RAIN 8/23: Opponents argue Nadler royalty bill discriminates against new tech, would "cause irreversible harm" to radio

Michael Schmitt
August 23, 2012 - 12:05pm

Nadler's oppositionNew draft legislation from U.S. Representative Jerrold Nadler (D-NY) has sparked backlash from webcasters and broadcasters alike. The bill's opponents say it discrimnates against new technology and would kill jobs.

Nadler's bill, the Interim FIRST Act, would raise streaming royalty costs for AM/FM broadcasters by imposing an extra fee (essentially adding an over-the-air performance royalty to broadcasters' streaming bills; RAIN coverage here). It would also potentially raise royalty rates for satellite and cable radio by shifting those platforms' rate determinations to the "willing buyer/willing seller" model, instead of the 801(b) standard.

"Fairness demands that all music related rate settings utilize the same 801(b) standard," argued Pandora founder Tim Westergren in a statement.

Westergren called the current royalty system "astonishingly unfair," with Internet radio paying substantially higher rates than other radio platforms. Pandora paid nearly 70% of total revenue to royalties (based on its Q1 FY 2013), compared to SiriusXM which pays about 8%.

"Congressman Nadler’s discussion draft would only perpetuate this hypocrisy and worsen an already flawed legislative mistake that is discriminating against new technology and hampering innovation."

Cathy Rought of the Free Radio Alliance (FRA) said Nadler's bill "is misguided and would cause irreversible harm to free and local radio" (more here). The FRA continues on its blog (here): "It's clear that the ultimate objective is a back door attempt at a performance tax."

NAB spokesperson Dennis Wharton agreed, saying the draft legislation "fails to recognize" radio's "unparalleled promotional value" and "would kill jobs" at radio stations.

The National Religious Broadcasters (NRB) also "strongly opposes" Nadler's legislation, writing in a statement that it "would place a new and unwarranted burden on many Christian radio broadcasters" (more here).

Westergren quoteTechDirt's Mike Masnick writes (here), "As it stands now, [royalty] rates are so damaging that Pandora -- the top player in the space -- has made it clear it may never be profitable. Yes, never. Nadler's bill would effectively make sure that no one else in that market would be profitable either. The end result? Many of these services don't exist or never get started. That would actually mean fewer services, fewer listeners and lower royalties."

Nadler's bill has the support of the musicFIRST Coalition, which argues it would implement a system "that treats artists and platforms fairly and equally." Nadler thinks his bill would "both level the playing field for Internet radio and ensure that artists are fairly compensated."

Pandora disagrees, instead supporting legislation from Rep. Jason Chaffetz (R-UT). Chaffetz's bill, the Internet Radio Fairness Act of 2012, would move web radio royalty rate determinations to the 801(b) standard -- the same standard currently used to set rates for radio delivered via satellite, cable and other platforms (RAIN coverage here).

"Congress should embrace the Chaffetz approach," said Westergren. The Hill has more coverage here.

Paul Maloney
August 23, 2012 - 12:05pm

At least two members of Congress have recently announced plans to introduce bills concerning the royalties webcasters pay to perform copyright sound recordings. News of the proposed legislation from Congressmen Chaffetz (here) and Nadler (here) bookended a Brookings Institution call for reform of webcast royalty determination (here).

For clarity on the complex topics of royalties and music licensing we'll turn to three of the industry's top legal experts for our "Music Licensing Roundtable" panel at RAIN Summit Dallas. RAIN readers are well familiar with attorney David Oxenford. He's a Washington, D.C.-based partner at Wilkinson, Barker, Knauer LLP, and he's represented the webcasting industry before Congress and in royalty negotiations. He'll lead the discussion with SESAC VP/Industry Relations & Business Communications Greg Riggle (left) and SoundExchange General Counsel Colin Rushing (right). 

RAIN Summit Dallas takes place September 18th -- the day before the start of the RAB NAB Radio Show, and at the same location: the Dallas Hilton Anatole. Please visit the RAIN Summit Dallas page for registration info, agenda, speaker roster, and more.

Immediately following the "Music Licensing Roundtable," knowDigital president Sam Milkman will present updated results of his company's ongoing study of "Successful Streaming Audio Brands." Then shortly after that will be the keynote address (more here) from Clear Channel Media and Entertainment President of National Sales, Marketing & Partnerships Tim Castelli (left). The afternoon also includes 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 23, 2012 - 12:05pm

Pandora on AndroidApps from Pandora and CBS Radio News have received major upgrades.

Pandora has updated its Android app with many of the features already offered in its iPhone app (RAIN coverage here). That includes a completely refreshed design, song history, song lyrics, artist bios and much more. TechCrunch has more coverage here.

Meanwhile, CBS Radio News has issued a "major upgrade" for its iPhone app. The update includes "a new uninterrupted stream offering coverage of special events, speeches, and other news conferences, plus social media links and headlines from Twitter," reports AllAccess (here).


Paul Maloney
August 23, 2012 - 12:05pm

The annual "Beloit College Mindset List" is out, and press coverage of it seems to portray radio as a long-forgotten relic of which today's 18 year-olds have no concept.

The Mindset List is created by two Beloit College professors each year, and it's intended to compile "the cultural touchstones that shape the lives of students entering college this fall." This year's list includes the item "15. Having grown up with MP3s and iPods, they never listen to music on the car radio and really have no use for radio at all."

Now the list is quite usually pretty over-dramatic, as we think it is here. Taken literally, this list of items would portray today's college freshman of not only not consciously remembering a time when Robert DeNiro played Vito Corleone (from "The Godfather II"), but as having no concept of it. And, obviously, when it comes to radio, that's simply not true. While we continue to believe that radio listening patterns are changing (and dramatically so), the idea that young adults "really have no use for radio at all" seems pretty far-fetched. A quick look at Arbitron will show that while the amount of time young people spend with broadcast radio is declining, radio is still present in their lives.

But the coverage the Mindset List is getting seems to focus on this point that portrays radio as a relic. It reminds us of a recent blog by Jacobs Media president Fred Jacobs here. We agree with Fred, and continue to maintain that radio is best-positioned to transition the medium into the future. Today's broadcasters have the content, the talent, the expertise, and now the technology to maintain their dominance as radio expands its platform, and remain relevant for generations of incoming college freshmen.

Plus, if college kids don't know radio, there'd be no college radio station! Where will the musicheads work? The college ISP?

Read the Mindset List here.