Wharton Responds to Radio-Capable Cell Critics
(From Radio Online.com)
NAB Executive VP/Communications Dennis Wharton (pictured) has issued what he calls a “fact-based response to the critics of radio-capable cell phones.” Wharton notes that radio’s audience is growing as the most recent report from Arbitron shows that radio reaches more than 239 million American listeners ages 12 and older. That’s an increase of seven million listeners in just one year.
Any claim that radio is “dying,” “declining” or “losing listeners” is simply not accurate, says Wharton, who also cites a New York Times piece called radio “a classic evolutionary survivor” in an article detailing the history of media and technological consumption changes.
Wharton also points to two studies, a 2008 TNS study and an Alan Burns study, that when given the choice, consumers like radio-capable cell phones. From a global perspective, he says, it’s expected that there will be roughly 700 million FM-capable cell phones on the market by next year, representing 45% of all active cell phones.
The 2008 study from TNS found that 45% of mobile users in Latin America and Asia cite AM/FM radio as one of their top three reasons for purchasing a mobile phone. The Alan Burnsstudy showed 47% of women in the U.S. and nearly three-quarters (73%) of female early adopters would buy a different cell phone if that phone contained a built-in FM receiver. 54% said they would listen to local radio more if they had a radio-enabled mobile phone.
High stakes game for the NAB
(From Tom Taylor – Taylor on Radio-Info.com) Some small market operators aren’t happy about the process, and about how far the negotiating got before the Board talked with the members. Saga’s Ed Christian said this on his Q2 call, and he’s not the only group head who feels this way – why did “a small group on the NAB executive committee” work “in a vacuum” with such “urgency”? Sounds like Ed has now had more time to ponder the situation. But the NAB needs that same mental journey to happen with a lot of other folks. One group head tells TRI “don’t quote me, but this probably wasn’t handled the best way by the NAB. Too much was getting leaked out, and it really infuriated a lot of non-Board members, and many smaller-market operators.” He says “my fear is that this could do some real damage to the NAB among their smaller-market members.” Here’s a bigger risk for the NAB – what happens if it can’t deliver all the pieces of the package that it’s talking about from third parties, like the AFTRA deal on streaming ads, and FM chips on cell phones? There’s going to be pushback on those, even with the lobbying support of the music industry.
The pros and cons of an FM chip in mobile devices
(From RBR.com) We all know by now that NAB and the RIAA may ask Congress to require that new mobile phones include an FM receiver chip. The idea emerged in a proposed compromise for a dispute over whether musicians and record companies should receive royalty payments from radio stations that air their tunes. As we have stated time and time again, if there is an emergency, the mobile and cellular networks will be overloaded—just like 9/11. Since people don’t carry transistor radios around much anymore, the cellphone or smartphone is the place they can get important information, and that will be through an FM radio chip built inside. Google’s Android already has an FM tuner built in. Yes, there have been rumors of Apple enabling a dormant FM Tuner on the iPhone and iPod Touch, but it still hasn’t been turned on.
The MusicFirst Coalition — an organization backed by music unions and trade groups that’s leading the fight for royalty payments — says FM in phones is fine as “another way for people to enjoy music.” But it really isn’t about the music in this case – it’s about an emergency, and the cost is not that prohibitive.
Let’s take a look at the engineering: All it would need is the chip integrated into a unit’s processor – the FM antenna would simply be the wired earbuds, or there could be a small contact point where the human hand could act as the antenna (more complicated). We agree that building an internal FM antenna may be asking a bit too much for some devices — these receivers generate a lot of DSP (digital signal processing) interference and there would have to also be proper shielding. However already several manufacturers — including Sony Ericsson, Nokia, Samsung, LG and HTC — already sell phones that can receive FM signals via the earbuds. Certainly, the Bluetooth stereophonic headsets have not caught on as the industry may have wished — the vast majority of consumers still use earbuds to listen.
That shows that FM technology doesn’t harm cell phones or add a big expense, NAB’s Dennis Wharton says. He says that in another year or so, it might become economical to also include chips that can handle digital signals from the growing number of stations offering HD Radio. We reported that the current chip cost for FM alone is twenty cents; an HD Radio chip would add five dollars if implemented today. We think to get a decent FM chip in there, however, the chip will be a bit more than twenty cents for dependable reception. Saga CEO Ed Christian told RBR-TVBR that because of this, minimum engineering and manufacturing standards need to be written into any applicable legislation and regulation.
