RSSRecord Labels Propose Extending Royalties to All Radio
By Scott M. Fulton, III | Published May 10, 2007, 4:44 PM
As a means of eliminating the appearance of disparity between the performance royalties about to be charged to US Internet streaming music providers such as AOL Radio and Pandora, and what terrestrial broadcasters pay for the same privilege - which, for that category, is currently zero - lobbyists representing the recording industry, according to Billboard magazine, are pressuring Congress to resolve this problem by extending essentially the same sharply higher performance royalty rates to all broadcasters.
If such a measure were to become law, an industry which once had the problem of overcoming the appearance of paying off radio broadcasters to increase the airplay for their songs -- a practice known as "payola" -- would begin charging broadcasters in all media for the privilege of having their songs played.
In response, National Association of Broadcasters President and CEO David Rehr is asking senators to oppose what he describes as a "performance tax." "Not only would this new performance tax upend the longstanding mutually beneficial business relationship that exists today between record labels, recording artists and broadcasters," Rehr writes, "but it would have a serious financial impact on broadcasters that could affect their ability to serve their local markets."
According to the Billboard report which was repeated in The Hollywood Reporter, the coalition backing lobbyists' efforts include representatives of record labels, plus the RIAA, musicians' and vocalists' unions, the Recording Artists Coalition, and the SoundExchange organization which would serve as the royalties collection body.
For seven decades, radio stations have paid royalties that are distributed to songwriters, and for most of that time, performance rights organizations (PROs) such as ASCAP, BMI, and SESAC have served as songwriters' representatives. Long-standing agreements between bargaining groups representing broadcasters and these PROs have limited royalty fees to amounts the stations could live with - for the smallest stations, as little as $972 per year to all three PROs combined.
The passage of the Digital Millennium Copyright Act in 1998 introduced into US law the concept of relatively higher value for digital content than for traditional analog. This enabled the recording industry -- which holds copyrights on the performance of music as opposed to the authorship of it -- to acquire the right to charge royalties to digital music streamers and distributors (such as iTunes), on the basis that a digital performance essentially constituted a duplication of that performance. Such fees would theoretically offset losses caused by any piracy that emerged from that duplication.
Up to this point, terrestrial radio broadcasters have never had to pay performance royalties, on the basis that analog performances did not constitute duplications. Now, it appears that the "digital performance = duplication" argument may be in the midst of replacement in favor of a less technical, more populist argument centering on the rights of performers - people whose work appears in music, even if they didn't write the music - to be compensated for their work.
But a report published today by the Information Technology and Innovation Foundation (PDF available here) suggests that performers appearing in popular music haven't exactly gone poor all these years.
With regard to the new populist argument adopted by the recording industry, the ITIF writes, "Considering the historical relationship between the music industry and terrestrial radio there seems to be little merit to this argument. Terrestrial radio could not exist without the music provided by the record labels; however, they have managed to avoid paying royalty fees for sound recordings. On the other hand, the record labels depend on terrestrial radio to create hits, promote their music and drive music sales. If copyright owners could establish separate royalty fees for each sound recording, some copyright owners would actually allow radio stations to broadcast their music for free and some would even pay the radio station. Getting your music played on the radio provides a huge boost for an artist."
The NAB may end up being a strange bedfellow for Internet radio providers who would also prefer the possibility of compromise. Two weeks ago, webcasters were upset by a statement from NAB Executive Vice President Dennis Wharton, which included the sentence, "We will work with Congress to craft a solution that helps ensure the survival of a fledgling audio platform."
As USC Professor of Music Industry Jerry Del Colliano responded last week in his Inside Music Media blog, "Hell, the only reason it's fledgling is because it has been in a battle for its economic life over royalty rates for years. That doesn't really create stability or set the atmosphere right for growth. When universal WiFi is available, Internet radio will be the next radio...See, another reason why the National Association of Broadcasters might want to be seen as useful to this 'fledgling' group."
5:00 pm ET May 10, 2007 - While all this was going on, Senators Ron Wyden (D - Ore.) and Sam Brownback (R - Kansas) (a candidate for President) introduced a Senate version of the Internet Radio Equality Act on the floor of the House, presumably in an effort to expedite the bill's passage through both houses of Congress.
