Aritaur Communications has announced that it will sell the frequency for WMVY, its Martha’s Vineyard fm station, to WBUR, Boston’s NPR news station. Their plans for the signal do not include continuing to air the local flavored, eclectic-folk-alternative format that generations of islanders (either physically or virtually) have come to love. The staff of the station, headed by highly talented program director and all around great gal Barbara Dacey, are hoping that the community (local and online) will rally and raise enough cash to keep the programming streaming online.
I met Internet radio for the first time while I was managing Aritaur’s group of radio stations, and spending a lot of time at WMVY. It is, without a doubt, the best radio station, bar none, in the world. On any given day, at the little house at the end of a dirt road that we called an office, any number of fun, folksy, or famous people might stop by to visit. It is one of the few broadcast stations left that doesn’t program for mass appeal, which of course is its magic.
Dacey and others at the station are hoping to raise $600,000 in sixty days to keep the format alive online, which would be a fine place for it to live. While this may seem like a daunting goal, take this little story as an example of the power that a community has to save things that it values. I live in a small village in Connecticut where last year after hurricane Irene, our local market went out of business. For four months our community mourned the loss of our local store, before deciding to form a co-op to replace it. In a few short months the store had over 600 members (at $195 a membership) and had also loaned the store over $300,000 (in more than 200 individual loans). The store is open for business, and doing pretty well, in a village that is a lot smaller than Martha’s Vineyard.
So here’s wishing my friend Barbara and her crew a lot of luck in this next chapter. I’m sorry that WMVY won’t be on the air the next time I head out to the cape, and I know that Aritaur’s founder Joe Gallagher will miss it too; owning that station was his dream come true, selling it can’t have come easy.
In the meantime, you can still listen to the best there is, right here…
There’s an article on DMN from about a week ago about a songwriter Ellen Shipley. She’s complaining about the amount of royalties she receives as co-writer of a song that has been played 3 million times on Pandora recently. The problem is, she’s mad at Pandora, when her gripe is really with SoundExchange and the record companies. They’re the ones that decide what happens to the performance royalties that get paid by Pandora, and how they get parsed out to performers versus songwriters and co-songwriters.
I’ll bet someone from her record company called her right up to explain that to her..
There’s been a line of artists complaining recently about the paltry amounts of money they are receiving from Pandora and other streaming services, prompted by the proposed Internet Radio Fairness Act. I’ve written about that, and would like to leave that debate to one side for the moment and talk more about the responsibility that the musician has to become their own business, and take responsibility for their own income, especially if they are unhappy with the size of the checks that are arriving in the mail.
I started thinking about this after I read an article on NPR’s blog about some musicians that are promoting themselves and getting paid for their performances on Kickstarter and similar platforms. Singer and performer Amanda Palmer was one of the first to use Kickstarter and raised over a million dollars for her new album. Other bands, like A House For Lions, produced a video, as well as t-shirts and other promotional items that they sell online through Ignition Deck. It’s a lot of work, but they consider it part of their business.
Artists like Amanda Palmer and A House For Lions aren’t just sitting around waiting for their check to arrive in the mail, and then complaining about it. They are managing their businesses which happen to be music and asking their audiences to pay for their product which happens to be songs. Here’s the video that A House For Lions made to promote their album and ask their fans to donate:
Spotify recently closed a new $100 million in funding, which brings their total funding to $288 million. Mary Meeker is a partner in the firm Kleiner Perkins Caulfield and Byer, which has lead the last two rounds of $100 million each. Meeker is widely respected for her ability to see and report trends in technology, last year she predicted that mobile and audio were “the next big thing.” Apparently she thinks Spotify is as well.
Another interesting thing about this recent investment is that Coca-cola is a player as well, owning about ten percent of that latest $100 million. Last spring we began to hear of Coke’s relationship with Spotify, which was described as a marketing partnership, in which Spotify would enable Coke’s music platform, and Coke would feature Spotify on its Facebook page and advertising. It was announced then that there would be a cash investment, so now the details on that are emerging.
