2008 Webcaster Settlement Act / The Payola Paradox / My advice to Webcasters

CNET News just reported that the 2008 Webcaster Settlement Act has passed. I'll be honest with you, my knowledge of this Act is scant, other than the basic gist of it. In fact, I'm embarrassed to admit this, but I hadn't even heard of it until today. I checked Wikipedia and couldn't find any info on it. Googling "webcaster settlement act" turned up a number of results for news stories, such as the CNET story. There are also results for a 2002 Webcaster Settlement Act, which I'm presuming is different from the 2008 Settlement Act. I occasionally check in with Kurt Hanson's Radio and Internet Newsletter (RAIN), and Radio World Online, and don't recall any mention of this bill in the last few weeks (admittedly I don't check these sites every day). I also read a number radio blogs, and no mention there either. I'm not implying anything conspiracy-like. Rather, I'm amazed how quickly this thing has gone from virtually unknown to congressional sign-off. But let me explain why I think this is...

In essence (and this is all based on my reading of the CNET article) the Act allows for webcasters to negotiate directly with copyright holders (read RIAA), and negotiate lower royalties than what are stipulated by the Copyright Royalty Board's decision. So what does this all mean, and why did this new Settlement Act pass through so quickly when the Internet Radio Equality Act stalled?

My guess is that Tim Westergren (founder of Pandora) convinced RIAA that it was making them more money than it was costing them. Namely, Pandora (like many other webcasters), sells music through it site. While I have no idea what kind of margin Pandora gets for each sale, I do know that most of that money goes back to RIAA's major labels. While the overall amount of cash going back to the labels might be less than what RIAA could have got had they received the original CRB rated royalty, it's still an overall net profit for RIAA's labels. Therefore, if Pandora were to shutter its service, the music industry would effectively be "cutting off their nose to spite their face". I suspect this is why Pandora has restricted its service to US customers only. I suspect this is why Pandora has been publicly threatening to shut down its service.

I will get back to the Settlement Act in just a minute, but want to discuss a related piece of news first. Namely, a couple weeks ago Wired reported that Adman Doug Perslson proposed a business model around Payola. Wired's journalist (Eliot Van Buskirk) did a good job at explaining the background and the idea, but was ultimately dismissive of the concept. My take on payola? It's now both inherent and irrelevant to radio. This sounds like a paradox, but let me explain. Payola as you may know is the illegal practice of paying off stations to force their deejays to play music so as to boost the music's sales. The reason it failed listeners is that the music wasn't always what deejays wanted to play, and by extension what listeners were counting on the deejays to play for them. Now things are different. Because of affiliate programs (like the iTunes affiliate program), anyone and everyone is in a position to "sell" music. Remember all those innocent mix tapes you made as a teenager for your friends. Back then it was all about making a cool tape that you were hoping your friends would appreciate, or that you could turn them on to new music. Now all you need to do is fill out a form or two and get paid for doing just that. Does this mean you would create a tape that would sell better? Take some time to think about this. I think you'll realize that you would make the same recommendations since your objective (unless you're some kind of sadist) is to turn your friend on to new music that you think they would like. Not only do you know your friends and family better than anyone else, but you also influence them the most too. Take me for example. My friend James (who's blogged here before) turned me on to tons of music, and never saw a cent from any of this. While I doubt he would have got rich off me, he was always a guy I looked to. For a non-conformist, and skeptic of capitalism, James probably made more money for the music industry through his recommendations than anyone else I know. If he were to be paid after-the-fact with no pressure on his decisions before-the-fact, I doubt he would have changed his behaviour much, apart from possibly recommending even more music.

So what's my advice for webcasters? My advice is (if you haven't done so already) to sign up for one or more affiliate/associate programs (e.g. iTunes, Amazon.com), and remind listeners that if they like the track they're hearing they should buy it from your site to keep the station going. For now, streams are not the same as a custom radio application like Pandora or Last.fm, so it's harder to be sure that your recommendation results in a purchase from your site (hence my skepticism that webcasters are out of the woods yet). This is why it's important to remind people of where they should go to make their purchase if they like the song. It will be these numbers which will be your strongest argument if it ever comes to negotiation with the labels.

The good news is that the message is finally hitting home that Internet radio is making the labels money and not taking away. Common sense prevails!

Stay TUN3D.

