performance royalties

QUICK HITS: Royalty bill; listening while flying; Audio Industry Summit

Monday, September 30, 2013 - 12:10pm

Free Market Royalty Act: As promised (or threatened, depending on one’s perspective), on Monday morning Rep. Mel Watt introduced a bill that would have broadcast radio pay artist royalties, evening the playing field (again, depending on vantage) for Internet radio services. No doubt a developing story with reactions and commentary to come. (See Inside Radio note here.)

FAA prepares new gadget recommendations: Before long you’ll be able to listen to downloaded Rhapsody/Spotify/Rdio (to name a few) playlists while ascending to, and descending from, 10,000 feet. That annoying and arguably nonsensical devices-off period will be discontinued if the FAA, as reported, recommends that airlines eliminate it. Flying rules are determined by each airline, but are strongly influenced by FAA recommendations. Airplane Mode will still be required of devices during airplane use -- and the enforcement problem is not solved in the slightest. (See Digital Trends here.)

The Audio Industry Summit: This gathering is held in conjunction with Advertising Week in New York. Radio Ink covers highlights of last week’s sessions, which included discussions of the Arbitron/Nielsen merger, streaming radio, social media, and the future of radio. (See Radio Ink here.)

Chaffetz's Internet Radio Fairness Act aims to help streaming broadcasters, not just Pandora

Friday, 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).

SoundExchange: SiriusXM, Pandora royalties constitute "substantially" less than 90% of total revenues

Wednesday, April 18, 2012 - 12:45pm

SoundExchangeLast week we wrote about new calculations from Live365 general counsel Angus MacDonald, which found that 90% of SoundExchange's 2011 revenue came from just SiriusXM and Pandora (RAIN coverage here).

Now SoundExchange refutes the claim, though the collection agency says they "are not able to publicly disclose the payments to SoundExchange from specific digital music services." SoundExchange argues that royalty payments from SiriusXM and Pandora made up "substantially below" 90% of their revenues.

Billboard.biz has more coverage here.

MacDonald calculated that Pandora's royalty payments alone made up 36.66% of SoundExchange's revenues. The webcaster paid "about as much in royalties for its FY 2012... as it made in TOTAL REVENUES for its previous fiscal year, FY 2011," wrote MacDonald.

Pandora paid 49.7% of its FY 2012 revenues to SoundExchange, according to its 10-K submitted to the SEC.

SiriusXM is currently suing SoundExchange and A2IM, accusing the record industry organizations of interfering with its efforts to reach direct deals with rightsholders (RAIN coverage here and here).

Radio sees ulterior motives in music industry's support for TV spectrum auction

Friday, November 18, 2011 - 12:00pm

Four music industry lobby groups sent a letter to the Congressional debt-reduction "supercommittee" yesterday, encouraging lawmakers to let the FCC auction television broacast spectrum wireless operators. The American Federation of Musicians, the Recording Academy, SoundExchange and the Music Managers Forum say the auctions could raise billions of dollars in revenue for deficit reduction, as well free up spectrum for wireless broadband devices. Broadcasters that own television licenses want to choose whether they relinquish this spectrum, and want to be fully compensated for doing so.SoundExchange

But why are music industry interests speaking up regarding television spectrum? The Hill's "Hillicon Valley" blog put it simply: "Broadcasters and the music industry have a long-running feud over whether artists should receive royalties when radio stations play their songs."

The music industry groups say they are interested to "hasten the migration of music fans to cutting edge (wireless broadband) platforms that compensate artists," by paying royalties they say are a "basic economic and civil right for musicians."

The groups wrote, "It would seem to us that the NAB is not entitled to spectrum owned by the public, or costs associated with relinquishing it, and the federal government reclaiming this spectrum for purposes of deficit reduction is the kind of shared sacrifice that is required in these difficult times."

The NAB doesn't buy it. Spokesman Dennis Wharton fired back, "By coupling a TV spectrum issue with an unrelated performance tax on radio stations, the music industry sets the standard for grasping at straws. This is a Hail Mary pass that deserves to fall incomplete."NAB

Inside Radio believes the letter is part of a new music industry "tactic: find ways to make it difficult for broadcasters to do business such as by opposing license renewals.  The request to the Super Committee fits into that strategy, and similar moves are in the works, according to insiders who say bad feelings among many in the music community linger."

What's more, Inside Radio sees implications for online radio too. "As online streaming royalties grow bigger with each passing year, (NAB president Gordon) Smith believes webcast rates are likely to become intertwined with an on-air royalty issue," they write today. "Broadcasters’ current streaming royalty agreement with SoundExchange expires in 2015 yet Smith thinks there could be a way to resolve both the on-air and digital royalty issues sooner than that, potentially with something similar to a universal settlement. But with some broadcasters more digitally invested than others, radio’s internal royalty debate may once again break down between large and small market operators. Smith said he was optimistic that won’t happen, suggesting any new proposal would include an even more 'progressive system' where size dictates costs."

 
Read more from The Hill here. Subscribe to Inside Radio here.
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