TESTIMONY OF DON HENLEY
representing the RECORDING ARTISTS' COALITION
before the
SENATE COMMERCE, SCIENCE, AND TRANSPORTATION COMMITTEE
hearing on MEDIA OWNERSHIP: RADIO INDUSTRY
January 30, 2003
Thank you, sir.
I am honored to be here and I thank you and all of the other
members of the committee for letting me speak today on behalf
of the Recording Artists' Coalition (RAC).
Before I begin my testimony, I feel compelled to speak to
a statement that was made a little bit earlier by Senator Brownback.
I very much feel that it's important I address some of the comments
he made, not only in this room but in a press release from his
office that came out this morning. So if I may, I'd like to address
that and then I'll begin my testimony.
Senator Brownback's news release said that "I understand
that the Future of Music
Coalition and Mr. Henley are here today to address how consolidation
is effecting artists' access to the airwaves and the public.
Recently the artist community banded together with the recording
companies in an effort to advance webcasting royalty legislation
that ultimately could have led several small webcasters out of
business. It is my understanding that artists have supported
this bill as a way of forcing an increase in the royalties charged
by BMI and ASCAP."
And I would like to state for the record that nothing could
be further from the truth. In fact, we pushed for a small webcaster
bill from day one, when the copyright office released its rates.
We were on the radio the very next day condoning that, and saying
that we were all for it.
First of all, the small webcaster bill kept people in the
business. And for the very first time, artists were paid a performance
royalty for webcasting. We are not traditionally paid because
of the power of Mr. Fritss' lobby here in Washington. We are
not traditionally paid a performance royalty for terrestrial
broadcasts. We are the only country in the free world that does
not pay the artist a performance royalty when a singer sings
on the radio. And we are penalized for that around the world.
We worked closely with Senator Leahy and Senator Hatch and
we were totally in favor of a viable small webcaster bill for
people who have businesses and who pay all their royalties.
So I just wanted to clear that up. Thank you for letting me
do that.
It is often said that radio airplay determines whether a recording
artist will succeed or fail. Even with the ascendancy of the
Internet and webcasting, radio airplay is still the most important
factor in an artist's career, and this is especially true for
new and younger artists. Getting on the radio, in one way or
another, is the holy grail of our business. In a perfect world,
merit would determine which records get played on radio. But
this is far from a perfect world.
When I started in this business some 35 years ago, radio,
especially FM radio, offered a wide variety of stations, each
presenting an interesting array of musical genres. A listener
could tune in to a single FM station and hear rock music, rhythm
and blues, folk music, soul music, pop music and everything in
between. The breadth of music on the airwaves was varied and
exciting and genres were not compartmentalized and put into little
boxes. Listeners were encouraged to explore different styles
and to stretch the boundaries of their tastes. The idea was not
to fragment society into what is now called demographics, but
rather to bring people together. The benefit to the public, and
to our culture and to our economy was enormous. Artists could
spread their wings, reach audiences never reached before, and
create self-sustaining careers on an unprecedented scale.
But slowly the radio world, and along with it the music industry,
changed. As local and independent radio stations were purchased
by larger corporations, radio playlists started to contract and
become much more uniform. In an effort to gain more control over
the music industry, radio conglomerates started to narrow playlists
and centralize the radio programming function that had traditionally
been done independently by each individual station. Radio consolidation
made it increasingly more difficult for an artist to get radio
airplay. Radio network
programmers became more powerful and demanding. And not only
did they erode the vitality of American music, they placed themselves
in a singularly powerful position to extract additional concessions
from the labels and the artists.
Payola is not new. It's been around for a very long time,
going back at least to the 1950s. It's always been here. But
today, as a result of this unprecedented consolidation, record
labels must now hire independent promoters on an even grander
scale to help convince radio networks and stations to play certain
records.
Millions and millions of dollars are spent annually on what
is called independent radio promotion.
The unspoken rule is that some form of special promotional
or marketing consideration must be provided by the independent
promoters to the radio station. The more consideration, the better
chance a record has of being represented by the independent promoter
and then getting airplay. So, we all accept with great sadness
the fact that merit plays only a small part in the equation,
if it plays any part at all. A recording artist has a much better
chance of getting on the radio if the promotional budget for
a record is large, than if the record is good. And then adding
insult to injury, the promotional fees paid to the independent
promoters are recouped either in whole or in part, against the
artist's royalties. So essentially, the artist is still paying
for radio airplay -- and paying more than ever.
The 1996 Telecommunications Act strengthened the conglomerates
position tenfold when it loosened the restrictions even further.
The consideration sought for radio airplay increased because
there was less competition among radio stations and networks
- the more powerful the radio network, the greater the pressure
on artists and labels to spend independent promotion money. These
days, many radio stations are now demanding exclusive promotional
concerts from certain artists who are on their way up the ladder
of success. And this is just another form of payola.
