NAB

Free Market Royalty Act: Plenty of swirl around an unlikely law

Tuesday, October 1, 2013 - 12:35pm

Rep. Melvin Watt yesterday introduced the Free Market Royalty Act (FMRA) which would address the lack of parity in statutory royalty requirements levied on terrestrial broadcasters and Internet radio services. (Read Rep. Watt’s statement and rationale here.) 

By law, broadcast radio is exempt from paying a performance royalty to artists and labels. Broadcast stations do pay royalties to publishers and songwriters. Also by law, Internet radio is not exempt, and must pay for use of recordings in addition to paying songwriters and publishers.

The Free Market Royalty Act introduced by Rep. Watt aims to remove government from setting royalty rates, and to turn the matter over to free market negotiations. As such, the bill has a compulsory impetus, but no compulsory mechanism. It would repeal the existing blanket license that makes label-owned recordings available to broadcasters free of charge. To gain a license for playing music recordings over the air or in an Internet radio stream, programmers would negotiate with labels directly, or with SoundExchange, a performing rights organization that represents labels and performing artists.

Labels and broadcasters are already striking out on the non-statutory path, ditching government compulsory licenses for negotiated ones. This summer, Warner Music and Clear Channel Media & Entertainment agreed to establish broadcast royalties payable from Clear Channel radio stations to Warner labels, and to lower label performance payouts on Clear Channel digital streams. (Clear Channel operates iHeartMusic, a streaming platform that features broadcast webcasts.)

Is it a good idea to push government out of its long-standing role as copyright arbiter? RAIN spoke to David Oxenford, law partner of Wilkinson Barker Knauer LLP in Washington, who specializes in broadcast regulation, and who has represented radio groups and digital media companies. “No. The government has almost always been involved, either through the Copyright Royalty Board, or through rate courts that ASCAP and BMI go through on the publishing side. The only collective in the performance rights world that is not subject to government oversight is SESAC, and SESAC is being sued by radio and TV broadcasters to bring it under that kind of oversight.”

The National Association of Broadcasters, radio’s chief lobbying voice, unsurprisingly disputes the bill. NAB head of communications Dennis Wharton cited the Warner Muisic/Clear Channel deal in his refutation of the FMRA as an unnecessary correction: “NAB believes market-based negotiations like the recent Warner Music-Clear Channel accord demonstrate that this issue is already being addressed in the free market. This legislation would impose new costs on broadcasters that jeopardize the future of our free over-the-air service.”

From the other side of the opinion fence, burdensome costs are exactly what the bill might correct. Pandora and other Internet radio pureplays arguably serve the same music-discovery mission as terrestrial radio, and provide a corresponding benefit to performers and labels that broadcast does, yet are legally bound to add a cost line item that doesn’t exist on traditional radio balance sheets. Rep. Watt’s statement on that point: “Those deals expose the unfairness and inadequacy of the current system and they strongly point out the need for a legislative solution that will apply market wide.”

Previously introduced bills have sought to even the balance from the opposite direction -- by lowering or eliminating performance royalties on the Internet side. The Internet Radio Fairness Act was put into congressional play last year, suggesting an adjustment to the makeup of the Copyright Royalty Board, and the standards by which it sets compulsory royalties to labels and recording artists. According to David Oxenford, “They deal with things totally differently. Essentially, the structure that Watt is proposing makes the Internet Radio Fairness Act meaningless.”

The MusicFIRST Coalition, which advocates for musicians, clearly had its PR gun locked and loaded, ready for the Watts bill. Executive Director Ted Kalo delivered an instant response supporting the FMRA with plenty of historical context and criticism of the NAB. (Read it here.) “After saying no to each and every approach to date, the broadcasters have run out of excuses. [...] This bill sends all parties back to the bargaining table [...] and critically, for artists, it preserves protections in current law.” 

Casey Rae, Interim Executive Director of the Future of Music Coalition, puts a global spin on his organization’s support of the FMRA: “First, there is no defensible excuse to not pay recording artists for the use of their music, especially considering that the rest of the developed world recognizes the contributions of performers. Second, the lack of a reciprocal right internationally means that millions of dollars are left on the table that would otherwise go to American creators. You’d be hard pressed to think of another export that the United States would freely give away in the global marketplace with no expectation of remuneration.”

Will the FMRA become law? Oxenford doubts it. “I think Congress has a few other things to deal with. Besides that, the NAB has got over 100 Congressional representatives signed on the anti over-the-air bill, I think it’s unlikely to pass. Most copyright legislation -- unless you get all parties to agree on it, Congress is reluctant to act on it.”

