Big Keeps Getting Bigger

Big Keeps Getting Bigger

It seemed like a really great idea at the time.  Ever said that?  Yeah, me, too.  If I only had a dollar…   I bet people in the music industry say it all the time because that tiny catch phrase seems to pretty much sum up the decision-making process in the music industry. Case in point – the story of the demise of high-rolling independent radio promoters in the 1990s.  Just as WKIT’s Bobby Russell said – “One day it was over.”

I love this story.  I’ll give you the nutshell version.

The intimate connection between the major labels and commercial radio has been in place for decades.  This makes sense. If you want to sell a song or a record, you need buyers to hear it so they know they want to own it, and radio is that opportunity.  I can’t argue with that logic, but let’s add the possibility of generating millions of dollars in sales from a song, from an artist.  With those stakes up for grabs, it makes perfect sense for record labels to reinforce the odds of breaking a single to radio by hiring third-party independent radio promoters able to capitalize on their connections to program directors, not to mention free concert tickets and prizes for listeners.  Listeners are happy, radio stations like happy, loyal listeners, and happy listeners buy a lot of music.  Everybody is happy.

Nothing is that simple.

The Telecommunications Act of 1996 released the beast and removed the cap on the number of stations a single owner could control nationally and also eased the restrictions on local ownership.  In a flash, and still today, the radio waves in the US were owned by very few corporations, you know these names – Clear Channel, Cumulus, and Town Square Media.  You think WalMart has the country wrapped up?  Big Radio controls the listening pleasure of millions, coast to coast.  This means programming decisions are made by very few.  Very Few.  You might have more fingers than there are program directors picking out music for millions of people in the Big Markets.

Let’s compound this even more.  At any given time, those very few program directors have very few open slots for new music to enter rotation. This time, count your fingers and your toes.  It is all about Ratings, my friends, and keeping the listeners’ dials on the station.  Suddenly, getting a song on the radio in a highly competitive, trend-setting Big Market becomes crucial for success.

Now please remember, no little locally-owned station’s moral compasses were challenged during this era of promotion run amok.  Certainly not.  The big bucks and the big prizes were wrapped up in Big Radio and the Big Markets were a few spins could create massive profit for a label.  A locally-owned station was so far down the rating food-chain that they were lucky to get a couple of pairs of concert tickets and a bottle of scotch for the annual Christmas party. No, the big money was going to the big box stores of the airwaves, and those balance sheets scored millions, way more millions than you have fingers and toes.

In case you are wondering, according to previous judicial decisions, this was not the taboo payola, also known as pay for play, we have all heard about.  No, this third-party tango between the record labels and the program directors was legal…for a while.

This is where it gets fun.

Record labels funneled millions of dollars in “stuff” to radio stations over the many years that this system was in place to push the singles they felt worthy of the expenditures.  Greg Kot, music critic for the Chicago Tribune and author of Ripped: How the Wired Generation Revolutionized Music, wrote:  “It was not unusual for a label to spend more than $1 million in promotion costs for a single by a major artist, which is why the marketing expense – including radio promotion money – for multiplatinum albums by singers such as Alicia Keys and Jennifer Lopez could range upward of $14 million.”

What?  How is that even possible?  Well, it seemed like a good idea at the time.  The record labels created this system, but eventually they were feeling squeezed by the independents.  And they didn’t like it.  Why didn’t they stop paying?  The big crybabies were too scared to just stop paying – they’d lose too much money – so they went to the only other people who would understand corruption like they did – the US Congress.

In 2002, Congress went to work adjusting the new definition of payola and expressing concern that when the American people turned on the radio they should hear quality music, not music bought and paid for in a backroom.  Level the playing field, Congress said.  I hope we all see the irony there.

In 2004 Elliot Spitzer, then attorney general and soon to be caught with his pants down, started a series of investigations that lead to The Big Four record labels, Sony BMG, EMI-Capital, Warner, and Vivendi Universal, acknowledging that they funneled cash to radio programmers to play specific songs.  They paid fines of over $30 million.

In 2007, the FCC, went after the four major radio companies, Clear Channel, CBS Radio, Citadel Broadcasting, and Entercom Communications, for wrong-doing and collected over $12 million.

Shame, shame.

But no one really cared.  Chances are you remember Spitzer’s eventual prostitute-based disgrace more than the crack down on radio promotion.

Why is this walk down memory lane important today?  Because bigger isn’t always best, and it is damn hard to control. On February 13, 2015, Billboard Magazine carried “Apple Doesn’t Want to Compete — It Wants to Own the Record Business,” by Shirley Halperin and Ed Christman.  There is a good chance we haven’t even seen Big yet.     From the article:  “Apple’s presence in the music business, says the insider, “is to be the music business; it’s not to compete with Spotify.” The proof is in the 800 million credit cards it already has on file — comparably, Spotify has 15 million subscriptions and 60 million monthly users, although the service is growing, headed to an initial public offering.”  Get ready for a brand new shade of Big.  This seems like a good idea how?

Stay tuned.  Support Live Music!

Feel free to email us with questions at rockandrollintel at mainemusicnews.com – I said questions, not ranting or bitching or complaining – and leave comments and ideas on Facebook.

Resources:

“Bobby Russell.” Personal interview. 30 Jan. 2015.
“Future of Music Coalition.” Future of Music Coalition. N.p., n.d. Web. 22 Feb. 2015.
Kot, Greg. Ripped: How the Wired Generation Revolutionized Music. New York: Scribner, 2009. Print.
Halerpin, Shirley, and Ed Christman. “Apple Doesn’t Want to Compete — It Wants to Own the Record Business.” Billboard. N.p., 13 Feb. 2015. Web. 22 Feb. 2015.

 

 

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