RAIN 7/19: Congressman crafting bill aimed at royalty parity among Internet, satellite, and cable radio

Paul Maloney
July 19, 2012 - 12:40pm

Utah Republican Congressman Jason Chaffetz has reportedly begun crafting a bill aimed at bringing Internet radio royalty rates more in line with those of other radio platforms. The bill's key feature is a change from the controversial "willing buyer/willing seller" standard in webcast royalty determinations to the more prevalent "801(b)" standard.

Chaffetz says his Internet Radio Fairness Act of 2012 is still in draft form and isn't yet ready to be introduced. But he plans to determine his next steps by the end of this month.

When Copyright Royalty Board (CRB) judges determine the royalty rate at which webcasters pay copyright owners and performers for the use of sound recordings, they do so based on the standard -- mandated by the DMCA -- of what a "willing buyer" and a "willing seller" would agree to in a hypothetical marketplace. The judges do not (and in fact, are instructed to not) consider the "real world" ramifications of their determination, only the perceived economic value of the right. The Internet radio royalty process is unique in this way, as royalties for satellite and cable radio are based on the Copyright Act's more well-known 801(b) standard. Royalty determinations for what labels pay music publishers and songwriters are also based on 801(b).

"In setting royalties, (801(b)) assesses not only the economic value of the sound recording, but also the public interest in the wide dissemination of the copyrighted material and the impact of the royalty on the service using the music," explains attorney David Oxenford (here). Among other objectives, judges using 801(b) are instructed to set rates that "minimize any disruptive impact on the... industries involved." (Read 801(b)(1) of the Copyright Act here.)

How much of a difference does this standard make? Consider that satellite radio operator SiriusXM pays around 8% of its revenues for the right to use copyright sound recordings in its broadcasts, based on a determination using the 801(b) standard. Pandora, on the other hand, says nearly 70% of its total revenue (based on its Q1 FY 2013) will go to royalty payments (and that's based on on a deal Pandora struck that actually decreased its obligation from the CRB decision -- a decision based on "willing buyer/willing seller").

"It seems screwy that royalty rates change so dramatically based on the platform," Chaffetz explained. "When you’re listening to music in your house or in your car, you may be listening to it on your iPhone, you may be listening on the satellite radio or the FM radio. Does that mean the royalties should be so vastly different? It doesn’t seem to make sense to me. We need to play catch-up here."

A summary of the bill (according to news source The Hill) says the legislation also aims to "improve the proceedings process for rate-making cases and ensure judges on the Copyright Royalty Board have the same legal background and expertise as federal court judges who consider copyright cases."

Chaffetz says he expects push-back from the recording industry, and remains open to labels' input. "We’ll flesh all that out. I have no doubt we’ll have a good, lively discussion on that. There’s plenty of money to be made by all the various interests, it’s just I think moving toward parity is an important principle," he said.

The "801(b) vs. 'willing buyer/willing seller'" issue has come up multiple times in the history of Internet radio. The Performance Rights Act, which would have imposed a sound recording performance royalty on broadcast radio, would have moved webcast rate determinations to 801(b) (see our coverage here). Attorney David Oxenford wrote about the inherent unfairness of using different standards by platform in early 2008 (see RAIN coverage here). That same year Senators Ron Wyden (D-OR) and Sam Brownback (R-KS) introduced their Internet Radio Equality Act, which would have, like the PRA and Chaffetz's new bill, given Internet radio the 801(b) standard. That effort stalled by July (see RAIN coverage here). We have tons more coverage and analysis about 801(b), here.

Read more from The Hill online here.

Michael Schmitt
July 19, 2012 - 12:40pm

HondaLinkHonda has become the latest carmaker to offer in-car web radio.

The company yesterday announced a new system called HondaLink, which incoporates Aha Radio (from audio-equipment supplier Harman) and includes built-in support for Pandora.

Like the systems offered by Ford, GM and other automakers, HondaLink reportedly relies on a smartphone to connect to the web. It's controlled via voice commands and in-dash buttons.

