RAIN: Radio And Internet Newsletter

August 1, 2007

Daily news and commentary on the key issues involving radio and the Internet

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CRB coverage 2007:
CRB decision
SaveTheStreams
Legal options
Markey
Petitions
Copyright law
Canada?
Fred Wilhelms [2] [3]
JPMorgan analyst
SaveNetRadio
Rehearing denied
SNR.org website
B'casters interests
Day of Silence?
What is "fair"?
House IREA
SX Point/Counter
July 15th D-Day
Hill walk recap
Senate IREA
Hanson/Simson
Offer to SCW
Berman/Coble
100th co-sponsor
File for stay
Noncomm offer
$1 bil admin cost

CRB coverage 2002:
CARP decision
Industry reacts
Industry stunned
Huge RIAA win
SJO editorial
Day of Silence?
Congress support
Day of Silence on!
Press coverage
Day of Silence
Librarian decision
Cuban speaks up
Labels: Die Now!
Forbes coverage
SWSA
SCW license

"The Future of
Radio" series
1 | 2 | 3 | 4 | 5

"Net radio frontier:
Ad sales" series
1 | 2 | 3 | 4 | 5

UPDATED:
Internet radio
royalty basics

Copyright Law
DMCA
CRB 2007
Webcast decision

Headline: "Does radio impact sales? Let's do an experiment!"
BY KURT HANSON
If you ask me, the biggest strategic mistake made by NAB and DiMA member radio stations during the past decade of CARP and CRB hearings was to assert the promotional power of radio airplay on music sales without any proof to back their assertion up.

As a result, the debate of whether radio airplay is adequate compensation to the copyright owners — because airplay, via a second-level effect, promotes the sales of CDs and concert tickets — consists of one side saying, "Sure it is," and the other side saying, "No, it's not," and nothing much beyond that.

And we're left with such hard-to-believe results as the Registrar of Copyrights telling a key subcommittee of the House of Representatives yesterday that she believes that radio airplay has no — no! — promotional value whatsoever.

ICBC's Charles Warfield (pictured below) did an excellent job representing the radio industry in the hearing yesterday, but when it came time to talk about the promotional value of radio airplay, all he had to work with was an anecdote about how back when he was a radio station VP/GM, on music day, record promoters were always filling the lobby of his station. It was not compelling.

The next time a broadcaster or webcaster has to testify in front of such a committee — or make an argument to a Copyright Royalty Board — we should make sure they have better material to work with.

As such, I'd like to propose today that broadcasters and webcasters get together (with record labels and musicians, if they'd genuinely like to learn the truth) to conduct a test — one that I would like to propose we call "The Shambala Experiment" — to determine, quantitatively and inarguably, the effect of radio airplay on music sales.

The simple premise
Although the experiment I'd like to propose is relatively complex, because I'd like to study the effect of both adding and removing airplay on both new music and catalog product, the heart of the experiment can be described in a single sentence:

If all Three Dog Night records were to disappear from the U.S. airwaves, would sales of Three Dog Night CDs and downloads go up or would they go down?

According to the position taken by SoundExchange and the musicFIRST coalition, radio airplay is inhibiting consumer purchases of Three Dog Night songs ("Easy to Be Hard," "Eli's Comin'," "Shambala," "One," "Mama Told Me (Not To Come)," and so forth) and concert tickets (to the extent that they're still touring) because Three Dog Night fans can hear their songs on the radio and thus have less need to make such purchases.

On the other hand, I would hypothesize that if Three Dog Night records disappeared from the airwaves, an "out of sight, out of mind" phenomenon would occur, and their sales would actually decline.

Hard data is hard to refute
Fortunately, we don't have to play "he guesses / she guesses" here — we can find out!

In shorthand form, here's how "The Shambala Experiment"might work:

First, we hopefully reach an arrangement with SoundScan, Amazon, and iTunes such that each would be willing to provide sales data on the Three Dog Night catalog broken out by sales volume east of the Mississippi vs. sales volume west of the Mississippi.

Next, for a six month period, every radio station, say, east of the Mississippi drops Three Dog Night from their playlists, while every radio station west of the Mississippi that plays the band, say, triples their rotation. (Maybe some A/C stations and classic rock stations decide to bend their formats a tad and add appropraite Three Dog Night tracks as well.)

Finally, we look at sales results. (It would also be excellent if they were touring, but the results would admittedly be harder to measure cleanly.) If my hypothesis is correct, sales should increase in the region in which the band got more airplay and decrease in the region where they disappeared. But, in any case, we'd know.

Benefit to up-and-coming artists
It would also be critically important, I believe, to include some current artists in The Shambala Experiment, because the heart of the value of radio airplay to the performer and the copyright owner is probably there.

In other words, I would hypothesize that radio airplay is most valuable at the peak of an artist's career — i.e., when they have current hit releases. It's radio

airplay that gave Sam & Dave (pictured right) and Judy Collins their careers. (Conversely, aritsts like Steve & Don and Jenny Crabtree did not get airplay, and thus never had hit records nor successful touring careers.)

