BBC executives warn about threats to radio

By Emmanuel Legrand

BBC Radio 1's Ben Cooper & George Ergatoudis

Los Angeles -- The transition to smartphones and the threat of streaming are two of the biggest challenges faced by traditional radio, according to two senior BBC Radio executives. 

Speaking at the Worldwide Radio Summit in Los Angeles on April 24, Ben Cooper, the Controller of BBC Radio 1 and 1Xtra, and the stations's Head of Music George Ergatoudis warned an audience consisting mostly of US radio professionals that radio faces the risk of irrelevance if it does not deal with these two issues.

"Radio is dead!" It is with this provocative statement that Cooper started his keynote presentation at the Worldwide Radio Summit 2015. What is dead, he added, is the old model of radio, where a DJ is a studio spoke in a microphone and then the signal was beamed across to radio sets via transmitters and eventually reaching an audience. Whoever thinks they can continue to do radio that way has little future, warned Cooper. 

The key to the future of radio is, according to Cooper, the smartphone, or rather how to engage with the owners of mobile devices. "We are in love with the smartphone, we are obscessed with our mobile phones" he said, adding that 80% of Brits aged 15+ had smartphones. "The time that you would normally spend with your radio station, you now spend it with your smartphone," said Cooper. 

"If you target a young audience, something scary is going to happen," he warned. In the UK, he said, streaming ranks among the 14th most used feature on a smartphone, while radio is at 33rd, "below banking," quipped Cooper. Another stat he suggested to take on board: 1 in 3 kids has a tablet, and only 1 in 7 have a radio set.

Radio 1 still reaches 10.5 million weekly listeners but the number of listening hours has dropped dramatically. "We lost three hours [per listener per week]," said  Cooper. "Where do they spend time? On YouTube. So the answer is to visualise a lot of our content." And in the process of doing so, Radio 1 "made a lot of mistakes" and put out "a lot of rubbish" but Cooper made no mystery that without a visual component, radio will have problems keeping pace with consumers' behaviour.

But not any content, he said. "I don't think our audience is interested in the image of jocks scratching their asses between two songs," he said. Content has to be meaningful, including a lot of live performances but also getting artists to provide unexpected performances. "People want to see interviews," said Cooper, "but do not want the old ordinary interview with the star. You have to let your creative people do things creatively. When you get famous people to do something different, that's great content. If you can make parodies and make audience laugh, it's a winner."

For Radio 1, the switch to TouTube has proven successful, becoming the first radio station in the world to have 1 million subscribers on YouTube, and now counting over 2 million, and over 1 billion views. "The audience is getting value from the brand in another way," said Cooper, who includes social media such as Facebook and Twitter, on which Radio 1 has 2 million followers.

"The reason social media works is that it gets the personality of the station in the tweets rather than carpet bombing audience with info about the programmes," explained Cooper, who added that the BBC "keeps experimenting with new media all the time."

Cooper said that going forward radio's future can be ensured by focusing on four things: presenters, with real personality; playlists, curated, "created by humans, not by algorithms; live music; and community. And in the end, radio needs to deliver "the right content at the right time to new audiences."

Meanwhile, Ergatoudis ironically called streaming services "the sharks taking our audience away," stressing that as the streaming market was already getting a very crowded place, the biggest threat to radio has not happened yet. For him, ""a huge disruptive monster is coming down the hill" in reference to Apple whose "pile of cash" and "ambitious ideas" could change the music and radio industries. "Apple has been totally revamping its iTunes store in preparation for the launch of its streamming service, and integrate it into the new iTunes eco-system."

Having felt the impact of Apple's ambitions -- Radio 1 lost host Zane Lowe to Apple -- Ergatoudis said that the Cuppertino firm is apparently building a service "with a huge amount of learning from traditional radio." For him, the combination of huge resources, coupled with a direct access to millions of smartphones around the world and a capacity to drive consumers makes Apple a serious contender that will set new challenges to the radio industry. "Whatever they announce will be hugely significant for the industry," he claimed.

Rob Sisco, President North America for radio service company SoundOut, was impressed by the presentation made by the two Radio 1 executives. He commented, "For me, that presentation was a homerun. Of course, no one has the same resources as the BBC, but what we should all be thinking about in the radio industry is how close we can get to that model."

New US bill to include terrestrial performance rights

By Emmanuel Legrand 

The US music industry is getting one step closer to having performance rights paid for by terrestrial broadcaters with the introduction on April 13 of the The Fair Play Fair Pay Act Of 2015.  If voted this will put the US on par with most of the rest of the world, especially Europe, where such neighbouring rights have been in place for the past 30 years.

The bipartisan legislation -- sponsored by Congressman Jerrold Nadler (D-NY), Ranking Member of the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet, and Congressman Marsha Blackburn (R-TN), Vice Chair of the Energy and Commerce Committee -- would "harmonise and modernise the outdated rules that currently govern music licensing for digital and terrestrial radio broadcasts." 

