can and does step in to "fix" things.
What do you consider widespread?
What normally results from the government fixing things? (Higher prices, greater regulation, less freedom)
Whether that is something you approve of is irrelevant/i]
No, it's not. It's called an opinion. In a forum, such things are the entire point.
[i]I'm not saying this is necessarily the best solution,
My point exactly.
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|Many artists are told that the only way they can make it in the "business" is to sign up with a big label, even if they don't want to.
Waahh. I think I'm going to be ill... ;)
A lot of up and coming artists are foregoing labels in favor of going it on their own now. If more and more of them do this the labels' stranglehold on them will die out as it should.
My point exactly. The problem *can* take care of itself. Without government intervention.
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|*laughs*
More power to ya. Just don't ask for mercy when they lynch you.
...and sure as hell don't go crying to the government to support your business model or bail you out.
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