Interview: Athena Reich Shares an Artists's Perspective on The Business of Art

I've known Athena since I was in high school (or maybe it was middle school). She was friends with my sister but unlike other friends my sister brought over, Athena always stood out. Back then I knew Athena as a "free spirit" who was passionate about all things artistic: Singing, writing, dancing, acting, and even painting. But at that age it's sometimes hard to tell apart those that talk about going off and becoming an artist, and those that actually do, and succeed. I even know someone who was on Degrassi Junior/High during the same period. And although he's still working in the film industry, he's no longer in front of the camera. I've said it before, and I'll say it again: Choosing art as a career path is incredibly risky. But if you were to choose the arts as a career path, you'd do a lot worse than to follow in Athena's footsteps. Here are but a few small lessons I've learned from Athena:

1. Move to New York City and start showing up to auditions.
2. Always keep writing and other acts of creativity going. Keep releasing stuff and booking gigs.
3. Nurture all of your talents.
4. Learn how to market your abilities.
5. Look for other opportunities your talents can be used to earn a living (e.g. teaching).
   

Because it's rare to find such a savvy artist, I thought I'd take this opportunity to learn more about "The Business of Art" (to use an expression borrowed from another great Canadian artist, Tegan & Sara)...

Q1 Neil: Thanks for taking the time for this interview! Last time we spoke you were recovering from surgery to remove polyps on your throat. You're not supposed to sing. I know you've got a lot of other talents to fall back on, but this sounds rough. How are you coping with this? What's the prognosis?

A1 Athena: I got hit with a really bad bout of bronchitis last spring and there might have been some pneumonia mixed in with it. The doctors are guessing that the virus damaged a nerve in one of my vocal chords and partially paralyzed it. Or, it is possible that I was born with a partially paralyzed vocal chord, and never noticed it until now, although that scenario is less likely. At the time, I was also teaching a lot (music & theater), auditioning constantly (musical theater), and recording my 5^th CD on the weekends. Partially paralyzed vocal chord + extensive use = polyp.

A polyp is a little bump, caused by a blood vessel bursting. Luckily, mine was small, and stuck out from the vocal chord, so it was easily removable. I went to the best doctors in the city, who specialize in working with professional singers. The surgeon removed the polyp with laser surgery, using the latest technology. I went through speech therapy afterwards. All in all, I couldn't talk, off and on, for 3 months. It was really challenging to live life as a mute!

couldn't sing, write songs, or audition. I couldn't even talk when I went to the grocery store, or to my lover at night. So I typed a whole bunch and started drawing constantly. I took life drawing classes and created oil pastel portraits in the middle of the night when all my pent up fears and frustrations would surface.

Visual art was my first love, before I discovered performing at age 9. I always thought I would come back to it, when I was ready to calm down a bit. Well, this was a forced slowing down!

I ended up having one of the "quickest recoveries ever" (as quoted by my speech therapist), and am now back to singing, auditioning, and talking as much as ever. There is no evidence that I had any surgery on my vocal chord. Even the doctor was surprised that there was absolutely no scaring, only 2 weeks after surgery. I still have partial paralysis on my vocal chord, as that is not something you can heal with surgery. The doctors say it might go away over time, or it might stay, but that it doesn't really matter. "The proof is in the pudding", they say. If I can sing, talk, and belt out a tune as much as I could before (which I can), then I am golden. Apparently, lots of professional singers (opera, rock, musical theater etc), have funky things like partial paralysis. All it really means is that I have to continue to take good care of myself.

It's a good life lesson, in the end. I am taking Pilates classes, and maintaining a healthier lifestyle, with less stress and more fruits & vegetables. I've become a better singer, and voice teacher, with all that I have learned. And I am still drawing. I have even begun selling my work!

Q2 Neil: Your background is diverse and quite robust. Napoleon Dynamite famously said people need "skills" to be successful. You're flush in this department. How would you describe your "skills", and what talent gave you your first big break?

A2 Athena: Acting, Singing, Writing, Performing, Business, and Teaching are some of my strongest talents. I think my secret is that I am also talented at learning. I can quickly pick up new skills. For example, I just started learning tap and am having a ball! Maybe it's because I'm a Gemini that I constantly crave new creative outlets.

What gave me my first break was acting. I was intensely devoted to it as a child and got my first agent at age 12. I quickly began performing in TV, Films, Commercials & Theater. Sometimes I worry that I might be spreading myself too thin, by nurturing my visual talents at the same time that I'm auditioning, releasing my 5th CD, and taking up Tap. But, they say "Follow Your Bliss". And I am so happy when I just let myself create, learn, and express as I please.

Q3 Neil: I've asked you about royalties in the past, and part of your income is being supported through royalties as a writer. Is this system working for you? Is there any way in which you would change it?

