After All These Years, Hilary Rosen is Still a Tone Deaf Hack

My history with today's top name in the news:

I need to rebuild and restore the links to the original THE WIZARD, FKAP website archives. My original webpage collection was started long before the term blog ever existed, but included a regular essay under the title The Existential Blues.  All the essays and files still exist and are still on-line.  I'll get the links restored and embedded in the right hand column as soon as possible.


When those link appear, you'll find I've written to and about Hilary Rosen since the early 1990's.  As the head of the Recording Industry Artists of America (RIAA) she is the subject of many of my earliest essays.  She has always been a tone deaf hack and in her official RIAA position, she almost single-handedly destroyed the entire music industry.  She fought legal digital downloads with a single-minded (closed minded) zeal that was breath-taking to behold.  If you wanted to sue Grandma for an illegal download, Hilary was your gal!


She seems incapable of independent thought, and functions mostly as an agent who does the bidding of her masters, currently the Democratic Party National Committee (DNC).


That Hilary Rosen is currently employed by CNN is an embarrassment to journalism.


Today, Hilary Rosen is in the headlines through her foolish comment about Ann Romney.  Here is a summary of the latest Rosen disaster from the AP Newswires:


The multimedia furor erupted Wednesday night when Rosen said on CNN that Ann Romney, whose husband is worth millions, never had to work to pay the bills and should not be her husband's surrogate on women and the economy. "His wife has actually never worked a day in her life," Rosen said. "She's never really dealt with the kinds of economic issues that a majority of women in this country are facing." 


The backlash was brutal and swift. 


David Axelrod, Obama's top campaign strategist, tweeted that Rosen's comments were "inappropriate and offensive." The president's campaign manager, Jim Messina, said Rosen should apologize. And the Democratic National Committee downplayed any connection to Rosen or her firm.


Although I've written in these spaces that the Republican "war on women" doesn't actually exist, Democrats and President Obama had successfully used this fabricated issue and had gained a virtually insurmountable lean among women voters.  


Hilary Rosen single-handedly turned the tide and gave the issue back to the Republicans on a silver platter.  That she then tripled down on her ill advised statement, assuring that the public forgot, if not forgave, Rush Limbaugh, was stunning to behold.


Republican comments were unnecessary.  We are watching a train wreck in progress.


Her apologies, two so far, were ever worse.  Hilary Rosen doesn't understand the public or the issues involved.  The Democrats need to drop her like the hot potato she has become.  So does CNN.

Losers

I'm going to keep this post extremely short because I've noticed that my continuous posts concerning the current Royalties battles between the Recording Industry Association of American (RIAA) and the various radio broadcasters puts most of my readers soundly to sleep.

But, for those of you who might be interested in the single most unfair abuse of power in Washington today let me simply refer you to today's issue of Radio and Internet News (RAIN)'s analysis of current events: CRB denies SX for more satellite money, but where's fairness for webcasters?

The bottom line? The Copyright Royalty Board (an agency of the US Government and an appointed board created by Congress) has granted an absolutely sweetheart deal to the monopoly of satellite radio, Sirius and XM Radio.

Without any competition and on the verge of merger, Sirius and XM are securely in the pocket of the RIAA, ignoring independent artists and following the hit making, payola laced, guidelines of the major record labels.

What does satellite radio bring to the table in return for the bargain basement royalty deal? Two companies, perhaps a half dozen program directors, no competition and no innovation.

Meanwhile Internet Radio which used to offer over 10,000 stations and 10,000 program directors and all the innovation and all the support for new, emerging and independent artists is forced by the same Copyright Royalty Board to pay royalty rates so high stations are now going off the air or into bankruptcy at an alarming rate.

Who are the "Losers" referred to in the title of today's post? The pubic, of course. Music lovers. Independent artists. Society in general. Exactly the people Congress is "supposed" to serve and protect.

Please read Paul Maloney's complete article in RAIN.

Left Hand... Have you seen the Right Hand lately?

I've said over and often that their simply isn't any industry in America with less marketing ability, less technological savvy, less consumer awareness or less common sense that the Music Industry. But these two recent events are simply too weird to even imagine.

