The World's Oldest Whine by George Ziemann (Dec. 21, 2003) Every year at this time, writers across the world are putting together a "year in review." That's where I intended to go with this article, but then I found out too much information. So instead of talking about the past year, let's look at a quick history of the beginning of the recording industry. After all, if you've been paying attention at all, you know what happened this year -- threats, lawsuits, claims of piracy and admonitions that music can not be distributed for free. As you shall soon see, this is exactly the same thing the recording industry went through 80 years ago. Let's start with the RIAA's version of the story: By the mid-1920s, advancements in areas such as microphones and loudspeakers that had been spurred by the advent of radio were also being applied to recording. Electrical recording and playback systems developed at AT&T's Bell Labs were introduced by Western Electric in 1925. Long-playing records were demonstrated by Brunswick in 1925 and again by RCA in the early 1930s. At the same time, German scientist Fritz Pfleumer was learning how to apply iron-oxide particles to paper tape for magnetic recording, and motion picture sound moved from the lab to theaters. Despite these promising technical developments, the 1930s were a tough period for a record industry that found itself competing against the free content offered by radio in a time of deep economic distress. The industry, dominated by 78 RPM records with a playing time of just three to five minutes per side, bottomed out in the early 1930s. Fortunes began to revive somewhat in the mid-1930s, due largely to the popularity of newly-introduced juke boxes. The outlook brightened further by the end of the decade, but continued to be hampered in the 1940s by wartime diversion of materials, as well as by a lengthy dispute with the musicians' union over recording royalties. As usual, the RIAA has taken the simple truth and left out enough facts to paint an unrealistic picture. "...the 1930s were a tough period for a record industry that found itself competing against the free content offered by radio in a time of deep economic distress." But if you put together the events that occured in the seminal years of radio, it's easy to see that there is a lot more to it than what the RIAA says. They left out all of the interesting parts. Emily Berliner replaces Edison's wax cylinder phonograph with the audio disc in 1887. This was pretty much the entire market for music, which still accounted for more than $10 million in sales in 1914. 78 R.P.M records were introduced in 1915 and the recording industry continued its campaign to convince people they needed music in their homes. The public took the bait and the industry sprouted, pushing sales over the $47 million mark in 1921. Surprisingly, according to the IEEE (Institute of Electrical and Electronics Engineers), when recorded music sales are weighed as a fraction of US gross domestic product, sales have never surpassed the peak reached in 1921. By the early 1920s, RCA started mass-producing commercial radios. While everyone agreed that the radio did not sound as good as the phonograph, if you had a radio, the music was suddenly free to listen to. The recording industry was incensed and attempted to sue the radio stations to prevent them from playing recordings on the air. The first judges presented with this issue, decided that if the radio station had purchased a copy of the recording, they had a right to play it, since there was really no law preventing it. Sounds familiar yet? Free music, doesn't sound as good as the actual recording, but the public eats it up anyway. Industry tries to sue the "offender" into submission. Comes up short. The recording industry, particularly Victor and Brunswick (two major players at the time), decided to forbid all of their artists to appear on radio. Artist contracts were redefined to stipulate the ban. Then the labels began to stamp "Not Licensed for Broadcast" on their recordings. Three court cases supported the right of the labels to use this technique. I'd like to point out here that this is the step that the recording industry has failed to make in the current situation. After three years, they have failed to offer a mechanism for identifying which music is and is not available for use on peer-to-peer. This is because they assume they control all of the "legitimate" music, of course, another mistake they've made in the past. Let's look at the RIAA version of the story again: "Despite these promising technical developments, the 1930s were a tough period for a record industry that found itself competing against the free content offered by radio in a time of deep economic distress." The truth is that radio did hurt the recording industry, but not as bad as they make it sound. Sales went from $47 million in 1921 to just shy of $27 million in 1925 (a more than 40 percent drop) before climbing back to $34 million in 1929. Radio had damaged the music market, but it certainly had not killed it. Another reason for the uptick in sales could be the introduction of the 33-1/3 LP record in 1928. With 1929 came the stock market crash and the Great Depression, which completely removed discretionary income for most Americans, driving record sales down to a mere $2.5 million in 1933. The recording industry had seen a 95 percent decline since 1921, with the largest drop between 1929 and 1933. The phonograph division of the Thomas A. Edison company was the first to go, folding in 1929. RCA bought Victor, CBS bought Columbia and most labels simply disappeared. Radio may have hurt the industry, but it was the Depression that almost killed it off. "Fortunes began to revive somewhat in the