RAIN 8/21: New draft bill aims to effectively tack over-the-air royalty to broadcasters' streaming bill

Michael Schmitt
August 21, 2012 - 1:00pm

Rep. Jarrold NadlerA new draft bill from U.S. Representative Jerrold Nadler (D-NY; pictured) aims to raise AM/FM streaming royalty rates, in effect implementing an over-the-air performance royalty. It would also potentially raise royalty rates for satellite and cable radio to the same levels as those for Internet radio.

Nadler's bill, dubbed the Interim FIRST Act and currently in "discussion draft" form, would "put cable and satellite radio services on the same royalty-setting standard as Internet radio," reports The Hill. That would mean switching cable and sallelite from the 801(b) standard, to the "willing buyer/willing seller" model currently used to determine web radio royalty rates.

Additionally, the Interim FIRST Act would "make traditional radio stations pay a higher fee for live-streaming their broadcast online." Nadler intends for this extra free to "make up for broadcasters not paying a fee when they play artists' songs over the air," writes The Hill.

Quote from Rep. NadlerThat extra fee would wind up being what the Copyright Royalty Board decides "most clearly represents the royalty that would have been negotiated in the marketplace between a willing buyer and a willing seller for the public performance of sound recordings by means of over-the-air non-subscription broadcast transmissions by affiliated terrestrial broadcast radio stations," reads Nadler's draft bill (Section 3).

Technically, it's not royalty on over-the-air radio. But it amounts to paying a royalty for over-the-air (plus the streaming royalty) if a station also chooses to stream.

An over-the-air performance royalty appears to be the overall goal here. Comments from the musicFIRST Coalition seem to explain the Interim FIRST Act's name: "The only real solution is for Congress to create a legal performance right, but raising terrestrial radio’s digital royalties is an important interim step towards that goal." Said Nadler in a statement: "The lack of a performance royalty for terrestrial radio airplay is a significant inequity and grossly unfair. We can’t start a race to the bottom when it comes to royalty rates and compensation for artists."

As for changing the standard for satellite and radio platforms from 801(b) to "willing buyer/willing seller," how much of a difference will that really make? While we'd have to wait for a determination from the Copyright Royalty Board to definitively answer that question, consider this: 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").

In July, we reported on (here) separate in-progress legislation from Rep. Jason Chaffetz (R-UT). That bill also aimed to bring more equality to radio royalty rates, but did so by potentially lowering web radio rates by determing streaming rates using the 801(b) standard.

Nadler says Chaffetz's bill -- which has Pandora's support -- could potentially "hurt performing artists." Not surprisingly, the musicFIRST Coalition has voiced support for the draft bill while the NAB opposes it.

You can find the discussion draft version of Nadler's bill here (PDF). The Hill has more coverage here.

Paul Maloney
August 21, 2012 - 1:00pm

Don't get stuck standing in the back (or worse, out in the hallway!). We want you in comfortably seated in a chair at the Dallas Hilton Anatole September 18th for RAIN Summit Dallas. To ensure this, of course, secure your spot now (in all seriousness, our September events in Chicago, Philadelphia, and Washington, D.C. all became SRO affairs).

Please visit the RAIN Summit Dallas page for registration info, links and more.

Each September we partner with the RAB NAB Radio Show and produce a half-day educational and networking event (modeled after our annual April RAIN Summit West). One of the most eagerly-anticipated topics we'll cover is the "social" applications for Internet radio: song sharing, music recommendations, listening rooms, and more. The "Social Radio" panel will be moderated by Triton Digital VP/Business Strategy, Applications & Services Division Jim Kerr. Manolo Espinosa (right), who is SoundCloud's Head of Audio (SoundCloud is a social audio platform where users create audio and share it) and Jelli founder and CEO Mike Dougherty (Jelli is a service for broadcasters which allows listeners to instantly affect what they're hearing using Internet social tools) will contribute, as will Clear Channel Media + Entertainment's iHeartRadio Network SVP Owen Grover and Myxer founder Myk Willis.

To engage the important topic of Monetizing Mobile listening, we're happy to welcome Spotify's Midwest Regional VP Brian Berner (left). Leading the conversation about this ever-growing audience segment (and how to profit from it) is Inside Radio Senior Editor Paul Heine. We also welcome Pandora's Kim Luegers, CBS Local's Neil Salvage, Kevin Straley from TuneIn, and Cox Media Group's Jeffrey Ulrich. 

The afternoon culminates with the keynote address (more here) from Clear Channel Media and Entertainment President of National Sales, Marketing & Partnerships Tim Castelli (right), RAIN publisher Kurt Hanson's "State of the Industry" address, and the presentation of the third-annual RAIN Internet Radio Awards.

You can see the full RAIN Summit Dallas agenda, with a complete rundown of panel topics and speakers, here.

The Radio Show is currently offering a special two-for-one discount if you plan to attend both the Radio Show and RAIN Summit Dallas. Just register for the Radio Show (here), and make sure you select the "Radio Show/RAIN Summit Two-for-One Discount" option. See you in Dallas!

(We'd also like to remind you about our inaugural RAIN Summit Europe, coming up October 5th in Berlin. You can find more details on that, and links to register, here.)

Michael Schmitt
August 21, 2012 - 1:00pm

Sony stereoA new line-up of car stereo units from Sony include App Remote -- a feature that lets users stream music (like web radio stations) from mobile devices via Bluetooth. Sony specifically mentions that the new stereos can control playback of Pandora.

A connected iPhone, Android, or Blackberry device is required. The stereos also include USB jacks for wired connections to mobile devices. If you forget your smartphone, Sony's stereos also include a CD player, AM/FM radio and (if you shell out for an add-on antenna) SiriusXM. Engadget has more coverage here.