All Things Digital

RIAA Sues Radio Stations for Giving Away Free Music

–Headline from satirical newspaper The Onion, Oct. 2, 2002

Talk about life imitating The Onion …

Apparently the recording industry’s institutional memory is about as solid as its crumbling business model. As recently as 2007, it was paying radio stations to play its music. Today, it’s accusing them of pirating it. Yersterday, the ironically named recording industry group musicFIRST demanded that broadcasters pay royalties for the music they play over the radio, dismissing as a red herring their claims that radio airplay is a form of free promotion.

And to illustrate that point, the group sent the National Association of Broadcasters a can of herring and a dictionary. Some clever folks over there at musicFIRST.

“[AM-FM broadcasting is] a form of piracy, if you will, but not in the classic sense as we think of it,” Martin Machowsky, a musicFirst spokesman told Wired. “Today we gifted them a can of herring, about their argument that they provide promotional value. We think that’s a red herring. Nobody listens to the radio for the commercials.”

Well, he got that much right. Nobody does listen to the radio for the commercials. They listen for the music. And there was a time when record labels paid broadcasters to play it. They even coined a word for the practice: payola.

Looking five, six, seven, 10 years ahead, advertising will become 15%, 20%, 25% of Microsoft’s business. As much as people have bones to pick with advertising, people much prefer an advertising-funded experience to one they pay for.”

–Microsoft CEO Steve Ballmer

Viacom has a new online advertising partner and–big surprise–it’s not Google. It’s Microsoft.

The entertainment broadcaster has signed a far-reaching, five-year strategic partnership with the world’s largest software company valued at approximately $500 million. Under its terms, Microsoft will buy ads across Viacom’s broadcast and online networks and license content from its MTV, Comedy Central, BET and Paramount Pictures properties for use on the MSN Web site and the Xbox 360.

In return, Viacom will adopt Microsoft’s Atlas AdManager digital-advertising technology and grant Redmond the exclusive right to sell remnant display-advertising inventory on its U.S. sites.

Quite the partnership, and one that may further in evolve in the years ahead. “This broad-based relationship will lead to conversations in other business areas,” Viacom CEO Philippe Dauman told Reuters. “What impressed me was the extent to which Microsoft is making the commitment–technological, financial and otherwise–to be a winner in this space.”

“Financial and otherwise,” indeed. As Om Malik notes, Viacom seems to have gotten itself quite a deal from Microsoft. “Viacom doesn’t have to spend anything and at the same time it is getting advertising dollars and more distribution for their content,” he writes. “I get a feeling that, going forward, this is going to become a template deal for all large media companies with content assets. For them it’s a green light to pillage Microsoft’s overflowing coffers. Deals like this will increase the pressure on Google to do similar ones with other content providers, mostly to thwart Microsoft’s advertising ambitions.”

Google is reportedly talking to Simon Fuller, the British entrepreneur behind the Spice Girls, about a joint venture in the Internet broadcasting market. “It’s a big idea on a global scale,” a source close to Fuller tells the Guardian. “It will change television in much the way iTunes changed music.”

Uh-huh.

Hate to say it, but the idea of Google hooking up with the guy behind the Spice Girls seems about as likely as the company’s founders joining the Spice Girls.