An AM chip is almost impossible. There is way too much DSP interference and the unit would require an internal – and fairly large antenna. An AM radio in a cellphone or mobile device is next to impossible.
But will Steve Jobs be happy about being forced to do anything with his iPhone line? Likely not, and the wireless industry says that FM radio chips would drain batteries, add to costs and take up space that could be used for new technologies.
In fact, a coalition of six technology industry associations (CTIA-The Wireless Association, CEA, the Information Technology Industry Council, the Rural Cellular Association, TechAmerica and the Telecommunications Industry Association) sent a letter to the Chairmen and Ranking Members of the House and Senate Judiciary Committees urging them to resist NAB-RIAA efforts to include an FM chip mandate for mobile devices in any legislation addressing an unrelated conflict between the broadcast and recording industries over royalties: “Calls for an FM chip mandate are not about public safety but are instead about propping up a business which consumers are abandoning as they avail themselves of new, more consumer-friendly options,” the associations wrote. “It is simply wrong for two entrenched industries to resolve their differences by agreeing to burden a third industry – which has no relationship to or other interest in the performance royalty dispute – with a costly, ill-considered and unnecessary new mandate.”
If adopted, they say it would be bad policy for several reasons:
* Mandating that every wireless device include an FM chip would require consumers to pay more for a function that they may not desire or ever use.
* The groups that are parties to the discussions over the performance rights royalty issue lack any expertise in the development of wireless devices and are in no position to dictate what type of functionality is included in a wireless device.
* Development by the technology industry and government of a mobile broadcast emergency alerting system makes the requirement unnecessary.”
They claim that text-based EAS system would be compatible with present and future wireless systems and will soon be a reality, and that adding FM chip would just slow the implementation of that system down. Well, guess what—that mobile broadcast alerting system uses FM and other broadcast signals—which would need a chip! (i.e. www.gssnet.us). Government EAS alerts are fine, but would they have the ability to alert the public as to traffic issues, local school sheltering, etc. like the local broadcasters? We think time after time broadcasters have proven that issue moot. While the text capability is present to provide notification that an emergency has been declared, radio is uniquely set in this EAS environment to provide an ongoing stream of geographically-specific information. It contains intelligent, real-time information that can detail what the north side of a city should do, vs. the south side. It contains the ability to instantaneously provide status and info. The vast majority where EAS is activated and has immediate need is with weather emergencies, but again, that is (and has been) done over the radio and that is where consumers often expect to find that info. But if they are out and about with no radio nearby and the cell systems are jammed, then what? An emergency text message that states, “EMERGENCY DECLARED. FIND FM RADIO FOR INSTRUCTIONS.” The whole Achilles heel of texting in an emergency is you can’t give very detailed information.
CEA is definitely fighting the whole idea, issuing the following statement: “…The National Association of Broadcasters (NAB) and the Recording Industry Association of America (RIAA)…want our lawmakers to become product designers and engineers by deciding which features portable devices should have.
Specifically at issue is the NAB and RIAA want Congress to mandate that FM radio receivers be built into cell phones, personal digital assistants (PDAs) and other portable electronics. Why? The groups claim that it would give consumers “more music choices”.
The NAB and RIAA are once again mistaking government mandates for innovation and market choice.”
“Broadcasters should man up, stop whining to Congress and start competing,” says Consumer Electronics Association (CEA) CEO Gary Shapiro. “Forced inclusion of an additional antenna [again, we note it can just be the earbuds], processor and radio receiver will compromise features that consumers truly desire, such as long battery life and light weight [a chip’s weight is negligible]. In the fast-paced digital world, we will oppose mandates that force backward-looking features and functions into cutting-edge hand-held devices. Hampering innovative companies with government design mandates hurts our competitiveness.”
He also told USA Today if the mandate catches on in Congress then he’d ask to double radio stations’ royalty payments and make sure that “the wireless industry will be compensated.”
NAB lays out royalty proposal.