The value of a global brand like Coke is huge to an upstart like Spotify. Spotify is in 17 countries, and has 15 million users, so they are a long way from global. But their goal is to have everyone use their on-demand service like a song library, where you can listen to whatever you want to hear. Coke’s a brand that has associated itself with the idea of music as the universal language for a long time, which is why I like the relationship with Spotify. If you’ve been around awhile like me then you remember this ad:
I’ve been thinking lots about the latest round of royalty struggles between Internet radio players (such as Pandora and iHeartRadio) and artists and record companies, represented by SoundExchange and MusicFIRST (and other lobbying organizations). The history behind this is complex and multi-layered.
The crux of the matter is that webcasters have a compulsory license to stream music as long as they pay performance royalties to SoundExchange and follow certain programming rules. That license was designed to make it easy for webcasters to stream without having to go door to door to each artist and record label to get licenses. Unfortunately, that left the matter of determining how much the royalty paid to SoundExchange should be, and that is supposed to be determined by a willing buyer/willing seller equation.
Pandora, which bears the biggest share of the royalty burden because they have the most listening of any of the webcasters, is paying somewhere around 50% of their revenues in royalties. They want a more equitable rate. But they have to get SoundExchange, funded by the record companies to agree, and that’s been a challenge.
The reality is that if Pandora claims they can’t pay what the record companies and artists claim is the rate they are willing to accept, then there is no willing seller in the room. And if that’s the case then webcasting services like Pandora, with more than 100 million listeners, go away. Can that possibly be what artists want?
Pandora has made some mistakes recently in their PR battle for a fair royalty. Top executives have been selling shares of the stock in big numbers and pocketing cash, and while there is nothing wrong with that, this might not be the best time to be taking profits while claiming that their business model is broken. But the bottom line is that Pandora is a hugely popular music platform that enables lots of musicians to reach their audiences, and artists need to notice that. If they gave one hoot about the business model they would have to admit that the royalty was too high. The willing buyer/willing seller model is supposed to incentivize artists to care about the business model and include them in the market process.
Instead, it’s created a battle of words controlled by lobbyists and press relations firms. It’s time to stop pandering to the press and start figuring out a way to stream music that works for everyone.
Zoe Keating is an independent musician who has an independent opinion about the Internet Radio Fairness Act that’s worth listening to. She says that almost every day someone asks her what she thinks of it, so after doing a lot of thinking she took the time to write a really great post on her tumblr about it all. First let me say that I try hard not to overdo it with discussions of royalties here on my blog because I think that others do a better job writing on that topic, and frankly, it’s a little dry for me. So I was charmed to read this on Ms Keating’s post:
“The subject of internet performance royalties is not only mind-numbing and very hard to focus on, especially when you have a toddler attached to your leg, but it is also joyless. It’s not rocket science, but I think rocket science would be more fun.”
Amen. Nonetheless, she perseveres, and comes up with some great thoughts that are not the usual gibberish that musicians spout after being prepped/educated by their record labels.
First of all, Ms Keating wants to know why the Internet related royalty payments that she receives are so hard to figure out. For example, she says she gets statements from SoundExchange that don’t even tell her anything about how many people have listened or how many plays she’s getting paid for. And she’d like to know that. In fact, she’d rather have that information than money because she recognizes that it would help her know her audience: “I wish I could make this demand: stream my music, but in exchange give me my listener data. But the law doesn’t give me that power. The law only demands I be paid in money, which at this point in my career is not as valuable as information. I’d rather be paid in data.”
After a really long and logical explanation of what she gets paid in royalties and what she thinks would work, Zoe Keating comes to this wonderful conclusion:
“we should make royalties equitable and fair for every kind of service: internet radio, satellite, commercial terrestrial radio. On the internet we can determine how many people are listening…In essence, let there be One Royalty Rate To Rule Them All and get rid of the percentage-of-revenue system (unless a broadcaster is non-profit, or maybe even during a well-defined start-up period)… I think this means internet royalty rates will need to come down (although not as much as proposed), and satellite and terrestrial will come up.”
All that, and she can play too…
Internet radio services such as Pandora are increasingly important platforms for new music discovery, according to a report released by NPD Group last week. The study also found that listening to Internet radio – 27% over last year, while listening to on-demand streaming music platforms is up 18%.
As Internet radio and on-demand listening has risen, the number of consumers who reported listening to music on CDs dropped 16 percent, while the music audience for AM/FM radio fell 4 percent, and the number of consumers listening to digital downloads declined 2 percent.
