Cathy Hughes Speaks Out: The Mayhem Behind the Music

story by: N'Digo Magazine
written by: Zondra Hughes
photos courtesy of Radio One

There's a red-hot battle brewing behind the scenes of AM/FM radio, as the record labels demand that radio stations belly-up for those beats.

Alas, the economic fallout from a digital revolution that placed purchasing power into music consumers' hands, and, conversely, fueled a piracy bonanza, has come full circle.

The Recording Industry Association of America (RIAA) reports that theft resulting from illegal downloads and counterfeit CDs, "has hurt the music community, with thousands of layoffs, songwriters out of work and new artists having a harder time getting signed and breaking into the business."

And the Institute for Policy Innovation concludes that global music piracy causes $12.5 billion of economic losses every year, and a loss of 71,060 U.S. jobs.

As it stands now, Internet and satellite radio make payments to SoundExchange, a government agency set up to collect performance taxes, and funnel that money to record labels and artists, if the music rights can be identified. With the introduction of H.R. 848, The Performance Rights Act, the pressure is on for AM/FM radio to pay to play songs as well.

"The way sound exchange is set up, they are allowed to keep any money if they can't identify the artist it belongs to after three years. All they have to do is look for three years and then they get to keep it," Hughes explains. "If you owe me a million dollars and you haven't been able to reach me, how hard are you going to look for me? The difference between satellite radio and Internet radio and what I operate, which is called terrestrial radio, is that we are free. People have to pay for satellite radio and Internet radio. We don't charge for our service, that's why we're adamantly opposed."
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Photo left: Cathy Hughes, founder and chairperson of Radio One, has a dog in the fight, and says SoundExchange is flawed and does not fit the AM/FM business model.
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This notion of AM/FM radio stations paying for music is a complete reversal of how the industry has always worked. The old business model was this: The artist is commissioned to create music for the record label. The record label delivers the music to the radio stations, requesting airplay. The radio station plays the music, earning its revenue from a stream of advertisers that market to its niche listening audience; ratings determine how large that listening audience is, and how much money the stations can charge for advertising.

Hiccups have always been present in the close-knit union between radio and the record labels, but usually to the benefit of the radio stations. For example, record labels regularly sought to influence airplay-anything and everything was bartered to coax radio stations to play a song. Record labels understood that every spin was promotion for the tune; the more spins, the higher the tune climbs on the industry charts; and the more likely the listeners would buy the song. Payola, that is, pay-for-play, is what this underground system of music promotion was called.

Just five years ago, former New York state Attorney General Eliot Spitzer nabbed Sony BMG Music Entertainment for what he deemed payola. The label paid $10 million in fines, and vowed to curb its pay-for-play tactics.

Yet five months ago, House Judiciary Committee Chairman John Conyers Jr. (D-Mich.), and the musicFirst Coalition staged a press conference on Capitol Hill to deliver a very different message to AM/FM radio: You've got to pay for play.

With Dionne Warwick at his side, Rep. Conyers stressed the fairness of H.R. 848, The Performance Rights Act, a bill that requires radio stations to pay set royalties each time a song airs on their station. Rep. Conyers and Warwick introduced race, civil rights, and even slavery into the debate:

"In 1865, slavery was abolished by the 13th Amendment. No more free labor," Conyers said. "It abolished at the same time involuntary servitude. What does that have to do with what we're here for today? Well, when you tell somebody that you're benefiting from their work product but there's no avenue for compensation, it kind of harkens back to that great problem."

On her Huffington-Post blog, Dionne Warwick, who describes herself as a 'Grammy Award winning artist and activist,' portrays Cathy Hughes as the greedy corporate tycoon that balks at paying black artists for the music she plays on Radio One's 54 stations. In her post, Warwick renames H.R. 848 The Performance Rights Act, The Civil Rights for Musicians Act:

"The struggling musicians who need the Civil Rights for Musicians Act don't want a handout from Cathy Hughes or Clear Channel or the National Association of Broadcasters, which is the mouthpiece of big -- largely white -- corporate radio. They just want to be paid for their work. This legislation would make sure that these artists are directly compensated, not the recording executives who may have stolen from them much as Ms. Hughes and Radio One steals from them now."

Cathy Hughes says Dionne Warwick is a paid lobbyist on the issue.

"You wouldn't even know Dionne Warwick existed if we did not play her," Hughes scoffs. "Dionne hasn't had a record in thirty years. You wouldn't even know she was alive. She's raising so much hell, talking about me like a dog--I've paid her rent. I helped her out, she's been in trouble several times." Hughes questions the legitimacy of Warwick's role as an 'artist/activist' on the issue.