mid-1930s, due largely to the popularity of newly-introduced juke boxes," says the RIAA. I guess "somewhat" is the key word here, since 1939 sales (the best of the decade) were still less than $20 million. This was because the industry had adopted an "anti-airplay" mentality. Recording industry personnel eventually concluded that their firms suffer when stations broadcast pre-recorded music. Their conclusion rested on what would later prove to be a flawed assumption: consumers will not buy records when they could hear them "for free" on radio. Their conclusion also rested on an accurate evaluation of U.S. copyright law. When broadcasting pre-recorded music, radio stations must pay royalties to the composers, lyricists, and publishers of the music, but they need not pay royalties to record firms. In other words, radio stations can generate income by repeatedly playing hit records and, aside from the initial purchase price, they need not compensate record firms. Given this conclusion, the recording industry developed a business model that featured two elements. First, record firms sought to prohibit broadcast of their pre-recorded product by stamping inscriptions on recordings (for example, "Not Licensed for Radio Broadcast"). They received validation from the courts; three rulings required that stations cease broadcasting records with prohibitive inscriptions. Second, record firms proposed that stations broadcast live performances by recording artists, thus offering material that did not duplicate the pre-recorded products of record firms. Powerful actors in government and broadcasting concurred with this proposal. Both CBS and NBC, for example, had long emphasized live shows and were receptive to the entreaties of record firms. Indeed, both networks discouraged their stations from broadcasting the products of record firms. The record industry's successful adoption of the "anti-airplay" model corresponded with its economic recovery in the mid- to late-1930s. The model not only skirted what recording personnel viewed as a failing of copyright law (that is, radio's ability to broadcast recordings without paying royalties to record firms), it also encouraged a symbiotic relationship between the recording and radio industries. "While the impact of radio in broadcasting in its earliest years disturbed the sale of phonograph records," noted one report, "appreciation of recordings has been further stimulated by broadcasting." -- Timothy J. Dowd from the Academic Exchange Much like with the state of the peer-to-peer battle that is going on now, the industry's response to radio was to attempt to keep their music off of it. As major players in the radio industry became more interested in broadcasting recorded work, ASCAP reinforced its control over distribution. Artists who were not ASCAP members had little hope of exposing their work to wide audiences. In the late 1930s, the primary licensing body, the American Society of Composers, Authors and Publishers (ASCAP), founded in 1914, comprised only 1,100 writers and 140 publishers. To gain admission to ASCAP a writer had to have published five hit songs, a requirement that not only precluded the entry of new blood to its membership but also favored a small body of established writers. Likewise, the system favored established publishers, about 15 of which regularly controlled 90 percent of the most-played songs on network radio. Country artists had access to the public through the Grand Ole Opry, broadcast over Nashville's WSM since 1925, and a few artists became nationally known recording stars, but membership in ASCAP eluded them. Country stars such as Gene Autry and jazz greats like Jelly Roll Morton were rejected for years by ASCAP before finally gaining membership. BMI entered this tightly controlled industry in the fall of 1939. Its organization was precipitated by the oncoming expiration of a five-year ASCAP contract, in which radio had agreed to pay five percent of its annual advertising sales revenues. Radio industry leaders considered the creation of an alternative music licensing source, in the event that ASCAP and the industry could not come to terms. A special radio group met in Chicago in the fall of 1939 to consider a charter for a new licensing body to be named Broadcast Music Inc. drawn up by Sydney M. Kaye, a young copyright attorney. That charter called for broadcasting organizations to pledge sums equal to 50 percent of their 1937 ASCAP payments as capital and operating funds. No dividends were to be paid to stockholders, for BMI's main purpose was to provide an opportunity for those writers and publishers unable to gain entry into ASCAP to share in performing rights revenue and provide an alternative source for broadcasters and other music users. BMI's charter was filed on October 14, 1939, and its offices opened in New York City on February 15, 1940. This was none too soon, as in March of 1940 ASCAP's newly proposed contract called for a 100 percent increase in radio's rates over the previous year. Already between 1931 and 1939, radio had seen licensing payments rise from $960,000 to $4.3 million, a jump of 448 percent. Not surprisingly, by the end of 1940, 650 broadcasters had signed licenses with BMI. When ASCAP's license contract ran out, only 200 small stations still continued to use its catalog, thereby effectively blacking out all ASCAP repertoire for much of 1941. When the 11-month battle between the networks and ASCAP ended by late 1941, BMI was well on its way to establishing a base of support for its aims. -- From BMI This was a bad time to be an artist. Suddenly, a lot of entertainers who were making a living doing live versions of pre-recorded material by others, found themself in a difficult position. They could