Friday, March 15, 2002

The music industry is an interesting study in the free market at work. The major companies have been credibly accused of price-fixing on CDs, and seriously exploiting the artists whose product they sell.

As for promotion, as I mentioned a few days ago, almost every song you hear on the radio is bought and paid for --- pay for play. It seems that the record companies are finally starting to figure out that this is poor value for money. And what entrepreneurial solution do the hard-charging businessmen of this major industry propose? Government regulation --- they want the FCC to step in to regulate the independant promoters who serve as middlemen in modern-day payola.

Which brings me to the company which nearly has a stranglehold on rock music radio, Clear Channel. They own hundreds of radio stations, coast to coast. The benefit of this to the listeners? Synergy.

What does synergy mean in the radio business? A national brand, of almost fifty different radio stations all calling themselves KISS-FM, like KSAS-FM in Des Moines. Even though the station is owned by a huge conglomerate, they're still involved in the community. On President's Day, the station's intern, "Smooch" is doing a live appearance, joshing with the DJ, "Cabana Boy Geoff" Alan, who's telling the crowd how bad Smooch's dance moves looked last Saturday night at the Big Easy, a hot Des Moines night spot.

The sound of that banter is the sound of synergy. Smooch is actually acting out his half of the conversation; "Cabana Boy Geoff" doesn't work holidays. He recorded his half of the conversation ahead of time.

In fact, "Cabana Boy Geoff" has never been to the Big Easy. He's never been to Des Moines; he works out of San Diego, and improvises scripts based on bits of local color mailed in by the Des Moines station manager. The phone calls from listeners played by the station are actually San Diego phone calls with the local color edited out; people who dial the real Des Moines radio station get a busy signal unless, for some strange reason, a member of its skeleton staff is in the office. Nor does the station have its own playlist --- that's done out of a central office. The Des Moines station manager mails in suggestions, which are rarely heeded.

This arrangement is justified by everyone in the company as providing "a higher-quality product at lower cost". Which is to say, homogenized crud, with no variety, and no opportunity for interesting new music to break out in local markets.

Incidentally, you, as a radio listener could be receiving this kind of wonderful service without even being aware of it. Clear Channel runs stations in numerous markets through shell companies to disguise their ownership. And if you're an advertiser, who relies on ratings to set rates, you might want to know they're holding a knife to arbitron.

But Clear Channel isn't just radio. They also do concerts. A couple of years ago, they bought out SFX entertainment, which was already one of the major concert promoters in the country, with bookings at venues all over. Which, of course, has lead to more synergy. The radio promotes concerts, which in turn, provide a venue to promote the radio stations.

Bands would surely accept a discount on their fees for this kind of service. If they don't, they don't get airplay. There have been numerous complaints that Clear Channel retaliates against bands who take better offers from other promoters, or even play concerts with other companies' radio stations, by denying the bands airplay throughout their network. In one case in Cincinnati, another radio station got sponsorship for a concert at a Clear Channel venue, and the upshot was retaliation against both the radio station and the band.

And it isn't even just music. Clear Channel recently got dumped as promoter for motocross, and is retaliating by trying to start its own league.

The astonishing thing is that all of this clawing and scraping doesn't even make for a profitable business. Clear Channel's immense reach is the result of a buying spree that has lasted for years and left them $9 billion in debt. But even if they don't survive, that doesn't necessarily mean a return to competition; they could just be swallowed whole, at a discount, by an even bigger fish. As can be seen, in a survey of entertainment monopolies through history...


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