Streaming Radio Shutting Down in the U.S.

A few weeks back, I caught a little heat for using the phrase, "selling older music to older people." I was actually quoting Jimmy Guterman from PaidContent, who was commenting on the aging hipster element at the Grammy Awards. While there really is nothing wrong with selling anything to older people, the mainstream recording industry is certainly making it look like older customers are all they're interested in right now.

Breaking new acts is not a priority for major record labels, just like it hasn't been a priority for major market radio. And the presence of internet radio hurts the marketing departments of major labels, who have a harder time than ever getting albums to go platinum or even gold as the marketplace fractures. Finding a way to justify the shutdown of independent radio streams under the guise of copyright enforcement is a sly way to reduce the number of ways that audiences can learn about new music.

So the declarations that internet radio is on its death bed are not exaggerations.

We were battling the "per stream/per listener" demands of the labels ten years ago when I worked in public radio. Only a last minute action from Jesse Helms and some surprise government funding kept public radio streaming back then. Now, using a formula that was admittedly designed to crush smaller stations, the Copyright Royalty Board has set a ludicrous fee for webcasters.

What's striking to me is that the audience for internet radio is still very tiny compared to that of broadcast radio. However, that audience of early adopters is probably the most likely group of people to actually purchase new music. Despite the potential influence wielded by this group of avid listeners, their overall power pales in comparison to the "big album launches" of two decades ago. As any manufacturer will tell you, it's far easier to produce one million of a single widget than ten million of twenty assorted widgets.

When you do the math, the shutdown of internet radio makes it easier for major labels to justify focusing their attention on a handful of key releases.

So, you say, doesn't this make it easier for independent musicians to gain exposure through internet radio?

No, for two reasons.

First, unlike "podsafe music," where creators can exempt themselves from being paid royalties because they (wisely) value the exposure more than the immediate payoff, internet radio must pay a minimum of $500 per year, per stream to the relatively new agency that aggregates royalties on behalf of copyright owners. Because streaming stations in the U.S. cannot "opt out" of this payment requirement, I wouldn't be surprised to see a cottage industry spring up around reporting unlicensed stations. (Hey, it happens with bars that don't pay their performance fees.)

Second, a radio station playing nothing but independent music would only ever reach a fragmented, niche audience. Radio listeners do not distinguish between what's indie and what's not -- but they do distinguish between what they know and what they don't know. Too much unknown material causes listeners to tune out, and this has been proven in study after study.

So, what can you do, as an independent musician or as a music lover, to change the situation?

Stay tuned...

Technorati Tags: music+business, internet+radio, streaming, RIAA, copyright