(From InsideRadio.com) The radio industry may have plenty of fight left in it, but National Association of Broadcasters president/CEO Gordon Smith is urging members to take pause and consider an end to the war with the record labels. “It’s better to shape the future rather than have it imposed upon us,” Smith says of proposed settlement terms that could resolve the three-year debate over whether radio should pay a performance royalty. Smith thinks what’s been floated is “far better” than the bill currently pending in Congress after broadcasters’ negotiating team won several “very worthy” concessions. Speaking during a NAB webinar Monday, Smith agreed with settlement critics that the NAB is likely to defeat the proposal this year. But he fully expects the issue to return as soon as January when the new Congress is sworn-in. “A lot of political capital for radio is spent on this,” Smith says, acknowledging the industry may opt to reject a settlement and keep flexing that lobbying muscle in what’s widely expected to be a more Republican Congress. Throughout the 45-minute session it was oft-repeated that there are proposed terms and nothing will happen until the industry weighs-in. NAB Radio Board chair Charles Warfield told members, “We are not sitting here pre-determined on this.” The proposed tiered rate structure would cost stations up to 1% of annual revenue. The industry overall would pay a combined $100 million a year in royalties. “We have pushed the rate as low as we believe we can go,” NAB Joint Board chair Steve Newberry told members. Although much of the presentation was focused on the perceived pros of a deal rather than any cons, Newberry says, “We’re not trying to do a push down on this.” Supporters think by removing the Copyright Royalty Board and writing the 1% rate into law it becomes tougher for the music industry to seek more money anytime soon. “If they want to increase the rate, the argument wouldn’t be about their right — we’d be arguing about their greed,” Smith says. “That’s a harder hill to climb and I like our chances very much.”
Streaming royalty reduction detailed.
Two weeks after going public with its framework, the NAB has released more details about the potential impact on streaming rates if broadcasters cut a royalty deal. Under the current proposal rates would be reduced by 10% over the length of the six-year streaming agreement currently in place with the record labels. When that contract expires, broadcasters and the labels would sit down and try to agree on a new pact. If that’s not successful, the process moves to arbitration. NAB Joint Board chair Steve Newberry says the Copyright Royalty Board would no longer be involved. “The CRB was absolutely unbelievable in what way they set the rates [in the past] in the way they didn’t take into account business practices and impact on the broadcast industry,” Newberry says. In a further signal of just how far the discussions between NAB and the musicFirst Coalition have progressed, when the first meetings were held in February the record labels proposed a plan similar to what it charges online music service Pandora. It would have required stations pay at a minimum 25% of their streaming revenue. Newberry says what’s been brought to the industry “isn’t perfect” but thinks the streaming deal is a step in the right direction. Broadcasters may have done better with online rates, but over the past few months the NAB made a tactical decision. “We continued to push for a streaming rate reduction but pushed harder for reduction in over-the-air fees,” Newberry explains. He says the on-air fees effect more stations and because they’re set in statute radio’s likely to live with those rates for a lot longer. Under the tentative outline stations would pay a royalty of 1% or less for on-air music usage. That’s far below the 8% originally sought by the record labels.
An epic fail for the music industry
(From AllAccess.com) In a video report, CNET calls it “an epic fail for the music industry.” What are they talking about? Yes — FM tuners on mobile devices. Last week (NET NEWS 8/17), ALL ACCESS reported there’s been many things that broadcasters and those supporting a performance fee for radio have disagreed on, but one that they both embrace wholeheartedly is adding FM tuners to mobile phones and other portable devices.
Now CNET chimes in, calling the idea of forcing a tuner on cell phone manufacturers as “pulling a GOOGLE/VERIZON.” The video report makes fun of the idea, continuing, “because music can only exist on the radio — and radio can only exist if cell phones have radios in them … by law.”
The online video report wraps up its rant by concluding that once STEVE JOBS gets involved, he will put an end to things “by blowing up the universe.”
View the CNET video here. The part about FM tuners runs from 1:00-2:00 as part of five-minute news posting. CNET is owned by CBS.
The Dodgers’ Vin Scully will come back for his 62nd season
(From Radio-Info.com) The 82-year old Major League Baseball Hall of Fame radio broadcaster joined the Dodgers even before the team moved from Brooklyn to Los Angeles in 1958, and he has been calling games ever since. In his storied career, he has called 19 no-hitters, three perfect games, 12 All-Star games and 25 World Series games, Among the most memorable games Scully called include Don Larson’s perfect game in the 1956 World Series, Hank Aaron’s 715th home run in 1974 and Bill Buckner’s error in the 1986 World Series that lost the game, and eventually the World Series, for the Boston Red Sox.