As news of new AM/FM royalty bill hits, CC announces latest revenue share deal with indie label

Thursday, July 25, 2013 - 12:40pm

Several sources are reporting that North Carolina Representative Mel Watt (D) (pictured) said today he will soon introduce new legislation to require U.S. broadcasters to pay royalties for their broadcast use of copyright sound recordings.

Watt told colleagues at a House Judiciary Committee hearing this morning he plans to introduce a bill before the House recess next month.

The National Association of Broadcasters immediately responded. EVP Communications Dennis Wharton called the legislation "a new performance tax that would kill jobs at America's hometown radio stations while diverting millions of dollars to offshore record labels." The NAB supports a non-binding resolution in both chambers of Congress, called the Local Radio Freedom Act, opposing charging radio for the recordings they play.

Unlike other forms of radio (Internet, satellite, cable) -- and unlike broadcasters in most other parts of the world -- U.S. terrestrial radio is not obligated to pay the copyright owners for the use of sound recordings they broadcast (only for compositions). Broadcasters do pay these royalties for online streaming.

The music industry in recent years has stepped up efforts to, in its terms, "correct" this "historical anomoly" and strongly supports Congressional action to require royalties for AM/FM radio. Meanwhile, operators of new forms of radio, saddled with sound recording performance royalties amounting to large percentages of revenues, say broadcasters' exemption makes fair competition impossible.

The NAB says is supports "private, company-by-company negotiations that are driven by the free market," for the use of recorded music. Today Clear Channel announced it has reached an agreement with indie music label Innovative Leisure "that will enable Innovative Leisure's artists to share in broadcast and digital revenue." It's the latest of a series of deals struck by Clear Channel (and a handful of other broadcasters) with independent label groups. Though the terms are never made public, it's understood that, in exchange for a discount (or waiver) on streaming royalties, the radio groups will pay a small royalty for on-air play of the label's music (which they call a "share of advertising revenue").

RAIN Summit autumn event Sept. 17 before Radio Show

Wednesday, June 5, 2013 - 12:35pm

David Field, president and CEO of Entercom Communications, will be the keynote speaker at this year's RAIN Summit Orlando on Tuesday, September 17th. RAIN Summit's annual half-day fall conference will take place the day immediately preceding The RAB/NAB Radio Show.

As leader of one of the nation's largest radio broadcasting companies, Field has worked in various positions in Entercom for 26 years and currently serves on the boards of the Radio Advertising Bureau, the National Association of Broadcasters, and The Wilderness Society. Fields was recognized as the 2006 Radio Executive of the Year by Radio Ink Magazine and one of the best CEOs in America by Institutional Investor Magazine in 2006, 2007, and 2008.

"We are thrilled to feature David Field as our keynote speaker at this year’s RAIN Summit at The Radio Show," said RAIN Summits president Jennifer Lane. "Entercom is one of the most innovative broadcast companies, distributing content across a wide variety of new media platforms to best serve their listeners."

Hosted by RAIN: Radio And Internet Newsletter publisher Kurt Hanson, the Summit will feature a variety of other speakers and panelists, offering insights on advertising sales, programming, audience metrics, social media, and emerging technology in online radio. Hanson will also make his "State of the Industry" address on the present and future of radio and new media.

An official partner event of The Radio Show, RAIN Summits are the premiere educational and networking events for Internet radio, focusing on the intersection of radio and the Internet. RAIN Summits are geared to broadcasters pureplay webcasters alike.

Previous RAIN Summit keynote speakers include CBS Radio CEO Dan Mason, Pandora founder Tim Westergren, RAB president/CEO Erica Farber, Clear Channel EVP/Digital Sales Tim Castelli, NPR SVP/Digital Media Kinsey Wilson, ESPN SVP Traug Keller, and Pandora CEO Joe Kennedy.

RAIN Summit Orlando is Tuesday, September 17 at the Rosen Shingle Creek Resort in Orlando. We'll soon announce more speakers and panel topics. You can always find the lastest information, along with registration links, on the RAIN Summit Orlando web page here. For sponsorship information, contact RAIN Summits president Jennifer Lane.

NAB task force to prepare for new streaming music royalty negotiations

Wednesday, May 1, 2013 - 12:50pm

The National Association of Broadcasters has reportedly formed a dedicated task force in anticipation of upcoming negotiations on streaming music royalties.

The NAB reached a streaming royalty deal with SoundExchange (the music industry body that adminsters royalties for the online use of copyright recordings) in February of 2009 (ending in 2015), the top-level terms of which are here under "COMMERCIAL BROADCASTERS".