“Although AM/FM radio remains America’s favorite music-listening choice, the basket of Internet radio and streaming services that are available today have, on the whole, replaced CDs for second place,” said Russ Crupnick, senior vice president of industry analysis at NPD. “We expect this pattern to continue, as consumers become more comfortable with ownership defined as a playlist, rather than as a physical CD or digital file.”
96 million Internet users listened to Internet radio or an on-demand service in the past three months. In an interesting chart of usage rates of Pandora listeners to other music sources such as AM/FM, CDs, and digital music files on computers, the report shows that Pandora listeners listen less to all of those over time, but continue to listen to AM/FM more than the others.
In the states where the races for the presidential election were the closest, radio advertising made the difference. According to an article in Politico last week, both candidates used radio to target specific segments of the population, with Obama spending quite a bit more than Romney. The article, which is also very nicely summarized by Fred Jacobs in his blog, notes that the campaigns saw radio as a way to reach voters who were not extremely political and might not be tuning into polls on a daily basis. As well, radio ads were a strategy for reaching busy younger adult women who spend lots of time in the car tuning in.
A nifty infographic that TuneIn, the Internet radio portal, sent me shows that voters likely to favor Obama were indeed listening to radio. Radio was a key strategy for the campaigns in swing states, with the Obama campaign airing a series of tailored radio ads for eight key states, targeting Paul Ryan, including specific ads relevant for Virginia, Colorado, Florida and Nevada starting in August, and Romney using swing-state radio ads to knock President Obama over his ” bayonets and horses” quip during the final presidential debate.
TuneIn looked specifically at how many listeners were tuning into political talk programming during the month of October and found more listening to liberal (so-called) democratic programming. Indeed, their data, which they sent me on Monday, largely predicted the outcome in most of the key swing states…
Last week the Electronic Frontier Foundation, which tasks itself with protecting the public interest with regard to digital rights, got my attention by coming out in support of the Internet Radio Fairness Act. That’s the bill that has been introduced in congress to equalize the performance royalties that various streaming platforms pay around one standard. Currently, different standards are applied to streaming services based on who owns them and the type of services they provide.
From their post on the topic, here’s an excellent explanation of the issue at hand:
Music services aren’t all treated the same, though – Congress gave older, more established companies a leg up. For satellite and cable radio, the judges set prices to give the labels and artists a “fair return” and the music service a “fair income.” In practice, the judges tell these services to pay about 10% of their revenues to the artists and labels. For Internet radio, though, the judges are supposed to set rates based on what a “willing buyer and a willing seller” would do in an open market.1 This sounds pretty good, except that there is no open market, so there’s no consistent benchmark. As a result, judges have set Internet radio royalty rates at cripplingly high levels. Internet stations went to Congress twice, in 2008 and 2009, to get temporary relief from rates that would have put them out of business. Today they pay about 50% of their revenues to SoundExchange.
In case you got lost, they explain that satellite and cable services pay 10% of their revenues in performance royalty fees, while streaming services pay 50%. Simply because the technology is different. These are services that do not provide on-demand access to songs. You can’t download anything.
An article yesterday in the NY Times quotes Clear Channel’s Bob Pittman and Pandora’s Tim Westergren in support of the bill. The two companies compete fiercely as brands, but have paired up to support the bill as leaders in the Internet Radio Fairness Coalition.
MusicFIRST meanwhile, is the coalition of record labels, artists’ representatives, and unions that would like to bring the bill down. They would like fairness, but they’d like everyone to pay based on that “willing buyer/willing seller” arrangement that nets them 50% of revenues. Which would likely drive streaming out of business. And what would happen then you might ask. Would all the younger demos that have gotten so attached to streaming stop listening, or would they go underground and start listening to services that pay nothing? I’m just saying..
Coca-Cola’s efforts to target teens in South and Central America include a personalizable streaming platform, Coca-Cola.fm. While it is not available in the US, Coca-Cola.fm apparently targets teens, according to the press release: Coca-Cola.FM is a platform through which teens can also develop their own creations — a radio station in Mexico on which they can talk, be listened to and communicate with the world through their musical preferences.
The station is also available in Brazil, where an innovative new marketing effort has just been released. With the help of ad agency JWT, they’ve turned the cover of popular teen magazine Capricho into an ad for the streaming platform that turns into an iPhone speaker. Watch this…