Radio’s royalty deal gets cool response from wireless industry
(From InsideRadio.com)
One of the incentives for broadcasters to go along with a proposed outline for a performance royalty agreement is getting radio chips on cell phones. But that piece of the deal may prove the most precarious of all. Broadcasters and the music industry would jointly lobby the wireless industry to voluntarily go along. But there’s also a push to include the mandate in the royalty legislation taken up in Congress. CTIA – The Wireless Association VP of government affairs Jot Carpenter says they’re steadfastly opposed to any new federal mandate. “This is not a three way industry deal. This is the broadcasters trying to spend other peoples’ money to solve an ongoing challenge for their industry,” he says. CTIA believes engineers not politicians should decide what’s best placed inside handsets, where Carpenter says there’s growing competition for space. FM chips are available in about 25 handsets already and they’re inside — but not activated — in others, including the iPhone. “It’s not something the public is clamoring for,” Carpenter says. “Even if consumers were demanding this, I’m not sure we’d have to put it in every phone.” Wireless carriers’ research suggests most consumers don’t want to listen to music using their headphones, something that would be necessary since the FM antenna is in the cord. “The decision to put FM in a phone is a purely commercial decision that should be left to individual carriers and handset makers,” Carpenter says. The issue has the potential to unravel the current royalty deal.
Broadcasters say no phone, no deal. While paying $100 million in royalties per year isn’t the outcome most radio operators would prefer, the idea of getting a radio chip into mobile phones helps soften the blow. Nicolet Broadcasting president Roger Utnehmer, who sits on the NAB Radio Board, is among the many that sees the cell phone component as key to his support. “If we get a legislative package that gives us an FM chip in cell phones, that extends the life of small market radio for 40 or 50 years,” Utnehmer says. But without a voluntary agreement with cell phone companies or a Congressional mandate, what’s currently on the table between broadcasters and the music industry would likely go nowhere. An insider familiar with the negotiation’s inner-workings says, “If there is a royalty deal, the only way that broadcasters would agree is if radio’s reach gets expanded by including a radio chip in mobile devices. Without the chip, it’s hard to see how there is a deal.” Sources say preliminary discussions with a handful of mobile companies have begun and there have been some hopeful signs. Broadcasters see a radio chip on cell phones as a public safety solution and a way for carriers to meet their obligations under the WARN Act — which requires mobile companies to provide customers emergency alerts similar to EAS warnings. CTIAVP of government affairs Jot Carpenter says it’s a solution where there’s no problem, explaining, “We think the WARN Act was a good piece of legislation.” Carriers have already spent millions of dollars developing a text message-based solution and are waiting for FEMA to finish its review before final rollout. Radio has at least one other card to play. A broadcast source says they’re also working to show mobile companies how new revenue can be made from radio music tagging. If an agreement can’t be reached it could create a Clash of the Titans-type battle on Capitol Hill pitting broadcasters against the telecom lobby.
NAB still calls it a “performance tax”
(from Tom Taylor Radio-Info.com)
Labeled “the NAB wish list”, and that’s a fair description of the omnibus proposal that covers not only the possible terms of a U.S. royalty as discussed with the NAB Board (though not voted on), but also solutions to other issues that vex broadcasters. For example – The NAB puts in bold type the “permanent” removal of Copyright Royalty Board jurisdiction for terrestrial and streaming radio fees. That would really remove a Sword of Damocles from the exposed heads of broadcasters. In fact, let’s make streaming its own separate story, because of its potential importance –
Radio’s future in streaming could get a huge boost out of a performance royalty deal.
Getting the Copyright Royalty Board out of the way is just the start of the streaming-related issues in the NAB’s five-bullet point wish list of “proposed terms under consideration.” The next item is “reduction from current rates” for terrestrial broadcasters who stream. They already have more favorable terms on streaming music than pure webcasters. But many broadcasters still think the rates are too high to be sustainable. (Owner Jerry Lee at Philadelphia’s AC B101/WBEB is the most prominent holder of that opinion, and one of the few major market guys to swear off streaming altogether.) Also – the NAB seeks the support of the music industry and artists (through MusicFirst) in getting “AFTRA issues resolved (agency commercial replacement on webcasts”). Most broadcasters seem to have given up on solving it, and the result is often a near-total split of non-music elements, between what’s heard on the air and the streaming version of the station. Our Sean Ross has complained repeatedly about the parade of PSAs and other material run as substitutes, online and mobile. One of the results of that trend is that Arbitron won’t count it as a simulcast. And if online really is a growth medium for radio, that’s important. How about the guts of the NAB’s “proposed terms” – what would the industry be willing to pay in a new performance royalty?