When these up and coming artists refuse to do these promotional
concerts, there can be negative repercussions as evidenced in
some of the materials that I have provided -- or will be providing
-- to Committee staff.
In recent years, the problem has escalated unimaginably because
some of the same conglomerates that are buying radio stations
at an unprecedented pace have also embarked on a buying spree
of venues, agencies, and concert promotion companies. So, the
company determining whether or not a record is played on the
air may be the very same company owning the venue and books the
tour.
There was an incident not too long ago involving my manager
and one of the other artists that he manages, and Clear Channel
Entertainment. This artist was asked to do a promotional concert
for Clear Channel Entertainment. She had done a couple of these
things before. She declined in this instance, for very good reason.
She was in the studio, trying to finish an album on deadline.
The record label was breathing down her neck and she declined
to play this promotional concert.
My manager received a phone call from a gentleman named Michael
Martin, who was a San Francisco programmer for Clear Channel,
requesting this appearance by the artist. Also on the phone was
an independent promotion man. My manager was told, after he declined
the artist's particpation, that Michael Martin programmed all
40 rhythm stations owned by Clear Channel. And to make a long
story short, the artist's next single was basically boycotted.
I have an exchange of letters that some of you have seen.
Clear Channel, of course, denies this. My manager would be glad
to speak to any of you about this incident.
This institutionalized conflict of interest places the artist
in a vastly uncompetitive and weak position. What happens when
an artist refuses to perform in venues that are owned by the
radio network, or chooses not to go on tour with a promotion
company owned by the radio network? Will the
artist's records be played on that network or will the company
reduce or eliminate radio airplay?
Most artists cannot afford to find out. In fact, I come here
today at my own peril. There is a very good chance that my records,
or the records of the Eagles, could be reduced in airplay or
eliminated altogether. I don't know.
This unprecedented control over the music industry by the
conglomerates is hurting the music business and it's hurting
the culture. It is preventing talented, new artists from emerging
and is generally casting a pall over a business that has already
been decimated by peer to peer file sharing, a faltering economy
and fierce competition from other entertainment industries.
Artists, managers and record labels are not the only ones
speaking out about this. Mr. William Safire, one of the most
well-known, conservative columnists in the country, has strongly
condemned the unbridled consolidation of the radio industry in
a recent New York Times editorial. Mr. Safire persuasively
makes the case that further deregulation will hasten the demise
of diversity and competition on the airwaves.
Because of the 1996 Act, and subsequent FCC deregulation,
the two largest radio chains in 1996 owned 115 stations. Today,
those two own more than
1,400. The top five radio chains used to generate only 20% of
industry revenue; now they generate 55% of all money spent on
local radio.
Mr. Mays claims that they own a very small percentage of the
total stations in the country yet he fails to break down their
ownership by format. He fails to point out that they are 82 percent
of the pop airplay in the United States of America, which is
the crucial "make it or break it" format. They are
82 percent.
The number of station owners has plummeted by a third. As
a result, "the great cacophony of different sounds and voices
on the radio is being amalgamated and homogenized." As Mr.
Safire also points out, the radio airwaves are loaned by the
public. The radio airwaves cannot be equated with grocery store
shelves. The airwaves belong to the public, just as the national
forests belong to the public. And they're supposed to be used
to benefit the public as well as to foster economic growth.
When radio station owners engage in unbridled, unregulated
consolidation, clearly the public interest is not served, and
the industry as a whole stagnates. Deregulation in this regard
is not pro-business, it is anti-competitive, and like Teddy Roosevelt
before him, Mr. Safire's conservative, economic religion is founded
on the rock of competition, and endless consolidation harms competition.
Regulation does not always have to be anti-business.
The problem of radio consolidation will only get worse if
the FCC is allowed to remove the last limitations on ownership.
The RAC not only strongly opposes the proposed FCC action, we
strongly advocate for a reexamination of the effect of the 1996
Telecommunications Act, and with that reexamination, propose
the implementation of new restrictions on the conglomerates.
Artists can no longer stand for the exorbitant radio promotion
costs nor can we tolerate the overt or covert threats posed by
companies owning radio stations, venues and agencies. The public
interest is only served when the airwaves provide diverse and
exciting programming which benefits both our culture and our
economy. This will only be possible when artists are free to
compete in an open marketplace, not shackled by the anti-competitive
practices of the conglomerates.
And in conclusion, I want to say this -- What is the definition
of liberty? And freedom? What is the definition of a free market?
Is it being able to own as much as you can own even if it runs
counter and contrary to the public interest? Historically, the
FCC definition of the "public interest" is threefold:
diversity, localism and competition. And we believe that consolidation
is undermining this.
The radio conglomerates have usurped and co-opted the radio
airwaves. And they get them for free. And they build multi-billion
dollar empires on the public airwaves for free. You talk about
a "takings" issue... To me, this is a taking.
Congress must address these issues as quickly as possible.
The future of musical creativity and artistic expression in this
nation depends upon your action.
I thank you again for this opportunity to discuss these important
issues.
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