The fate of indie music as we know it

Just as Uncle Sam has finally cracked down on payola in corporate radio, the government has dealt a blow to Internet radio, the only promising home to music beyond the top 40.

By Paul F. Roberts

Read more: Politics, News, internet radio, Clear Channel, blogosphere

March 20, 2007 | It was the best of times, it was the worst of times for independent musicians, music labels and their fans earlier this month in Washington.

In two distinct rulings, one by the Federal Communications Commission, and the other by the Library of Congress' Copyright Royalty Board, the U.S. government took a firm stand in favor of small artists and music labels -- and local programming over media conglomerates -- even as it drove a regulatory stake through the heart of a fast-growing and popular medium for niche and independent music: Internet radio.

The two rulings set off a flurry of media coverage and online debate of the proper role of government in promoting diversity on the airwaves. They also painted a picture of a federal government at odds with itself about how to balance the rights of the public with those of artists, copyright holders and media conglomerates. But with music fans and artists increasingly disenchanted with the status quo and newly empowered by technology, the squabbling over royalties and copyright may already be causing a paradigm shift that will transform the music industry.

First, the good news. After years of public and private complaints about payola, or "pay for play" practices, the FCC is close to levying multimillion-dollar fines against some of the nation's largest radio conglomerates, including Clear Channel Communications, CBS Radio, Entercom Communications and Citadel Broadcasting, for using cash, gifts of travel and other perks to get an inside track at major commercial radio stations.

The FCC hasn't finalized its decision, but a source familiar with the negotiations confirmed the accuracy of published reports that named fines in the neighborhood of $12 million for infringers. FCC chairman Kevin Martin also assured a skeptical Congress last week that the investigation is ongoing and that other broadcasters could also be called to account.

Some of the participating companies are already talking, too. Andy Levin, executive vice president and chief legal officer of Clear Channel Communications, said in a statement that his company agreed to settle the long-standing payola investigation with the FCC so that it could "close the door on (the) ongoing inquiry and move forward," though the company admitted no wrongdoing.

The FCC investigation and settlement follow years of official inaction despite appeals from artists and artists groups about what many said was a rampant payola system that channeled money from well-off music labels to commercial stations through so-called independent promoters.

The proposed FCC settlement and a related agreement between broadcasters and the American Association of Independent Music, a trade association that represents independent record labels, might make breaking onto commercial airwaves a little easier for bands that have been shut out of commercial broadcasts.

According to reports, the deal will open up 8,400 half-hour blocks of commercial radio time to artists from independent and small labels like those that belong to A2IM. Clear Channel would not comment on the details of the deal with A2IM, but said in a statement that it is "reaffirming our commitment to new and emerging artists by committing a significant amount of airtime to music performed by unsigned artists."

That kind of commercial radio access would counter what many consider the corrupting influence of pay for play and the homogenizing effects of radio industry consolidation under the Telecommunications Act of 1996. Since the passage of that act, diversity on the airwaves has plummeted, according to a study released by the Future of Music Coalition in December.

Today, just 15 programming formats make up three-quarters of all commercial programming, with stations serving up "urban," "oldies" and endless variations of "adult contemporary" music and pushing out niche music formats like classical, jazz, bluegrass, independent rock and folk, FMC found.

The lack of variety and the prevalence of pay for play has made life difficult for up-and-coming bands like Evoka of Winston-Salem, N.C., said drummer Bryan Ledbetter. After an Evoka EP, "Stranger Than Fiction," generated buzz a few years back, the band hired a radio promotions team to tour the country. While some program directors gave the band a fair hearing and added Evoka's music to their playlist, band members also encountered blatant corruption. "One programmer said, 'Come up with this amount and you're on.' It was vacation packages, whatever they want. It was all money. Push and shove," Ledbetter said.

But the devil will be in the details of the A2IM decision. Most of the parties involved in the negotiations with the A2IM aren't talking about how they plan to work unsigned artists and independent labels into their rotations, or even what music formats will or won't qualify. FMC said that it is "cautiously optimistic" that the deal with A2iM will signal to programmers and disc jockeys that commercial radio is open to independent radio, said Jenny Toomey, executive director of FMC, in a statement.

But even as it gave to independent musicians with one hand, federal regulators were taking with the other. A ruling on March 2 from the Copyright Royalty Board, an arm of the Library of Congress, imposed strict new terms on the licensing of copyrighted songs for Internet broadcast that may doom even the best-run, best-funded webcasting operations.

In a hearing last week by the House Subcommittee on Telecommunications and the Internet in Washington, chairman Ed Markey, D-Mass., called the CRB ruling a "body blow to many nascent Internet radio broadcasters" and said that that the decision would hurt "fledgling entrepreneurs" as well as public broadcasters and smaller stations.

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