"But let me say this, I ain't mad at her, and the reason why is because the record industry, SoundExchange and musicFIRST--according to a source at the White House--they have already spent about $28 million to get this legislation passed. Dionne and them are on the payroll. They are getting like, $200,000-300,000 paychecks, flying on corporate jets, being put up in suites at the hotel. They are getting paid, they are professional lobbyists on this issue.

Hughes adds, "They're saying, 'Oh, I'm an artist,' and that is true, but you're also getting a paycheck from the record companies to come out here and say this shit. I'm not mad because this girl doesn't have any other way to make this type of money, other than doing this. So I understand what's causing this and she ain't the problem."

The problem with H.R. 848 The Performance Rights Act, is that it's flawed legislation, Hughes argues, returning to the traditional business model that has sustained the radio industry for decades.

"The reality is that artists should be paid, the record companies have ripped them off for years. But it's not a radio station's responsibility. I wouldn't know Beyonce even existed on the planet until a record company walks through my door and brings me a CD and says, 'look I have a new artist, and her name is Beyonce.'

When you walk through that door with a CD, Beyonce is signed, sealed, and delivered to a record company; it is their responsibility to pay her, not mine. It's kind of like asking me to pay child support for a child that's not mine. This is flawed legislation."

Hughes also revisits the contracts that have left many black artists living from prince to pauper, adding that if the bill passed, its unlikely that artists would receive the royalties anyway.

"In order for these artists to make a deal, even in this day and time, they have to sign away all their rights, all their publishing, all their performance rights, so that money would not be going to the artists," Hughes says. "It would be going to the record companies who have ironclad contracts with these artists."

Hughes: The Future of Black Radio is at Stake

There are more than 11,400 commercial radio stations in America; of those, 240 are black-owned; of the 240 black-owned stations, 54 of them are Radio One properties.

The passing of H.R. 848, The Performance Rights Act into law could very well signal the end of black-owned radio in several markets. David Honig, executive director of the Minority Media and Telecommunications Council, has warned that the bill would put "at least a third" of minority stations out of business.

Says Cathy Hughes, "2009 was the worst year in the history of black radio. The entire radio industry simply lost an average of 27 percent of their revenue. In black-owned radio, that number went as high as 47 percent, that's half of your revenue."

Radio One recently announced a multi-layered refinancing deal to cover its debt and increase its equity stake in TV One, the television channel it owns with three private firms and Comcast. Radio One has also shed 400 employees, a move to "keep the company alive," Hughes says.

Passage of the bill could cost Radio One $14 million per year. "Now if I have to pay the performance tax, that's $14 million that I have to pay to subsidize the formats. If I had $14 million extra next year, I would hire 400 people back. I wouldn't give it to foreign record companies."

She quickly adds that the bill would not mark the end of Radio One. "We still have 1,800 employees. The reason I became ad hoc spokesperson against this initiative is because we can afford to do it. This tax would not put us out of business, let me say that upfront. Thank God my son was a member of the new breed of black entrepreneurs so he diversified us. We have TV One, we have Syndication One, we have Blackplanet.com, and we have Reach Media. We have diversification, so this bill will not put us out of business."

Bigger than the bottom line is the belief that black radio-black-owned media in general-is under siege; the power and influence of black-owned media outlets to mobilize the community is threatening to some, Hughes explains. And this attack is rooted in racism that can be traced to the election of America's first Black president:

"Are we in a post-race society? Oh, heavens no," Hughes says. "The backlash going on in America is quietly building steam and gaining momentum. There is a conscious effort to cripple black media, no question, in print and the electronic media, and the backlash is because of the first black president."

"Black women turned that tide for Barack Obama in our community, but it started in radio, and black publications like N'Digo, Ebony and Jet, because they were Chicago-based. That level of support for a black candidate did not start with Barack Obama; it started with Carol Mosely Braun. And you have WVON; Chicago has always had great Black communication, be it publication or electronic, moving in the right direction at the same time, and on one accord, so you start seeing this blossoming throughout the entire country and that's what is happening now. And some folks don't want to see it happen again."

According to RBR.com, the Radio Business Report, despite the momentum in favor of H.R. 848, The Performance Rights Act, "more than half of the House of Representatives has signed on to a resolution that opposes 'any new performance fee, tax, royalty, or other charge' on AM and FM broadcasters." No congressman wants to get on the wrong side of radio broadcasters ahead of the fall election season.

For her part, Hughes says Black radio station owners are watching the developments closely and are not going down without a fight. "Radio is still the primary source of information and inspiration for the African-American community because urban media is still the only way for Black folks to analyze, receive and digest news and information through an African American perspective," she says.

"And I am not going to let them shut down the voice of Black America."

Stay tuned.