local radio freedom act

Some lawmakers won't hear webcasters' pleas while AM/FM is exempt from royalties

Friday, March 22, 2013 - 1:05pm

What if the most significant obstacle to Internet radio's efforts for royalty relief is broadcasters' fight against on-air royalties?

When the Internet Radio Fairness Act was given a hearing by the relevant House Subcommittee in November (RAIN coverage here), the bill itself got very little attention. Instead, music industry witnesses and sympathetic lawmakers steered the converstation nearly entirely to AM/FM's exemption from paying sound recording royalties. The message: Until radio pays, webcasters' obligation will not change.

The IRFA has yet to be re-introduced since the new Congress began. What has been introduced in the new Congress is the Local Radio Freedom Act. It's a resolution "That Congress should not impose any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station." The resolution now has the support of 105 House members and four Senators. While it's not actual legislation, it's still a line drawn in the sand and shows how these lawmakers lean.

In the past, lots of webcasters felt broadcasters were pitted against them. Online only radio providers assumed broadcast groups wanted to maintain the competitive edge that the royalty inequality gave them. It's now obvious that most broadcasters seem to understand the potential, if not the current value, of webcasting, and understand their businesses will become more and more reliant on the Internet as time passes. Some (Clear Channel, Entercom) have even struck deals with record labels which will have them pay royalties for on-air use of those labels' music in exchange for online royalty discounts. Some broadcasters support the IRFA (some publicly, some more indirectly).

It's clear the strong broadcast industry is a vital ally to webcasting.

Webcasters need some reform (the IRFA or something else) that would afford webcasters to pay something less than 60% (like Pandora did last quarter) or more of their revenues in royalties to operate. But is it possible to achieve this, independent of efforts to impose a sound recording royalty on radio? Will broadcasters need to choose between fighting royalties for on-air, and attempts to control royalties online? 

At RAIN Summit West, April 7 in Las Vegas, we'll feature a panel called "The Song Plays On" to take up the ongoing Internet radio royalty discussion. It'll be moderated by the industry foremost authority on webcasting royalty and legal issues, David Oxenford. Panelists Brad Prendergast of SoundExchange, BMI's David Levin, artist Patrick Laird, TAG Strategic's Ted Cohen, and SomaFM's Rusty Hodge will all their views on this issue to the table. Register for RAIN Summit West here (and look in your RAIN daily e-mail for a discount code!).

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