A3 Athena: Honestly, I'm not making that much money through royalties. There have been times when I performed on commercial radio or TV and never saw a cent. But then every now and then I get a check and I have no idea why. I think all in all it's a pretty good system. It would be great if we could start making royalties off Internet radio. Although that won't happen until Internet radio starts making money, I imagine.

Q4 Neil: As for music itself, with the Internet it would appear that many smaller artists are now able to get a toehold and launch a successful career, whereas before they couldn't get beyond a local "scene". Is this how you see it?

A4 Athena: Yes, we do have the tools to launch ourselves into cyberland more than ever now. But there is a plethora of talent, and now that anyone can create a CD or YouTube Video, it's more difficult for the average consumer to really support any one artist. Although anyone can gather hundreds, or even thousands of fans on MySpace, it does not mean those fans will translate into dollars. And now, more than ever, the most successful artists are those who have millions of dollars in publicity behind them. In the 70's A & R reps used to actually go to clubs, scouting for original talent. Today, labels are very conservative, and mainly sign artists who fit into their cookie cutter molds for success.

For example, I have a friend who got a major record deal. He was a model and dancer. He told them, quite bluntly, that he can't sing. They said they didn't care, that they could teach him how to sing. He had a marketable look and body, so he got the deal. Now, on the other hand, the Regina Spektors and Arcade Fires of the world are still getting signed, so how do you add them into the equation? Basically, it's the luck factor. Most original talent is not getting signed, but every now and then, the golden rays of "being discovered" shine down on an original soul and give them a break. How do you increase your chances of getting a 'break'? Build fans, create a cyberpresence, perform live, audition, do what you love, take care of yourself, don't give up, and leave the rest up to fate. You might get a big break, you might get a series of small breaks, but if you stick with it, I believe good things come to those who are talented and work hard.

Q5 Neil: When I last saw you perform at "Not My Dog" in Toronto, you joked that it was the gig that Facebook built. I agree, but I also thought it was one of the coziest performances I've ever attended. There was a convivial mood in the room that night that was palpable. To what extent does Facebook and MySpace help nurture your audience?

A5 Athena: Facebook helped me reconnect with friends and acquaintances I had lost touch with over the years. That night was my first gig in Toronto in over a year, and since that time, I had joined facebook. Toronto is my home town, and I've been living in New York City for the past 8 years. That night was one of those rare nights where everyone showed up and most people were connected to each other in some way. It was a completely magical night. Not every gig is as magical, and I sense that people are losing their lust for facebook, just as the addiction to MySpace has slowed down. I wonder what the next networking buzz will be?

Q6 Neil: You're the NYC correspondent for Toronto's ProudFM 103.9, and have worked in their studios. What's it like working for a radio station? What does your job entail?

A6 Athena: I report on gay life & culture in New York City. I phone in, a couple times a month, and talk about the arts, night life, and queer scene in New York City. I got the gig because I had emailed them, and asked if they would be interested in interviewing me, in promotion for my upcoming performance at "Not My Dog". The interview went great, and I emailed them afterwards to suggest that I become their NY correspondent. They thought it was a great idea. So basically, I got the job because I gave them the idea for the job. If I were to give advice to newbie artists, I would say use your creative faculties when promoting yourself. Create your own work. Create your own visibility.

Q7 Neil: Radio used to be (and still is according to recent stats from Jupiter Research) a major means teens discover new music. I think radio's role is shifting though. How do you see radio?

A7 Athena: I think that it's very hip to discover new music on YouTube or MySpace. Radio does expose teens to new music, but the underground Indie scene is very alive and prominent in their lives as well.

Q8 Neil: Your music is very personal and emotional, so this is perhaps a tough question. Is there a single song you've written (or heard) that best captures the essence of Athena Reich?

A8 Athena: That is a tough question. My first instinct is to say that that's an impossible question to answer, as my essence is wildly diverse in feeling, expression, and genre. But.. if I had to pick one song, I think it would be "White Bandages". It starts out tentative and sad, and builds to a passionate cry for survival, amidst a sea of destruction and self hatred. A lot of my songs express a struggling spirit, determined to thrive in the throws of adversity.

Q9 Neil: What's on your horizon?

A9 Athena: My 5^th CD will be released in the next few months. I will promote the CD by touring, creating YouTube Videos, and getting it out to important people in the industry, like Film & TV Music Directors, agents, etc. I also have some exciting auditions coming up. I will continue to draw and sell my work. I will continue to take care of myself, follow my bliss, and create art for the love of it, despite adversity.