Radio & Vultures

I was on a panel yesterday for the California Bar Association in Santa Monica dealing with the issue of repealing radio's performance tax exemption.

Besides the fact that everyone was very nice as expected, it was a scary hour and a half that I thought you'd like to hear about.

These guys are clueless -- the record industry -- about the new paradigm that free is the new overpriced CD.

What's scary is that no matter how many times you tell them that both the radio industry and record business have lost control of their delivery systems, they stumble back into dreaming up ways to get their piece of traditional music-related businesses and new ones that are struggling to get off the ground.

Excuse me?

Record labels have done a lot to devalue music by setting up the conditions that led to the next generation's widespread pirating of music.

Arguably, the labels should have bought the original Napster when it reared its head -- not sue them. In the past eight years, the labels have lost control of the things that used to make them money. The record business is off 30-35% from previous years and not even the biggest optimist thinks it's going to get better.

And yet?

1. These misguided dinosaurs from prehistoric times are hoping for passage of the radio performance tax repeal this year -- even though they admit the political year of 2008 may sidetrack approval. They seem to have it in for radio -- an industry that they believe (or say they believe) gets most of the benefit by playing the labels' music. Of course, they're full of it, yet they're beginning to scare me. Nobody likes the record business. The one friend they have left is radio. They are that desperate.

2. How idiotic is it to overtax Internet streaming when the Internet is the only guaranteed growth engine that could help the dying record business. They don't agree. To the music industry and the lawyers who love it Internet streamers should pay their fair share. While they're effectively stunting the growth of their new best friend, I get the feeling the labels are going to do everything they can to make an example of Internet streamers so they can expand their taxation of other music platforms.

3. They played the Sympathy Card crying that Etta James has to work at age 70 and ill because she doesn't profit as a singer. Radio gets the benefit of playing "At Last" but Etta James gets nothing. They didn't like it when I pointed out how many singers the record industry has screwed on its own over the years. I also heard complaints that U.S. artists are missing out on the money it could be earning if reciprocal agreements were in place and how Canada is such a wonderful example for music. Huh? The 35% Canadian content rule for their radio stations and all.

4. They don't understand that record labels don't control their own businesses anymore. Steve Jobs does. And the young people who pirate music do. Music has been devalued on their watch from overpriced CDs to --- well, free. Putting it bluntly, the record industry is competing with free.

5. The record industry lawyers don't care about the next generation or radios problems or that the Internet is their future -- they only care what percentage they're going force them to pay.

In the end, I reminded the group that they are fighting over two dead bodies.

Without the next generation the radio industry is dead.

Without a means to control their delivery system the record industry is dead.

The only animal that fights over dead bodies is -- a vulture.

I rest my case.

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