Music labels create radio inteference

Not a month goes by without traditional media groups unveiling plans to cope with consumers shifting their media consumption to digital. Each medium has to find its own way to overcome the challenges, but one that seems to be doing so successfully is among the oldest media of all: radio.

These days, for example, Virgin Radio says it gets more digital listeners than analogue ones at certain times of the day. For advertisers wanting to reach consumers online, the potential for engaging with digital radio services ought to have plenty of appeal.

But radio groups are being hampered as much as helped by their most important partner – the music industry.

In the online world, the biggest challenge for radio groups might be not their traditional rivals but upstart “music discovery” companies such as Mercora and Last.fm. These let users search for music they like and stream it free to their PC – in effect, a personalised radio station.

The first wave of music sites, such as Napster, led the music industry to criminalise its online customers, chasing illegal file sharers through the courts. Unfortunately, it is reacting once again with a stick rather than a carrot, this time against websites that are far easier for the industry to work with and far more engaging for consumers to use than Napster ever was.

This month, music labels forced one of the new generation of music services, Jukebox, offered by internet service provider Tiscali, to shut down. You might see this as a sensible reaction by labels wanting to protect their revenues, but Tiscali claims that sales of legally downloaded music from its portal increased 30% in the few weeks it was up and running.

Shutting down such services is short-sighted, because record labels miss out on potential legal sales, particularly the chance to sell the vast catalogue of tracks that rarely make it onto radio stations’ playlists. In any case, listeners will just go elsewhere, perhaps to illegal sites.

Radio stations could easily develop their own versions of such services alongside DJ-led shows. But while the music industry maintains its current stance that seems unlikely. Another way radio stations can attract and retain users is podcasts – but for licensing reasons, stations still can’t include music tracks in their time-delayed shows.

As radio continues to move over to digital platforms, it could find that it is not the listeners or even the advertisers that create the most difficulty, but the record labels.

Dominic Dudley

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