In addition to getting radio stations to pay royalties to performers and labels, the bill also addresses the issue of pre-1972 recordings, by ensuring that their use by broadcasters and digital platforms is subject to royalties, but would also codify industry practices streamlining the allocation of royalty payments to music producers and ensure that artists receive their fair share from direct licensing of all performances eligible for the statutory license (see below).

Said Nadler, "The current system is antiquated and broken. It pits technologies against each other, and allows certain services to get away with paying little or nothing to artists. For decades, AM/FM radio has used whatever music it wants without paying a cent to the musicians, vocalists, and labels that created it. Satellite radio has paid below market royalties for the music it uses, growing into a multibillion dollar business on the back of an illogical ‘grandfathered’ royalty standard that is now almost two decades old. Artists, musicians, producers and radio services alike deserve better. The Fair Play Fair Pay Act fixes this broken and unjust system by making sure all radio services play by the same rules, and all artists are fairly compensated.”

The bill is cosponsored by John Conyers (D-MI), Ranking Member in Judiciary Committee, and Congressman Ted Deutch (D-FL), Member of the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet.

The Fair Play Fair Pay Act is endorsed by the musicFIRST coalition which regroups recording artists, managers, record labels and performance right advocates. “Fair market value for music will encourage creativity by music creators," said Ted Kalo, Executive Director of the musicFIRST coalition. "It will promote innovation among music services. And – most importantly – it will give fans the best music they have ever heard – delivered in the most exciting ways they could ever imagine."

The Recording Academy, which organises the Grammys, has also been a long-time advocate of performers' rights. Its President/CEO Neil Portnow said that the Fair Play Fair Pay Act of 2015 would "brings fairness to many issues facing music creators in a comprehensive approach - ‎a concept and position advanced and championed by The Recording Academy and it's broad constituency.

The Recording Academy's  Chief Advocacy & Industry Relations Officer Daryl Friedman said that the bill "levels the playing field so that creators can get fair pay." Detailing the provisions in the bill, Friedman said that the bill would address several inequalities in the current system. "First," he said, "the bill would establish a process for setting fair-market royalty rates; create a performance right for artists on terrestrial radio; close the pre-1972 loophole to see that veteran performers receive royalties; and codify royalty payments to music producers for the first time." 

Collective rights management organisation SoundExchange, which collects royalties on behalf of performers and producers of recordings for the use of music on non-interactive digital services such as Pandora or Sirius/XM, also welcomed Nadler's initiative. "For decades, music services have gotten away with building their business on the backs of hard working musicians, paying unfair rates -- and in the case of the $17.5 billion radio industry, paying nothing at all -- for the music they use," said president and chief executive officer Michael Huppe. The Fair Play Fair Pay Act introduced today will bring much needed reform to the music industry and addresses many of the issues that plague the recorded music industry.

However, on the other side of the spectrum, radio organisations reacted megatively to the proposed bill. The Free Radio Alliance, which represents over 1,000 radio stations in the US, pledged to "fight the multinational record labels’ latest attempt to persuade Congress to impose hundreds of millions in new fees on radio stations across America." It called Nadler's bill "a performance tax legislation" and "a patchwork of past proposals, which have failed to pass Congress previously." 

Meanwhile, the National Association of Broadcasters, which has always opposed any such legislation, expressed its disappointment at a bill that "retreads years-old policy positions rather than advancing the copyright dialogue through policies that help grow the entire music ecosystem." NAB's spokesman Dennis Wharton, added, "NAB stands ready to work with Congress on a balanced music-licensing proposal that promotes innovation and recognizes the benefit of our free locally focused platform to the benefit of artists and listeners." 

According to a statement from Jerrold Nadler, the Fair Play Fair Pay Act would: 
- Create a terrestrial performance right so that AM/FM radio competes on equal footing with its Internet and satellite competitors who already pay performance royalties. This would resolve the decades old struggle for performance rights and ensure that – for the first time – music creators would have the right to fair pay when their performances are broadcast on AM/FM radio.

- Bring true platform parity to radio – so that all forms of radio, regardless of the technology they use – pay fair market value for music performances. This levels the playing field and ends the unfair and illogical distortions caused by the different royalty standards that exist today. - Ensure terrestrial royalties are affordable capping royalties for stations with less than $1 million in annual revenue at $500 per year (and at $100 a year for non-commercial stations), while protecting religious and incidental uses of music from having to pay any royalties at all. 
- Make a clear statement that pre-1972 recordings have value and those who are profiting from them must pay appropriate royalties for their use, while we closely monitor the litigation developments on this issue.
- Protect songwriters and publishers by clearly stating that nothing in this bill can be used to lower songwriting royalties. 
- Codify industry practices streamlining the allocation of royalty payments to music producers.
- Ensure that artists receive their fair share from direct licensing of all performances eligible for the statutory license.