Inside Radio reports Beasley Broadcast Group CFO Caroline Beasley will head the task force. As chair of the NAB Radio Board, Beasley "was actively involved in 2010's performance royalty negotiations," Inside Radio wrote.

Her company is one of the ownership groups which, like Clear Channel and Entercom, have entered into royalty deals outside of the NAB/SoundExchange deal, with some smaller labels. Though the terms of the deals are never made public, it's commonly understood that in exchange for significant royalty discounts on the music they stream, radio groups pay a small royalty on the broadcast use of the labels' recordings (which the radio groups characterize as an "advertising revenue share").

Part of the NAB's deal with SoundExchange, by the way, waives limits on music use imposed by the Digital Millennium Copyright Act, known as the “sound performance complement,” which presumably makes online channels like iHeartRadio's two-artist "Beatles & Stones" stream (see our coverage here) legit.

Here's what else is happening in Internet radio

Thursday, April 11, 2013 - 6:00am

We've been doing a lot of RAIN Summit West review lately (here and here, with more to come!), so we wanted to take a minute and pass along some other news that's out there. Some is from the NAB Show, some unrelated, but we hope you find it useful and interesting.

NAB's Smith urges embrace of "hybrid radio": NAB CEO Gordon Smith (right), in his "State of the Industry" address at the NAB Show Monday, urged broadcasters to find ways of providing content across platforms.

He described "radios in smartphones" as a "hybrid-radio" system combining on-air content with interactive enhancements. He also acknowledged broadcast radio's upcoming battle to maintain its dominance in the car dashboard. Billboard's coverage gave no indication of any mention of Internet radio or streaming. Read more in Billboard.biz here.

Aha Radio inks CBS News deal, launches Publisher Portal: Aha Radio by Harman announced Monday its partnership with CBS Radio News, bringing audio of the broadcaster's top news programs to Aha Radio listeners. Aha also launched its "Publisher Portal" by which anyone (following an approval process) can make content available on the Aha Radio system. There's more in Examiner.com here.

TargetSpot to deliver in-stream ads for Microsoft's Xbox Music Service: Online audio ad network TargetSpot announced it will deliver in-stream audio ads for the free version of the Xbox Music service (pictured) on the gaming console and Windows devices.

Former Triton exec Freund lands at Clip Interactive: Former EVP/Triton Media Group Bill Freund joins technology company Clip Interactive as VP/Chief Revenue Officer in preparation for a 2014 national rollout of the service which will allow mobile listeners to interact with broadcast radio content.

Global shipments of PCs fell 14% in first quarter: ZDNet calls that the worst drop in a generation, the steepest decline since 1994. The IDC (International Data Corporation) points to a number of factors -- like mobile, but also "a weak reception for Windows 8." Read more in ZDNet here.

Jelli says data shows increased social engagement helps ratings: Jelli has released data it says reveals a direct correlation between increased "social engagement" by broadcasters with listeners and increased listening (as reflected by ratings). The company measured weekly active registered users who were using its online or mobile app to vote to choose the music played during live broadcasts. It found as weekly social engagement rose 127%, weekly cume went up 30%.

Jelli says its data also shows these socially-engaged listeners engage with advertising more.

Net radio streaming service SurferNETWORK awarded patent: SurferNETWORK, a streaming vendor, was awarded its fifth "Buffering Patent" for technology that enables content streams "to start immediately," instead of waiting for playback while a cache of data loads.

Cox latest broadcaster to support Internet Radio Fairness Act

Tuesday, November 13, 2012 - 12:45pm

The Cox Media Group has officially announced its support of the Internet Radio Fairness Act (details of the bill are here) that would move Internet radio royalty determinations away from the controversial "willing buyer willing seller" standard to the more widely-accepted 801(b) standard.

"We believe the current royalty system for Internet radio actually hinders its future and growth," CMG Director of Communications Andy McDill said. "Cox Media Group strongly believes in a vibrant Internet radio marketplace, where artists, broadcasters and our listeners benefit from a sustainable rate setting process."

Other broadcast groups supporting the bill include Clear Channel and Salem Communications. Other supporters include webcasters like Pandora, Radio Paradise, and AccuRadio; plus groups like the Consumer Electronics Association and the Computer and Commmunications Industry Association.

While the NAB hasn't explicitly signed on as a supporter of the IRFA, when the bill was introduced the group said it "strongly supports legislative efforts to establish fair webcast streaming rates. NAB will work with the bill's sponsors and all interested parties to create broadcast radio streaming rates that promote new distribution platforms and new revenue streams that foster the future growth of music" (here).

Read more in Radio Online here.

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