Fishing For Royalties

The public war of words between the National Association of Broadcasters and the RIAA-supported musicFIRST Coalition over whether traditional radio should pay music licensing fees heated up June 23rd when the NAB responded to a recent "gift" it received from the coalition.

The gift was a can of herring, sent to NAB President David Rehr in response to the association’s contention that making stations pay music licensing fees would be the same as applying a new "tax" to the radio industry.

"It’s a red herring," musicFIRST Coalition Executive Director Doyle Bartlett said. "Every other platform that claims to promote music sales pays a performance royalty. The real issue is that corporate radio earns $167 billion a year playing music without compensating the artists and musicians who bring music to life and listeners’ ears to the radio dial."

Congress has long resisted making radio stations pay music licensing fees to labels and artists, taking the viewpoint that radio stations and record labels enjoy a symbiotic relationship, a quid pro quo of sorts where the labels provide music in exchange for promotion.

But the last time this issue was brought before Congress was 1981, a time that seems so vastly different from today when considering Internet radio, file-sharing, satellite radio and MP3 players. Add the dramatic drop in CD sales over the last few years and it’s not surprising that the recording industry is trying to develop new revenue streams.

Nor should it be surprising that terrestrial radio stations oppose paying the labels royalties for playing music. The recording industry has relied on radio airplay to promote its music for almost as long as radio has been around, and has considered airplay to be such a significant promotional tool that individual labels often have entire departments devoted to getting it.

Add that to past payola scandals, where labels illegally paid radio stations to play their music, and it would seem that radio offers the recording industry a very unique promotional outlet. After all, what is a song in a station’s heavy rotation but a three-minute advertisement for the artist, song and album?

But back to that can of herring.

The canned fish was accompanied by a note from musicFIRST quoting Merriam-Webster Online’s definition of the word "herring," specifically the second definition that states: "[From the practice of drawing a red herring across a trail to confuse hunting dogs]: something that distracts attention from the real issue."

In response, NAB executive VP Dennis Wharton issued a statement condemning musicFIRST’s herring package.

"This is so lame that it barely warrants a response," Wharton said. "Instead of sending fish to radio stations that advanced the careers of artists, RIAA should send food to the entertainers that foreign record labels have abused for decades."

Along with the response, Wharton included several quotations made by artists and label execs over the years supporting the organization’s contention that radio exchanges promotion for music, including Alicia Keys’ Grammy Awards quote from February of this year.

"I have to thank … every DJ, every radio guy, every promotions guy, everybody who ever put up a poster for me and spread the word," Keys said.

The business climate has changed since 27 years ago when Congress last considered the music licensing issue in regard to radio broadcasters. However, while music consumers have more avenues for music than what was available back then, getting music played on radio stations is still a priority for labels.

And the world hasn’t evolved only for the labels. Radio has experienced several changes as well. With news, talk and sports, more stations have adopted music-free formats than in the 80s. If the current debate results in radio stations paying music licensing fees, more stations might turn to non-music formats.

And then there’s The Onion, the news parody site that seemed to predict this argument a few years back when it posted a faux story claiming the RIAA was suing radio stations for music piracy, quoting then-RIAA prez Hilary Rosen as saying, "It’s criminal. Anyone at any time can simply turn on a radio and hear a copyrighted song. Making matters worse, these radio stations often play the best, catchiest song off an album over and over until people get sick of it. Where is the incentive for people to go out and buy the album?"

Everybody got a good laugh when The Onion published that piece back in 2002, but the current argument about whether radio stations should pay record labels is hardly a laughing matter.


MSG In The Penalty Box

Madison Square Garden could lose the New York Rangers over a Web site squabble.

That’s the possible outcome of a continuing feud between the National Hockey League and the venue, which owns the hockey team as well as NBA’s New York Knicks and WNBA’s New York Liberty. So far, the league has threatened to pull the team out from under MSG’s net.

Of course, the feud is about more than just control of the team’s Web site. It’s also about commerce conducted through the site. Adding up all the sports merch offered through, it’s clear that a lot is riding on this dispute.

According to NHL rules and regs, all team Web sites are controlled and operated by the league. This dates back to 2006 when team owners voted 25-3 to allow the league to assume all digital rights for its teams.

But MSG, which is owned by Cablevision Systems Corp., was one of the team owners that voted no on that agreement and last year sued the NHL, claiming the league violated antitrust laws by monopolizing control of team promotions. However, a judge sided with the NHL and ruled the league had the right to assume control of the team’s Web site.

Now the NHL is fighting back by threatening to eject the owners from the league or force a sale of the team. And even though the league’s retaliation for MSG’s antitrust lawsuit might smack of violating free speech rights, NHL regulations ban owners from challenging the league’s constitution, rules and procedures in court.

But the rules don’t prevent the league from filing papers against one of its members, which the NHL did June 18th when it filed documents that could start the process toward separating the Rangers from MSG ownership.

Charging MSG with breach of contract for filing its suit against the league last year, the NHL is asking a judge to rule that MSG violated its contract with the NHL by challenging league rules. Included in the filing was a draft letter from NHL Commissioner Gary Bettman to MSG / Cablevision Systems Chairman of the board James Dolan suggesting actions that could be taken against MSG, including suspension or terminating the company’s team ownership.

On the surface it seems pretty clear cut. MSG, as owners of the New York Rangers, had to agree to the league’s rules and regs.

However, the court of public opinion might swing things in MSG’s favor.

Recently the New York Post asserted that the league’s latest action isn’t about legalities as much as it is about control.

"This isn’t even about the Garden suing the NHL," wrote the Post. "Rather this is about Dolan and the Garden challenging the despotic reign of Gary Bettman just the way Bob Goodenow [former executive director, NHL Players Association] had the temerity to do so."

The same article asks a very interesting question regarding the MSG / NHL dust-up that hasn’t really been detailed in other reports.

"And exactly where does Bettman think the Rangers will play if he strips Dolan and the Garden of ownership?" asks the Post. "Rye Playland?"

Although no one is predicting that the Rangers would end up at the Rye Playland Amusement Park, the question as to where the Rangers would play if MSG is stripped of its ownership of the team is a good one. It’s not like there are plenty of available venues capable of hosting NHL games.

Plus, when you consider the feud involves hockey officials, New Yorkers and their beloved Rangers, plenty of nasty rhetoric from both sides and the threat of even more legal action, this isn’t one of those business disputes seeking resolution in the legal system. No, sir.

For the rest of us, it’s summer entertainment.