It’s hard to figure out what it will take to satisfy the Recording Industry Association of America (RIAA) which represents the interest of the big music labels. Following up on their “success” in getting congress to kill web based radio by agreeing that they have to pay royalties, they are now carrying the fight to traditional terrestrial radio. No doubt this was the plan all along – win a victory against the nascent and poorly funded web broadcast industry, then try to leverage that as a precedent to go after the big player – terrestrial radio.

Why the need for a plan?…

Terrestrial radio has always played by a different set of rules from other performance channels. Based on an agreement reached nearly eight decades ago, terrestrial radio has been exempt from paying the traditional performance royalty required of other forms of public music performance. The rational for this arrangement was that radio provided exposure to music that helped stimulate record sales. They have a simple, low cost payment schedule for compensating artists and composers, and that’s it. It was a quid-pro-quo deal that has seemed to work in everyone’s interest.

But the RIAA wants no more part of it…

They feel radio is taking away a potential source of revenue from them – revenue desperately needed by an industry in decline. That might make sense according to their spreadsheets, but unfortunately for them, not in the real world. Radio isn’t the problem here. The real problem the major labels have is that people are barely paying attention to their product. They don’t run out to get a new album and block out the rest of the world for a couple of hours to lose themselves in it. Instead, they’ll download a few tracks to their iPod or pop the CD in the car stereo and listen to it on the run. There’s nothing special about it anymore.

Music doesn’t define this generation the way it defined mine. Most music produced today is a disposable background track for something else people do – time in the car, homework, clubbing, etc. The music coming from the mainstream music industry is a manufactured, mass produced product packaged and marketed to specific demographics. No one really cares about it because there’s nothing there to care about. The labels are simply selling a product.

And bottom line, that’s the reason they are in decline…

The only things the big labels really have going for them are exposure and reach. As mediocre as the music itself is, sales are still generated and sustained through repeated radio play – repeated free terrestrial radio play. Free radio is a channel where the big labels still rule – they dominate the playlists. Satellite radio is barely a blip on the radar, and frankly the main reason people pay for music over satellite is to escape being bombarded with the repetitive playlists over on free radio (not exactly the audience the labels have in mind). As for music subscriptions, people have lined up NOT to sign up for any of the services being offered. Outside of a small core audience, subscriptions have pretty much been a market failure. Given the highly fractured, short attention span marketplace that exists today, terrestrial radio is really the only game in town for getting broad, quick exposure for new acts and recordings.

But the RIAA thinks that they’re just leaving money on the table with radio…

They want to kill their “Plan A” for getting exposure without having a viable ‘Plan B”. Simply wanting people to just start paying them for whatever they produce doesn’t count as viable. People have so many choices for entertainment, many of which are free – recorded music is only one of them. In going after free radio, the RIAA wants to walk away from their best shot at coping some mind share.

It’s hard enough to care as it is. In their quest to monetize everything possible, the major labels will find themselves becoming marginalized and fading away. Out of sight, out of mind.

And possibly out of business…

The big record labels want to blame Apple and iTunes for their inability to sell CD’s. They want to blame web broadcasters and terrestrial radio for limiting their ability to monetize different subscription offerings. They want to blame file sharing for their declining revenues. The truth is, they want to blame everyone but themselves and their own greed for the situation they find themselves in. But they’ll need to take a hard, critical look at themselves if they want to change the course they find themselves on.

And odds of that happening are pretty low…

So what will play out if the RIAA wins and terrestrial radio has to start paying royalties?

The labels will end up losing the one channel they have that reaches any meaningful audience. A few of the big radio conglomerates will probably (albeit reluctantly) cave in and start paying out, but many will either abandon music programming for some other format, or focus more on music from independent labels that want no part of the RIAA and its misguided meddling. And this shift in focus to the independents will end up being the undoing of the major labels. There are some great independent bands producing some incredible music. Not product. Music. And all they really need is some exposure to connect with a broader audience. This would give it to them.

Given the sorry state of the music industry today, a change like this would probably be a good thing. The status quo in this space is simply unsustainable. The labels are living off their back catalogs of recordings, and struggling to produce anything new today that will offer them a similar lasting value they can bank on in the future. They are taking legal action against everyone from ISP’s to colleges to individuals in a quest to ‘defend copyright’ and control distribution. No industry can survive if it continues to attack its own customers (regardless of the reasons) while arrogantly believing they’ll have no other choice but to accept it. Choices abound today, and people are becoming restless. They have no real passion for the product the big labels are producing, and are distrustful of the digital rights management it comes packaged in. There is a tectonic-like pressure building, and when it releases, it won’t be pretty.

To quote Bob Dylan, “You don’t need a weatherman to know which way the wind blows.”

But then again, maybe the big labels do.

A word of warning to the RIAA:
Be careful what you wish for – you just might get it…