If a merged form of this legislation does pass -- as current bipartisan support indicates is likely -- then any effort by the recording industry coalition to make terrestrial broadcasters pay the same performance royalty rates as Internet radio streamers, may be limited by new caps the Act would impose, which are based on royalty rates currently paid by XM and Sirius satellite radio.
I suggest that the music industry collect the money in advance as they do from musicians that want to play other peoples songs let me see at the rate of about 1 dollar per song per disk ...I think those executives are going to have to charge about 3 million dollars per I pod or radio! Ya that's fair!
Better yet would be consumer blocking software that blocks all of the mainstream industry music and lets the public hear something diferent for a change!
Score: 0
|"RIAA killed the radio stars" ...
Score: 0
|I was waiting for the other shoe to drop...congrats RIAA you are well on your way to ruining the artists you clain to represent and the outlet for getting their music heard...whats next charging music stores a royalty for selling your stuff?
Score: 0
|When Internet radio is killed by XM, Sirius, and Clearchannel, who will play truly indie artists? Who will provide independant (non-text) news? Fight back while we can!
http://www.urdomain.us/scuffling.htm
Score: 0
|The question is who *won't* play anything *but* the indie artists?
Those will be all the stations will be able to play without having to pay these royalties since the indie artists aren't associated with the labels or "recording indusrty".
Color me confused, but the indies should be jumping for joy, shouldn't they?
Score: 0
|This is actually quite a clever ploy. It will have the effect of enlarging the divide between the labels that are part of SoundExchange and those who are not. How so you ask? The record labels will continue to pay the radio station to play music but those in SoundExchange will get some of their money back. It has the effect of those not it SoundExchange paying more to have their music played on the radio, driving the smaller labels out of business. I'm surprised nobody saw this earlier. Net radio isn't the main target here, the small labels are.
Score: 0
|Very extraordinary insight, melkor. Indeed, that's a plausible theory. When you watch an organization play out a strategy that, on the surface, just doesn't make sense, you have to step back about three or four miles and look at the big picture. Which is what you just did.
-SF3
Score: 0
|Sure... Get Brownie to help make more money by charging all the radio stations. Get the terrestrial ones. Sure. Cripple the industry further. Pigeonhole HD Radio before it gets popular. Flush internet radio AND satellite radio AND internet radio all at once.
Great f***in idea.
Maybe that way, Brownback can take over radio stations on the cheap, and turn them into Intelligent Design propaganda machines.
Score: 0
|I think you may be confused, drumcat: Sen. Brownback's bill is not the one that would charge the radio stations; it's the one that would limit royalties paid by Internet streamers to no more than what satellite radio pays.
-SF3
Score: 0
|Is this news good or bad for internet radio lovers?
Score: 0
|Actually, no change from the previous news. It simply raises the pain threshold up to satellite radio fee caps. That means they'll very likely revisit Sirius/XM to hike their fees sometime next year under the cover of it being pervasive, and not aimed at just them. Revenue is revenue. The NAB/CRB pukes don't make or add any value here, they simply live off the earnings of others. The title of this article should have been "Record Labels Propose Extending ___ INTO All Radio" (fill in the blank with your preferred anatomical feature).
Score: 0
|For anyone that has seen the movie Idiocracy, this should provide proof that it was actually a documentary.
Score: 0
|Most radio stations are not making huge profits. Over the years, I've seen radio stations come and go. There are only a few around here which lasted more than 5 years. That has to tell you something. Now they want to charge the stations which PROMOTE their music. It should be the RIAA *paying* the radio stations to get their crappy top 40 hits played, not the other way around. I don't listen to the radio anymore, so I don't really care that much. Even if the RIAA shoot themselves in the foot and make a large percentage of stations go out of business, they'll just blame the drop in profits on pirating. You know what? I am a pirate and I'm proud of it. I'd rather take their crappy music for free, listen to it once or twice, then delete it than actually give any of my money to these greedy bas****s. If you want to go and buy Eminem's new CD, for that one song you heard on the radio (and getting a dozen or so duds along with it), so that he can buy another multi million dollar mansion, that's fine by me. But soon the whole "I heard this song on the radio and I'm going to by the CD" might disappear altogether. Go RIAA, tie that noose around your own neck!