The system reportedly includes an in-dash app for Pandora, Slacker and Shoutcast streams. Besides web radio options, HondaLink includes podcasts, audio news feeds from Facebook and Twitter and other offerings. It will first be available in the 2013 Accord.

It's a good first step for Honda, but the company "has a long way to go," writes Wired. "There’s still a lot missing from HondaLink to make it competitive... for now this is just one small step for Honda, while the competition is already on its second lap."

You can find more coverage from Engadget here, The Verge here, Wired here and AutoWeek here.

Paul Maloney
July 19, 2012 - 12:40pm

Steve DahlThe Conclave Learning Conference -- happening now in Minneapolis -- will conclude with the third-annual  RAIN Summit Midwest. This year's Summit includes a keynote presentation from radio legend Steve Dahl.

RAIN Summit Midwest is tomorrow, beginning at 10am. Featured presentations and panels include:

  • RAIN publisher Kurt Hanson's State of the Industry address.
  • "Many Platforms, Many Opportunities," a panel on the best multi-platform strategies. It will include Rick Greenhurt (iBiquity Digital Corporation), Steve Goldstein (Saga Communications), Samy Simpson (Eventr Real-Time Marketing & Advertising) and Mark Kassof (Mark Kassof & Company).
  • "How Stations Can Better Engage Listeners on Facebook," a presentation from knowDigital's Sam Milkman including insights into whether radio stations are truly engaging their audience on Facebook.
  • "'Pure Play' -- Radio's Most 'Direct' Competitors?" will be a one-on-one with Slacker music programmer Mat Bates, and will examine the highly competitive, quickly-changing landscape of firms providing online listeners a similar experience to broadcast radio.
  • "Using Social Media As a Show Prep Tool," a presentation on the best practices air talent can use on Twitter, Facebook, Google Plus and other services to find content for their shows. Valerie Geller (Geller Media International) will present.
  • "Streaming Strategies for Radio," a panel on the pros and cons of attracting listeners and generating revenue for your station via streaming. It will feature Michael Dalfonzo (Abacast), Kevin Straley (TuneIn) and Tyler Brookfield (Liquid Compass).
  • "What to Expect from Digital Marketing," a presentation from Ed Schindler (dmr Interactive) about the best practices for executing marketing campaigns online.
  • And, as mentioned, a keynote presentation from legendary air talent Steve Dahl. Kurt Hanson will interview the self-employed podcaster on-stage about his efforts to move the "Steve Dahl Show" to the digital age.

RAIN Summit Midwest"RAIN Summits have become a fixture at Learning Conferences," said Conclave Executive Director Tom Kay. "While everything we present during the Learning Conference carries a 'can’t miss' connation, Kurt Hanson’s annual trip to tomorrow is all that, and more!"

The 37th Conclave Learning Conference is going on now at the Doubletree Park Place Hotel Minneapolis, MN. 

You can find out more about the Conclave Learning Conference at www.theconclave.com.

We hope to see you there!

Michael Schmitt
July 19, 2012 - 12:40pm

TuneInHubbard Radio has added its 21 radio stations' streams to TuneIn's Internet radio directory. Hubbard operates stations in Chicago, Washington, D.C., Minneapolis-St. Paul, St. Louis and Cincinnati.

"We’re thrilled that Hubbard, a top-10 U.S. broadcaster, chose TuneIn as the service to power its digital strategies and listener base expansion," said TuneIn CEO John Donham.

Hubbard Radio"With TuneIn, we’ve made a great leap onto the digital stage and look forward to inviting new listeners to our stations," said Hubbard Radio President/CEO Bruce Reese.

You can find the companies' press release here.

Earlier this month TuneIn added NPR programming (RAIN coverage here). In late June the service added more than 600 streams from 20 major broadcasting companies (including Fox News Radio and Bloomberg Radio; more here), added content from Carolla Digital (more here) and station streams from Entercom, Cox and Emmis (more here).