Current state of radio royalties hurts artists and impedes innovation, Forbes says

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Issue Date: 
Jul 3 2012 - 12:40pm

From Issue:

Editor's note: RAIN will return Thursday, July 5. Happy 4th of July!

Actually, it's Forbes contributor John Villasenor who this week makes the case that not only should radio pay artists (and labels) for the music they play -- but that by maintaining an unlevel royalty playing field between broadcast, satellite, and Net radio, Congress is impeding innovation.

Broadcasters are exempt from paying royalties for sound recordings, it's argued, because their play drives record sales. And new forms of radio pay royalties because the content attracts audience and drives those businesses. But, of course, as Villasenor writes, "if airtime on traditional AM and FM stations drives sales, so, too, can exposure through cable, satellite, and Internet radio. And... playing artists who people want to hear, broadcasters of all stripes attract more listeners, and can therefore charge higher fees to their advertisers or subscribers."

Villasenor calls on Congress to end terrestrial radio's performance exemption, but, "and in some respects more importantly in the long run given the inevitable transition to digital," he wants rates to be "harmonized" across platforms. He concludes, "The government should not be stacking the deck against the newest, most compelling technologies. Saddling Internet radio with high royalty rates while giving terrestrial AM and FM stations a free pass impedes the growth of a promising new way to distribute content. And, it sends a message to would-be-entrepreneurs with ideas about how to revolutionize an industry that the playing field is far from level."

Read Forbes here (and more here).

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Broadcast Neutrality

While not arguing that radio of any kind should pay performance royalties, this is what I have been arguing for years. There is no reason that there should be differentiated pricing based upon broadcast medium.

Further, it has been shown a number of times that artist exposure in Bob Dylan playlists on Pandora increase their actual digital sales. Play on internet radio is promotional.

Finally, there is also no reason for rates to rise on Internet radio. Pandora pays large sums to SoundExchange yet are only paying half the standard rate. A rate that increases every year.

So yes, let's level the playing field but also recognize that plays through any broadcast medium is promotional.

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