PS. - Don't you love how the RIAA/MPAA blame waning profits on piracy, yet they post record braking profits every year? Makes sense, doesn't it? Because J-Lo and Tom Cruise are practically starving and living on the street because of all the piracy. Oh wait.
Score: 0
|>PS. - Don't you love how the RIAA/MPAA blame waning profits on piracy, yet they post record braking profits every year? Makes sense, doesn't it? Because J-Lo and Tom Cruise are practically starving and living on the street because of all the piracy. Oh wait.
Well, the MPAA believes that 70% of piracy originates in Canada, and 40% originates in New York.
You see? It makes perfect sense - 2+2=5.
Score: 0
|Great Idea!! Then they'll have more organizations to face. I think it was a secret lobbyist for the Internet broadcasters, planning to get more entities into the fight to push back the recording industries crazy demands.
Score: 0
|Damn Commies. Go back to Soviet Russia!
What the hell is rent seeking doing in a free market?
Score: 0
|We have just entered the "Twilight Zone"
Score: 0
|That's alright.
let the entertainment industry totally **** themselves. I just read Time/Warners CEO say it's a "crime to skip commercials when watching recorded programming" they also went on to say "it's OK for someone to get up and take a bathroom break, but to keep the leaving the room while a show is on down to a minimum".
That was no joke buy the way.
I make it a point to not buy CD's anymore and everything I watch on regular TV is on DVR. I still purchase DVD's and BR/HD-DVD's but only movies I dont already own and it has to be a new release (recent movie). There is no way in hell I'm going to re-purchase all of the movies I already own.
I think they are going to push a law saying you can't fast forward through commercials or try an remove the forward skip feature from future DVR's, forcing you to watch in real time complete with commercials.
These peple are out of control and it's time for consumer revolt.
Score: 0
|Saying we can't skip a commercial if we choose is ridiculous! We did it long before there was any digital method to do it, only now its a lot easier. But that's the only difference. Do they think we ever really wanted to watch commercials? We allowed them because we knew it meant free TV.
Then when cable came along we were happy to pay for TV for now commercials on their channels. But guess what nearly all of those channels have commercials as well.
I find it hard to believe the CEO of Time Warner actually sits through all the commercials when he watches TV, heck he probably doesn't even watch much TV.
Score: 0
|Charge the station that promotes your music...for promoting your music?
Um....yeah...
In what bizarro world does *that* make sense?
While I support the rights of copyright holders, this makes absolutely no sense to me.
Are they *trying* to eliminate their own product from the market?
Actually, now that I think about it... HD Radio, XM, Sirius, etc...could probably all be "protected" easier than traditional radio. Perhaps they *are* trying to kill off analog radio in favor of a format that can support DRM...
I normally don't give these folks much credit in the brains department, but this is clever *and* ballsy. (If it's their intention). Sure, it's not the most consumer friendly, but since when has that ever been the driving force behind any of their decisions?
Score: 0
|Well said. I couldn't agree more!
Score: 0
|Yeah, the less music that they play the less money they have to pay... They will be hurting themselves even more because the less music that the radio stations play = the less the artist's music gets heard and the less people hearing the songs = less consumers wanting to buy the artist's music :)
Score: 0
|Maybe this is a good thing because radio stations will play less music, meaning I won't have to hear J Lo's new "hit" single every other minute, or whoever the latest digitized pretty face is (see Lindsay Lohan, Hilary Duff, Ashlee Simpson).
Now if we could just eliminate those annoying car commercials we'd be in business!
Score: 0
|"This enabled the recording industry to acquire the right to charge royalties to digital music streamers ... on the basis that a digital performance essentially constituted a duplication of that performance. Such fees would theoretically offset losses caused by any piracy that emerged from that duplication."
OK... who the hell STREAMS CD quality audio? Maybe in some perfect future when everyone has bandwidth out their butt to spare... Most streamed programs can barely approach the quality of FM! It's a money grab ploy - pure and simple greed. They see another possible revenue stream that they can leech off.
Score: 0
|**** off.
Score: -1
|