It’s like that

“It’s like that
… and that’s the way it is.” RUN-DMC vs. Jason Nevins

Radio news
Requiem for satellite radio
The New York Times says Sirius XM is preparing for possible bankruptcy

‘A bankruptcy would make Sirius XM one of the largest casualties of the credit squeeze. With over $5 billion in assets, it would be the second-largest Chapter 11 filing so far this year, according to Capital IQ.’

Was it only a year ago …

March 2008
‘Justice Dept. Approves XM Merger With Sirius
WASHINGTON — The Justice Department gave approval on Monday to the merger of two rival radio networks, XM and Sirius, a marriage that would create a strongde facto monopoly/strong in satellite services now used by more than 17 million subscribers.’

For UK and European readers: satellite radio is digital but the delivery technology is different from DAB. Wikipedia Sirius XM

Both satellite and DAB are loosing the battle for music listeners to internet radio. Better audio quality, infinite choice of stations, multi-cultural, multi-lingual, global reach. Usually free to use and free of ads. Listeners choose the better radio experience, if it is available.
In the UK and Europe we have to be concerned about a similar lobbying process, where an existing industry faction influences the legislature to protect their interests and hobble new media competition.
In the UK DAB radio occupies the same position as satellite in the US, although with BBC as well as commercial backing.

Google are pulling out of terrestrial radio advertising. Google ends selling radio ads. 3 weeks ago Google exited the print ad market.

Will continue to invest in selling TV advertising, internet radio
‘Instead we will use our technology to develop Internet-based solutions that will deliver relevant ads for online streaming audio.’ Google blog.

Meanwhile, the future of music radio, in the US at least, will be shaped by negotiations between SoundExchange and internet radio broadcasters to set royalty rates for 2006-2010 (yes, mostly retrospective) and 20011-2015.
The October 2008 Webcaster Settlement Act, previous coverage on this blog here,
set a deadline of February 15th.

That would be Sunday the 15th. At close of business on Friday 13th Kurt Hanson’s Radio and Internet Newsletter reports

“Nothing has been heard as of yet from the Digital Media Association (DiMA), from the NAB, or from Small Commercial Webcasters concerning an agreement with SoundExchange.
This past week, SoundExchange sent out what they called the “Small Commercial Webcaster Settlement Agreement.
The so-called “agreement” would require webcasters to give up a variety of rights to qualify for royalty rates essentially the same as those in 2002’s Small Webcaster Settlement Act (SWSA). Provisions include barring all agreeing webcasters from CRB proceedings to determine royalty rates for 2011-2015, setting an annual revenue cap of $1.25 million, and requiring larger companies purchasing a small webcaster to pay royalties retroactive to 2006 under the CRB-set royalty rate.”

RAIN 02/13

Internet radio listening continues steady growth and continues to draw listeners away from terrestrial and digital radio. Sirius XM, for example.
See the graph at Weekly online radio audience at an all-time high

RAIN 02/02

Throw in some metrics for the exponential growth of listening on iPhone and Google G1 (Pandora, Last FM).
Wired 5 ways the cellphone will change how you listen to music

and it is clear that we are at a Schumpeterian moment for the music and radio industries.

To summarise:

Sirius XM prepares for Chapter 11 bankruptcy. There are layoffs throughout the AM/FM radio business in the US as advertising revenues fall off a cliff.

Technology players like Apple and Google know the future is in internet radio delivered over wireless to personal devices like iPhone and G1. Crucially, the technology players don’t trouble themselves with content and royalties … until they are in a strong position to negotiate with rights holders. Google can make money from search, playlists, ads, to the device in your pocket. It’s going to be personal.

Smaller webcasters have developed audiences and musicians through a focus on music and diversity, not advertising and limited playlists. They built this market.

Their fate in the US will be determined by negotiations which are, presumably, happening now. These negotiations will occur without public scrutiny or the participation of small webcasters: they don’t keep lobbyists in Washington.

Creative destruction: old media companies are being eliminated, the industry re-structures, new players position themselves for the next wave of profit.
And what of music as popular culture, rather than a commodity or profiling opportunity for marketers? Who looks after the public interest?

For UK listeners and readers looking for a policy which values culture and innovation as well as property rights, it is hoped that Stephen (Lord) Carter will be listening to feedback on the Digital Britain report from new media creators and users as well as incumbent industry interests.

Otherwise It’s like that … and that’s the way it is.

Lyrics and listen  YouTube


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