On one hand (lets call this one the right hand) we have a most amazing breakthrough from the Warner Music Group. Warner, after a decade of leading the fight against digital music, has actually agreed to place their entire catalog of onver one half million songs on Amazon in the totally unrestricted mp3 format, long despised by the music industry.

Warner joins Universal and EMI, bringing the total number of tracks available on Amazon to 2.9 million. 2.9 million!!

There are no silly DRM (digital rights management) restrictions on the Amazon tracks. No limits to the number of CD's you can burn or the mixture of tracks. And, most important, there are no compatibility issues. An Amazon mp3 track plays on virtually every device sold today.

This means there are absolutely no restrictions on the tracks purchased through Amazon. You can burn them to CD's, make custom mixes of tunes, transfer them to your iPod and to any other mp3 player. You can download them to a computer and then transfer them to other computers. No restrictions! You are actually allowed to enjoy the music you legally purchased at home, in the office, at the beach or in your car.

Warner Music Chairman and Chief Executive Officer Edgar Bronfman Jr. explained the decision this way:

In an e-mail obtained by The Associated Press and distributed to Warner employees Thursday, Bronfman noted that selling downloads without DRM would help
spur new types of online music applications and foster competition among online retailers.

"By removing a barrier to the sale and enjoyment of audio downloads, we bring an energy-sapping debate to a close and allow ourselves to refocus on opportunities and products that will benefit not only WMG, but our artists and
our consumers as well," Bronfman wrote.

Warner was the last holdout among the majors. Now ever label sells DRM FREE tracks somewhere, some via iTunes and others on their own web site.

Life is good.

But... on the other hand (let's call this one the left hand) the Recording Industry Association of America's (the RIAA) lawyers have now filed a lawsuit claiming that it is illegal to copy music from any legally purchased CD onto any device, anytime, anywhere or in any format!

Here is the news as reported by The Washington Post:

In legal documents in its federal case against Jeffrey Howell, a Scottsdale, Ariz., man who kept a collection of about 2,000 music recordings on his personal computer, the industry maintains that it is illegal for someone who has legally purchased a CD to transfer that music into his computer.

The industry's lawyer in the case, Ira Schwartz, argues in a brief filed earlier this month that the MP3 files Howell made on his computer from legally bought CDs are "unauthorized copies" of copyrighted recordings.

Clearly the left hand is totally unaware of what the right hand is up to. The left hand is in court attempting to convince a judge that a consumer cannot ever make any copy of any legally purchased recording. No copying to the computer. No copying to an iPod. No copying to an mp3 player. All copies are illegal.

If the RIAA wins this lawsuit, it will wipe out the entire digital music industry and end competition and innovation. In other words the RIAA might defeat everything Warner Music is trying to accomplish.

The CRB Drives Another Nail Into the Coffin

The details of the Copyright Royalty Board's decision on royalties to be paid by the Satellite Radio came pouring out today, setting up a three level royalty system that insures the death of Internet Radio.

You can read Reuter's full report here: Sirius, XM Royalties Set

But here is the bottom line. The Copyright Royalty Board (CRB) of the U.S. Library of Congress set royalties for Satellite Radio's music playing channels at 6 percent of gross revenues for 2007 and 2008, 6.5 percent for 2009, 7 percent for 2010, 7.5 percent for 2011 and 8 percent for 2012.

While that may sound high it's a tiny fraction of the rates the very same Copyright Royalty Board imposed in Internet Radio.

In fact, in the ultimate insult, the CRB specifically rejected the virtually identical proposal from the Internet Radio Broadcasters, then they turned around and presented these reasonable and livable rates to a virtual radio monopoly, the soon to merge XM and Sirius companies.

Why?

No one, least of all the CRB, can explain this outrageous action.

As an end result we have a three tier cost system for radio broadcasting. On the low end of the scale you have AM and FM radio who pay NOTHING!!! All music is gifted to AM and FM's corporate giants at no charge what-so-ever.

Then you have Satellite Radio who will pay a high, but manageable, 6 to 8 percent of revenues for the identical sound recording being gifted to AM and FM radio.

Finally you have Internet Radio who must pay rates often in excess of 100% of revenues for the same recordings.