“A tiered rate of 1% or less” would be owed to labels and artists – “roughly $100 million” in total.
The NAB’s performance royalty proposal goes like this, and I quote –
- Commercial stations with revenue more than $1,250,000 annually would pay 1% of revenue annually.
- Commercial stations with revenue between $500,000 to $1,250,000 annually would pay $5,000.
- Commercial stations with revenue between $100,000 to $500,000 annually would pay the lesser of $2,500 or 1% of revenue.
- Commercial and non-profit stations with revenue between $50,000 to $100,000 annually would pay $500.
- Commercial and non-profit stations with revenue less than $50,000 annually would pay the lesser of $100 or 1% of revenue.
- Non-profit stations with revenue more than $100,000 annually would pay $1,000.
- Stations with incidental music use – news, talk and sports radio – would not pay for music. Additionally, religious services – not religious music – would be exempt from music fees.
Capping royalties at 1% of revenue would be a win for the NAB.
The association has felt all along that the really juicy target for the labels was the big-billing music stations like AC “Lite” WLTW, New York and CHR KIIS-FM, Los Angeles. Keeping the top royalty at 1% is far preferable to letting Copyright Royalty Board choose, and the NAB seeks to chisel it in stone – “The above referenced rates would be permanently fixed by statute and can only be changed by act of Congress or joint agreement between both parties.” It’s willing to cede the principle of paying a performance royalty in exchange for rates it deems livable – and making it darn hard to raise them. As Bonneville’s Bruce Reese said at the now-famous Conclave “Meet the Pres” group head session, radio would be willing to do a tradeoff in order to gain certainty for its business plans. The NAB’s goal here is to head off much more onerous terms from a lame-duck Congress after the November elections. Next – the response of the music industry. The labels would keep about 50% of the new performance royalty, and a myriad of details would need to be worked out (exactly which performers would be cut into the new revenue stream?). Radio’s position up until last Friday was that it’s already paying for the use of music – it sends hundreds of millions of dollars a year to ASCAP, BMI and SESAC. That pays the composers and publishers. But in the last few months, radio has gotten some relief from ASCAP and BMI under temporary agreements, and that helps take away some of the sting of the possible performance royalty.
Radio remains women’s top at-work audio format
(From InsideRadio.com) More than half (54%) of all workplace music listening goes to radio. A new study by Alan Burns and Associates shows FM and AM radio is more than twice as popular as any other service. A survey of female AC and CHR listeners finds nearly one-quarter (23%) listen to an MP3 player like an iPod while on the job, 15% tune to an internet-only music site while just 7% use Sirius XM Radio to help get them through the workday. Consultant Alan Burns says three-quarters of radio’s at-work cume comes from over the air listening. “The online stream now accounts for nearly a quarter of all people who listen to radio at work, so we’re seeing that streaming is becoming very important,” Burns explains. He says people who do listen to broadcast radio at work typically don’t listen to music streams like Pandora or Slacker at all, or do very lightly — just one to three hours per week. Most say they just don’t think about using their computer to find a radio station. But an analysis of the numbers suggests things are quickly changing. “Within a couple of years, three-quarters of people who listen to radio at work will also be spending some time with a non-radio stream on the internet. So competition from that direction is growing,” Burns says. “Radio in the future is not going to win by being exclusive. We won’t be the only thing in your car, your office or workplace. So we have to be the best thing you can get in those places.” The findings are based on a June 7-15 online survey of 2,057 women, ages 15 to 54.
