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The Next Shoe To Drop – AM/FM Loses Ground as Newer, Better Services Take Root

An interesting new take from Music Industry blog today on the rise of digital streaming services. The article is pitched around the loaded question whether streamers are “cannibalizing” radio, but the basic point seems to be that, by offering better products like home-optimized streaming Hi-Fi systems and a better and wider choice of music, the new wave of streamers are simply outcompeting old radio.  That’s capitalism, not cannibalism, as far as I can tell.

It’s an important and positive story for music fans, technology companies and webcasters of course. But for artists and music creators, it’s especially important as a matter of economic opportunity and the long struggle for fair pay.

musicFIRST readers know all too well that AM/FM radio doesn’t pay artists or record labels for the musical performances that they use, while digital streamers do. For this reason, every time a driver switches off AM/FM and turns on an online streamer, artists do better, and the continued creativity that makes music becomes stronger and more viable.    

There’s been a lot of attention, and rightfully so, about whether streaming services pay enough given the value they receive from music creators and the potential loss of downloads due to the rise of easy and ubiquitous streams. Whether current payments from all forms of digital services including satellite are enough to continue a sustainable ecosystem for music creators remains an open question.   And musicFIRST has been at the forefront of the argument for fair pay on the digital side.

But we should never lose sight of the fact that at least these services pay while AM/FM radio simply sits back milking its decades old special interest loophole. Maybe AM/FM is losing out to streamers because it’s grown lazy, sitting fat and happy on royalty-free music and losing touch with an audience that hungrier digital services have fought so hard to satisfy and win. You can see it in this Wall Street Journal article, which exposes how AM/FM stations aren’t breaking new bands or promoting innovative music, but just play the same small rotation of well-worn hits and already-made-it bands to keep fans listening until the next commercial.

In the same article, music industry experts point out that playing the same hit over and over not only crowds out newer, more challenging acts, it even hurts the sales of the few bands lucky enough to make it onto the ever-shrinking playlists of corporate radio giants.  Why buy Katy Perry’s album if you can’t go half an hour on Top 40 without hearing one of her songs?   Who‘s promoting who in this scenario?

In this musical environment, the rise of streaming isn’t a huge surprise.  Americans are voting with their feet (or their ears?)!

Paying music creators is not only the right thing to do, it is essential to healthy businesses that reward creativity and know they need to win audiences and offer something that matters.  I’m heartened that the businesses models that value music and pay fair royalties for using it are winning out over the stale thinking and subsidized business models of AM/FM radio.