RAIN 7/20: Congressman's proposed royalty reform would benefit broadcasters too

Michael Schmitt
July 20, 2012 - 12:15pm

Broadcaster streamingYesterday we reported on in-progress legislation from Utah Republican Congressman Jason Chaffetz that would aim to change the way Internet radio royalties are determined (RAIN coverage here).

Other trade publications also covered the story, but some presented the issue as "Pandora's fight," more or less: "Pandora’s in Washington, pushing for a 'level playing field' on its biggest expense – royalties" (here) and "Congress may help Pandora cut royalties" (here), for example.

But this is (or at least should be), broadcasters' fight, too. Broadcasters -- not just Pandora and other pureplay web radio services -- could have much to gain from what Chaffetz is trying to accomplish.

The statutory performance royalty rate for broadcasters' online streams, like pureplay webcasters, is currently determined by the Copyright Royalty Board using the "willing buyer/willing seller" standard. And that arguably led to rates for broadcasters so high for the 2006-2015 period that the NAB had to cut a separate deal with SoundExchange (just like Pandora and other webcasters did, RAIN coverage here).

The lower rates reached by that separate deal are still apparently unattractive, at least for Clear Channel, which recently cut a deal with Big Machine that exchanged a share of on-air revenue for a break on web royalties (RAIN coverage here and here). The company is reportedly hoping to make other such deals, a good illustration that the largest player in radio sees a future online, but recognizes that royalty rates need to change to better realize that future.

Chaffetz's bill, the Internet Radio Fairness Act, would reportedly move streaming radio royalty determinations to the more prevalent 801(b) standard, the same standard used for satellite radio and cable radio royalty rates. You can find more on the pending bill and the 801(b) standard in our earlier coverage here.

One could also argue that somewhat lower royalty rates will most likely benefit copyright owners too, since high rates are currently inhibiting investment in and the growth of the sector. Higher listening levels to Internet radio could mean greater royalties available to composers, artists, and labels.

All that said, it's important to remember that nothing in Chaffetz's bill -- which is still unfinished -- would actually change web radio royalty rates themselves. It would only change the way in which they are determined, opening the potential for fairer rates in the future.

Additionally, though Chaffetz says he's aiming for parity between music platforms, nothing in his bill reportedly deals with a performance royalty for traditional AM/FM broadcasts.

The Utah Congressman says he’ll determine the next steps for his bill by the end of the month. "We’ll probably get disrupted with the August break, but despite the present election, we’ll keep going forward," he told The Hill (here).

Paul Maloney
July 20, 2012 - 12:15pm

Today at our RAIN Summit Midwest event at The Conclave, strategic marketing firm DMR Interactive shares the results of its comprehensive analysis of radio clients' digital campaigns over the past 5 years. DMR synthesized results from digital marketing in markets like New York, Los Angeles, Atlanta, Dallas, and Miami -- totalling over $2.3 million worth of advertising and 1.2 billion impressions and half a million clicks.

First, DMR found that 80% of those that respond to digital ads are heavy radio users (listening at least one hour a day).

Another important finding -- and something that radio may find counter-intuitive -- concerns the use of station logos and slogans. One "well branded, major market CHR station" was using its station logo in display ads, as was getting poor results. After the station removed its logo for "images of listeners and core artists" in the ad, response more than doubled. Similarly, clients found "keyword search ads" performed better than display ads -- with the caveat that "station slogan or names of secondary on-air talent" did not make for effective search keywords.

Andrew Curran, DMR Interactive COO/Radio, said, "You can’t just set up a digital campaign and let it run. You need to constantly be managing and adjusting your efforts. The fact that we integrate digital marketing into a larger listener engagement strategy and are constantly monitoring and adjusting to optimize performance, helps drive such strong results for stations."

The third-annual RAIN Summit Midwest took place today at The Conclave Learning Conference in Minneapolis. 

Paul Maloney
July 20, 2012 - 12:15pm

News broke yesterday that electronics giant Samsung will launch its own on-demand music service in the U.S. in the coming weeks.

The service, called Music Hub, boasts a library of 15 million tracks, and includes the (ever-more-popular among on-demand services) custom radio stations. Music Hub will also include a "storage locker" feature a la Google Music and MP3Tunes, and a download store.

The Los Angeles Times reports the service will only be available on Samsung's Galaxy S III smartphones, at least for now. Samsung won't reveal what they'll charge in the U.S., but the service already operates in the UK, France, Germany, and Spain, where it's 9.99 GBP/9.99 EUR.

Read more in The L.A. Times here.

Michael Schmitt
July 20, 2012 - 12:15pm

Car radio history

From the earliest 1930s AM radio models to web-connected, Bluetooth-sporting, Pandora-playing touchscreens, in-car entertainment has come a long way. Wired takes a roadtrip through the often "bumpy" history of car radios and audio systems with a new photo gallery, found here.

The publication highlights the first AM/FM car radio (1953), the 8-track tape player (1965), cassette players, iPod integration solutions and of course Pandora and the coming "new era of in-car entertainment."