Advertisers and subscribers support all three formats of radio at virtually identical revenue rates, which is, of course, logical. Major advertisers like Phillip Morris or General Motors aren't going to pay more per listener for the privilege of having their ads on Internet radio than they will pay for Satellite or conventional AM and FM radio.

Internet Radio, straddled by the competition of AM and FM and Satellite Radio, cannot arbitrarily raise its ad rates. They'll get what the market will get. And AM and FM radio, with no sound recording royalties to pay at all, can artificially keep ad rates low.

Meanwhile Internet Radio cannot pay the royalties awarded by the CRB in one of the most discriminatory rulings in history. There simply is no excuse for an agency of the U.S. Government to willfully and purposely drive an entire industry out of business in favor of it's competitors.

Will Congress finally act, as it has long threatened? We do urge you to continue to write your Congress member and keep him or her informed.

The Sounds of Silence

Bloomberg News reported stunning news this week about Internet Radio that shook up the business community and political circles, not to mention the rapidly growing legions of Internet Radio listeners: both AOL and Yahoo are on the verge of shuttering their Internet Radio operations!

This isn't news at all to radio industry insiders who had predicted that the Recording Industry Association of America's (RIAA) bizarre royalty demands made it totally impossible for any Internet Radio operation to ever break even, let alone make a profit. The RIAA has demanded huge per listener/per song royalties that literally mean the more listeners Internet Radio attracts, the greater the financial losses.

Imagine if some group owned a copyright on hamburger buns and they demanded that McDonalds lose 5 cents on every hamburger sold, regardless of price or sales volume. Obviously McDonalds would react by closing their restaurants!

This is exactly what the RIAA has done. And yet they are "shocked" that AOL and Yahoo would consider closing their radio stations. Bloomberg reports:

Nov. 28 (Bloomberg) -- Yahoo! Inc. and Time Warner Inc.'s AOL unit may shut down their Web radio services after being hit with a 38 percent increase in royalties to air music. "We're not going to stay in the business if cost is more than we make long term," Ian Rogers, general manager at Yahoo's music unit, said in an interview. Yahoo and AOL stopped directing users to their radio sites after SoundExchange, the Washington-based group representing artists and record labels, began collecting the higher fees in July. Those royalties may stifle the growth of Internet radio, which increased listeners 39 percent in the past year, according to researcher ComScore Inc. in Reston, Virginia. Radio sites have been "dealt a severe blow," said Jeffrey Lindsay, an analyst at Sanford C. Bernstein & Co. in New York, "It seems very unlikely that at this stage a solution will be reached." Yahoo, based in Sunnyvale, California, is promoting a music service offering videos and songs for sale rather than its Launchcast, the largest Web radio site, Rogers said. As a result, the number of people using Launchcast fell 11 percent to 5.1 million in October, according to ComScore. AOL Radio users declined 10 percent to 2.7 million from 3 million. "The current math doesn't add up,'' said Lisa Namerow, managing director of AOL Radio in Dulles, Virginia. "If the rates remain as they are, it would be very challenging to sustain a business that is profitable.'' "We're really re-examining the radio model," AOL's Namerow said. "Shutting down the business is a possibility if Webcasters and the music industry don't come to an agreement."

It remains terribly unclear why the RIAA wants to kill Internet Radio. One thought is that the major labels want total control over the industry, forcing independents and unsigned artists off the air. Others believe that the big labels simply don't understand the medium and equate Internet Radio with file sharing. Still others see Internet radio as the stalking horse for future battles with AM and FM radio who pay no artist royalties what-so-ever and never have.

Regardless of the reason, the very existence of Internet Radio is threatened.

Here are some simple math facts. Yahoo's Internet Radio operation, the largest in the world, expects advertising revenue to rise 4.7 percent to $45 million in 2008. That sounds good doesn't it?

Except, the RIAA demanded royalties would increase 19 percent this year. An impossible financial burden. Moore importantly, if Yahoo actually increased listeners, the usual solution to increased costs, the royalties would rise even higher..... much higher.

Increased listeners are actually the enemy. Hence all Internet Radio operations, including Yahoo and AOL, have stopped advertising or promoting their services and have created bizarre listener caps and automatic shut downs to reduce active listeners.

