Washington D.C.

Bill would potentially raise satellite, cable and AM/FM streaming royalty rates

Tuesday, 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.

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).

12/15: WTOP, nation's top-billing station, makes digital a priority

Friday, December 23, 2011 - 11:00am

Hubbard Radio's WTOP (Washington D.C., 103.5 FM) has restructuerd and expanded its workforce to "unify digital and broadcast staff." The station says its aiming to "redefine the news workflow. Instead of the traditional model which takes broadcast content and tries to fit it into a digital hole, WTOP’s strategy will focus on the creation of news stories at the beginning of a process. A story’s execution will be determined at its origin. It will then be optimized for all the distribution platforms WTOP offers: radio, web, Facebook, Twitter and mobile." (read more here)

D.C. news outlet will make online "as high a priority as radio"

Thursday, December 15, 2011 - 1:10pm

WTOP.comHubbard Radio's WTOP (Washington D.C., 103.5 FM) has restructuerd and expanded its workforce to "unify digital and broadcast staff." The station says its aiming to "redefine the news workflow. Instead of the traditional model which takes broadcast content and tries to fit it into a digital hole, WTOP’s strategy will focus on the creation of news stories at the beginning of a process. A story’s execution will be determined at its origin. It will then be optimized for all the distribution platforms WTOP offers: radio, web, Facebook, Twitter and mobile."

The Washington Post reports that WTOP intends to "to make online news as high a priority as radio and in some cases break news online first."

"The future is digital and WTOP will be the leader heading into that future," said VP of News and Programming Jim Farley.

One of the many changes includes having "both a digital editor and a radio editor working together 24/7," said Farley. "No other radio station in America does this."

Here's just a few of the moves WTOP has announced: John Meyer, WTOP's current director of digital operations moves to the newsroom as the new architect of the social and digital strategy. News director Mike McMearty will become senior news director, as assistant news director Mitchell Miller is promoted to news director. Digital editor Gary Emerling becomes the senior digital editor. And former WABC PD Laurie Cantillo joins WTOP to serve in the same role.

"The moves signal a growing digital role at WTOP, which already attracts 600,000 page views and 122,000 unique visitors on a typical day," writes Inside Radio.

You can find more coverage from the Washington Post hereRadio-Info here, Talkers.com here and subscribe to Inside Radio here to read their coverage.

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