no longer play the music that had garnered their audience. DeFord Bailey is a perfect example. Though best remembered as the first black star of the Grand Ole Opry, DeFord Bailey was far more than an obscure historical first or footnote to Opry history. In the fifteen years he spent on the Opry (1926-1941), he was one of the show's most popular performers and one of the single most influential harmonica players in Country music history. Skilled at playing Blues, Jazz and Old Time music, Bailey amazed generations of fans who saw him on Opry tours throughout the South and on the many WSM radio broadcasts. He was always dressed in a sharp suit and stood on a Coke bottle carton, played his harp into a huge megaphone and impressed everyone. In 1941, he was fired from the Opry in a complex dispute arising from the ASCAP-BMI feud; because his record company producers had copyrighted many of his songs with ASCAP and since ASCAP had banned their songs from the radio networks, DeFord was now being told he could no longer play his old favorites, like John Henry and Fox Chase. Puzzled and confused, he refused to produce "new," non-ASCAP songs and was eventually fired. For years afterwards, Bailey was bitter and refused to have anything to do with the show or its history. From CountryWorks.com By this time, the recording industry had been fighting with radio for 20 years. At the same time the ASCAP catalog was being banned from radio (although some sources say that ASCAP called a strike, refusing to allow broadcasts of music it licensed), the recording biz was ready to be changed, like it or not. This is the part we should all pay attention to. It should provide a clue to what is eventually going to happen with peer-to-peer. First, the New York Supreme Court ruled that once radio stations purchased a record, they were free to broadcast it ­ even when it bore a "Not Licensed for Broadcast" inscription. Displeased with this ruling, the dominant record firms pursued plans for obtaining fees from stations that broadcast pre-recorded music. To this day, they have still failed to get radio to pay the record labels for airplay. In 1942, arguing that the new jukeboxs were putting live musicians out of work, James C. Petrillo of the American Federation of Musicians declared a ban on recording. The AFM went on strike on August 1, 1942 in an attempt to get record companies to establish a fund for unemployed musicians. Most of the smaller and independent companies signed new contracts almost immediately; Decca signed a contract in September 1943, and the other major labels followed suit in November 1944. Second, a new record firm broke ranks and introduced a "pro-airplay" business model. Capitol Records (est. 1942) executives believed that broadcasting recordings would stimulate rather than harm sales. In search of airplay, Capitol routinely promoted its recordings at radio stations, and it became the first record firm that routinely delivered free recordings to disk jockeys. With a dramatic increase in record sales, Capitol quickly rose to dominance in the record industry. Unable to ignore Capitol's successful "pro-airplay" model, other dominant record firms begrudgingly ceased their quest for attaining fees from radio stations. In fact, in search of symbiosis, they likewise courted disk jockeys with free recordings. "The past few years have seen the emergence of the radio disk jockey as one of the most important factors in record sales," gushed one company document. "The record manufacturers are happier than they have ever been." (Timothy J. Dowd from the Academic Exchange) An ASCAP footnote -- Showing their arrogance, ASCAP chose not to license country and rhythm and blues songs. BMI began licensing rhythm and blues and country songs that ASCAP had chosen to ignore. When country and rhythm and blues became rock and roll, ASCAP found itself out in the cold. In conclusion, I would suggest that the RIAA is still replaying history, making the same mistakes over and over, based on the same shortsighted vision. They never got what they wanted from radio which, in the end, proved to be their greatest ally for a half century. But they fought it for 20 years first, losing artists and income in the process, purely due to stubborness and an inability to accept the changing technology. Capitol Records executives believed that broadcasting recordings would stimulate rather than harm sales. That's what changed everything in the world of radio. But it took 20 years of wrangling for someone to grasp the obvious. Given the ability of the recording industry to learn from its own mistakes, we can expect that it will be 2020 before any of today's record execs realize peer-to-peer can be a good thing. Unless the peer-to-peer users heed the lesson taught by the radio broadcasters. The fastest way to get the record labels to embrace peer-to-peer is by excluding them from it. I've said this before and now I see it reflected in history. It's more than boycotting the sales of records. That's a good thing and sales are down again for 2003, which the Hollywood Reporter somehow interprets as a "bounce back," merely because the decline was less severe than in 2002. It's still a decline. No bounce. Take the RIAA music off of the Net. This must be the goal for 2004. If we can do this, by the end of the year, the RIAA will be singing a different tune. If radio has taught us anything, it is to give the whiners what they've been requesting for 80 years. Stop listening to their music for free.

©2003 George Ziemann All material on azoz.com is protected by copyright law and by international treaties, but it all seems rather pointless. You may reprint any article on this site in whole, in part, in effigy or in ridicule. I really don't care.