I think it's reasonable that, in their senior years, Sam Moore and Judy Collins should look to their retirement savings, perhaps some touring income (assuming they still enjoy performing) and/or catalog sales, and perhaps a pension from their record label, rather than trying to argue to Congressmen that, because they had hit careers in the '60s and '70s, radio industry revenues in 2008 should provide them with their pensions.

But I digress. I think this experiment would benefit greatly if rock stations east of the Mississippi played the hell out of Clap Your Hands Say Yeah and A/C and AAA stations west of the Mississippi played the hell out of The Low Stars and we could look at the impact of airplay on breaking careers.

What do you think?
If "The Shambala Experiment" gets any take-up from you, RAIN readers, we could flesh this out in a lot more detail, perhaps involving some of the music industry's top researchers (Hey, I used to be one!) in setting up the research design.

But I'd like to briefly point out a couple of issues I know would need addressing:

First, it would be better to involve satellite radio and Internet radio in this experiment as well, but that would mean that using the Mississippi as the dividing line wouldn't work, since satellite radio and most webcasters can't geotarget their music playlists. As a result, we might have divide the experiment by time frame instead — e.g., take Three Dog Night off all forms of radio for three months, then put them in a triple rotation on all of those same stations for the next three months.

Second, we would have to ask the record industry for at least the mild level of support such that they would promise not to try to mess with the experiment.

If they lacked confidence in their position, the record industry could easily sabotage this test by, say, doing a heavy advertising campaign for Three Dog Night in the half of the country (or the three-month period) in which Three Dog Night was in "no airplay" mode. (Of course, if they did that, it would get noticed, and that would be pretty solid evidence that they didn't have confidence in their position.)

Third, we'd have to be careful with how publicly this experiment was conducted. If USA Today and Slate and the Associated Press and the Wall Street Journal wrote feature stories about Three Dog Night and this experiment during the "no airplay" period, that would be, ironically, the radio industry generating promotional value that would probably increase sales, and would muck up the test.

So what do you think? I'm ready to put The Low Stars (pictured above) and the Cowsills in a triple rotation on AccuRadio and give a couple of other artists a temporary rest. Are you?

Have an opinion? Drop us a note! (Or, to use your own e-mail software, click here.)


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Kurt and Paul, this is deep background -- don't quote me!

Thanks!

From Radio Ink: "Spanish-language broadcasters Univision Communications, Border Media, Bustos Media and Davidson Media Group, along with National Public Radio, are among the founding members of the newly formed Free Radio Alliance, whose mission is to fight the recording industry's efforts to gain a performance royalty from broadcast radio and TV.

"Echoing NAB arguments, the alliance calls the proposed performance royalty a 'tax' and says the recording-industry's attempt to draw a parallel between American radio's business model and the often-government-subsidized radio industries in other countries is an 'apples-to-oranges comparison.'

"The alliance's membership also includes the National Association of Black Owned Broadcasters, the Independent Spanish Broadcasters Association and the National Federation of Community Broadcasters, and in its launch announcement the group points to the effect the 'performance tax' could have on minority, niche and community radio...

"The alliance also counts a number of state broadcasters' associations among its membership."

Read Radio Ink's entire article online here.

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From iPhoneology: "While browsing through my iPhone’s firmware a few days ago, I came across something very interesting in one of the system preference

files, 'Default ApplicationState.plist.' Among the expected names, like 'mobileipod' and 'Weather,' there are a bunch of names in there that don’t appear on the iPhone at all...

"The ones I found were:

com.apple.unitconverter
com.apple.widget.phonebook
com.apple.widget.translation
com.apple.widget.worldclock (potentially different from the Clock application)
com.apple.mobile.radio

"...The most exciting of these seems to be the mobile.radio, as it suggests the possibility that Apple may be looking forward to supporting streaming radio or hopefully, an FM tuner on the device. So far, I haven’t been able to find icons or application binaries corresponding to any of these names, so I guess we’ll just have to wait to see what happens in future iPhone software updates."

Read this entire iPhoneology post online here.

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August 17 & 18	BandWidth 2007: San Francisco
September 17 & 18	Future of Music Policy Summit: Washington D.C.
September 26-28	R&R Convention: Charlotte, NC
September 26-27	NAB Radio Show: Charlotte, NC
September 26-29	PRPD Public Radio Programming Conference: Minneapolis, MN
October 13	IBS Webcast Conference: Seattle, WA
October 20	IBS Webcast Conference: Boston, MA
October 25-28	College Broadcasters Inc. Natl. Conf.: Washington, D.C.
October 27	IBS Webcast Conference: Chicago
November 4-6	NAB European Radio Conference: Barcelona, Spain
December 1	IBS Webcast Conference: Fort Lauderdale, FL
December 8	IBS Webcast Conference: Los Angeles
February 19-23	iMa Public Media 2008 Conference: Los Angeles

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