The only hope is that Congress will step in and demand reasonable royalty rates. At this point Internet Radio operators would like to settle for the exact same rates already granted by the RIAA to Sirius Satellite Radio earlier this month.

The question remains as to why the RIAA wants Internet Radio to pay so much more than satellite radio. It is interesting to note that satellite radio plays virtually no independent and unsigned artists. The bland blend of music available via satellite is virtually all big record label controlled.

$23.76 versus $222,000.00

Well here's a bit of bad news for those of us who have fought so long and hard for sensibility and intelligence in the music recording industry: A jury in Duluth, Minnesota has awarded the major recording companies (Sony BMG, Arista Records LLC, Interscope Records, UMG Recordings Inc., Capitol Records Inc. and Warner Bros. Records Inc.) a total of $222,000 for the illegal file sharing of 24 copyrighted recordings from the above mentioned labels.

Curiously enough last night I logged onto my Napster account (the new, legal Napster) and downloaded 24 tracks and burned them to a mix CD. My cost was $23.76.

The music industry, primarily the RIAA, hopes that everyone gets the message. $23.76 is a whole lot cheaper than $222,000.00!

Unfortunately my fear is that this will only encourage the RIAA and its members to continue their long standing attitude of treating their customers as if they are mortal enemies instead of the only real source of income they actually have.

This lawsuit may actually encourage the music industry to continue to make the legal purchase of music difficult, confusing, and frequently impossible. The music industry and their bizarre legal restrictions drive more consumers to illegal downloading than any other single factor.

Let's examine my purchase last night as an example. I have for a few weeks wanted to purchase a number of tunes I've heard on the radio. The first decision I needed to make was where to buy.

I'm a member of Napster and I love their "Napster To Go" service that allows me to download around two million songs for a flat rate of only $14.95 a month. It's a great deal! You can download and listen on several different computers (at work, home and even my laptop) and also transfer the music to an approved portable device like my Dell DJ. You never actually have to pay for any of the music as long as you pay the monthly fee. It's a wondrous program!!

Except I really prefer my Apple iPod device and you cannot play a single Napster purchased tune on an iPod. It's a "Digital Rights Management" issue along with proprietary software.

And you cannot burn any of the tunes to a CD. Those are the liabilities of the "Napster To Go" program. Sadly iTunes has no similar program.

So the solution is to go ahead and purchase the tracks individually and then legally burn them to a CD and then rip them to mp3's and then upload them to the iPod. That's a real pain in the ass.

But it gets worse!!! Some artists, labels and songwriters place additional restrictions on the legally downloaded tunes. They withhold the "Burn Rights" so you cannot legally make a CD even after you pay the 99 cents to buy the track!!!!

This, of course, makes no sense. You can download and listen to the music on multiple computers and even portable devices at no charge beyond the monthly fee, but you cannot give the artist and label money and burn a copy.

If you really want this song you are now left with only two options. One, go to Amazon and buy the CD, wait a week for delivery and then rip the song to mp3...... or go onto an illegal file sharing site and obtain the song for free (completely illegally) and listen where ever and whenever you want, on any device.

Add to this bit of stupidity that no site offers all the music. Napster has a lot of "exclusives" and iTunes has even more. To create your perfect mix you are likely going to be forced to go to several different sites and purchase tracks in a variety of different formats, all with different Digital Rights Management restrictions. You will then be forced to burn multiple CD's in order to reverse rip the songs into the universally accepted mp3 format before you can ever use your iPod!!!!

And the RIAA can't figure out why people continue to frequent the illegal, but extremely easy to use, file sharing sites.

The 24 songs I paid for last night took me eight hours of hell and $23.76 to get them onto my iPod and on to a single CD I can listen to in my car. Eight hours. I'm not joking. And I could never obtain two tracks I wanted. Poor Carrie Underwood and Matchbox Twenty lost out on the 99 cents I wanted to give them. My money went to Avril Livigne and Regina Spektor instead.

Dear RIAA, Jammie Thomas the near poverty level 30 year old, single mother from Brainerd, Minnesota is not the problem. You are.

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The Wizard also recommends you read Paul Resnikoff's excellent analysis of the current RIAA situation: Resnikoff's Parting Shot: Why Major Labels Just Lost