NAB Radio Board to see royalty deal outline
(From InsideRadio.com)
It may be the biggest test for Gordon Smith since he was hired to lead the National Association of Broadcasters nearly one year ago. Smith goes before the Radio Board today with detail of how the industry could settle its royalty fight. A number of radio executives say they’re going into today’s meeting with a substantial amount of skepticism, but also the understanding the fight could drag on indefinitely. “There are some things that will be put on the table that could sweeten this for broadcasters,” says one Radio Board member. The list of potential inducements in what’s become a framework for a deal includes a one-quarter percent reduction on streaming royalties, getting radio chips inside cell phones activated, and creating a structure that would avoid the Copyright Royalty Board altogether. In exchange, broadcasters would agree to the fundamental right of musicians to be paid — and the bill for the first five-year term would total an estimated $500 million. Some broadcasters believe what’s proposed sets a dangerous precedent. “There’s a lot of pushback to this,” says one insider. With Election Day expected to shakeup Congress, the biggest question for several executives is on the timing of any deal. “There’s going to be some pretty seismic changes that are going to take effect in November and their hand is going to be substantially weakened,” a group head predicts. The NAB says no agreement is in place, although it concedes months of discussions with the music industry have resulted in progress between the two sides. NAB EVP Dennis Wharton says, “Any agreement would have to be approved with the backing of the NAB Radio Board.” It’s unlikely that will come today. Gordon Smith began meeting with group owners yesterday to discuss the potential deal. One critic of giving up the fight noted the NAB flew executives to Washington and put them up in three separate hotels, half-jokingly suggesting it would prevent an industry consensus from being formed at a hotel bar.
As broadcasters consider royalty, the GAO weighs in. As broadcasters consider whether a settlement with the music industry is the right move, a congressional report may convince some to sign on the dotted line. The Government Accountability Office (GAO) has completed a five-month review that was originally intended to provide some estimates for how much the radio industry would pay if the proposed Performance Royalty Act became law. Instead, the GAO may be further muddying the waters. GAO director of physical infrastructure issues Mark Goldstein says if the royalty bill is passed, it would change the way the Copyright Royalty Board judges determine how much of a fee is assessed. Goldstein writes that the standard by which the CRB has considered the “disruptive impact on the industries involved…would no longer be considered for setting any rates.” With what’s known as the Section 801(b)(1)(D) standard gone, the GAO report says the effect on future proceedings is “unclear.” Yet there’s evidence to suggest it would abolish a potentially potent weapon from broadcasters’ arsenal as they go before the Copyright Royalty Board. In the past, webcasters and satellite radio companies were able to use the provision to win reductions in their rate by showing the damage a high rate would do to their business. Radio wouldn’t be able to do that, and presumably would be slapped with a steeper rate. Like most legal matters, the issue isn’t black or white however. Some government experts tell the GAO that the standard ensures that an industry can survive after a royalty is imposed. But CRB Chief Judge Marybeth Peters insists it could go either way — higher or lower rates. Goldstein concludes, “It is unclear how the proposed removal…would impact future rate-setting proceedings.” Such added uncertainly may be enough for some broadcasters to opt in favor of going along with a settlement if reasonable terms can be agreed to. The release of the GAO report that’s been in the works since March as some broadcasters were flying to Washington may be more than just a coincidence. It was conducted at the request of Senator Arlen Specter (D-PA), who supports a performance royalty It may be the biggest test for Gordon Smith since he was hired to lead the National Association of Broadcasters nearly one year ago. Smith goes before the Radio Board today with detail of how the industry could settle its royalty fight. A number of radio executives say they’re going into today’s meeting with a substantial amount of skepticism, but also the understanding the fight could drag on indefinitely. “There are some things that will be put on the table that could sweeten this for broadcasters,” says one Radio Board member. The list of potential inducements in what’s become a framework for a deal includes a one-quarter percent reduction on streaming royalties, getting radio chips inside cell phones activated, and creating a structure that would avoid the Copyright Royalty Board altogether. In exchange, broadcasters would agree to the fundamental right of musicians to be paid — and the bill for the first five-year term would total an estimated $500 million. Some broadcasters believe what’s proposed sets a dangerous precedent. “There’s a lot of pushback to this,” says one insider. With Election Day expected to shakeup Congress, the biggest question for several executives is on the timing of any deal. “There’s going to be some pretty seismic changes that are going to take effect in November and their hand is going to be substantially weakened,” a group head predicts. The NAB says no agreement is in place, although it concedes months of discussions with the music industry have resulted in progress between the two sides. NAB EVP Dennis Wharton says, “Any agreement would have to be approved with the backing of the NAB Radio Board.” It’s unlikely that will come today. Gordon Smith began meeting with group owners yesterday to discuss the potential deal. One critic of giving up the fight noted the NAB flew executives to Washington and put them up in three separate hotels, half-jokingly suggesting it would prevent an industry consensus from being formed at a hotel bar.
As broadcasters consider royalty, the GAO weighs in. As broadcasters consider whether a settlement with the music industry is the right move, a congressional report may convince some to sign on the dotted line. The Government Accountability Office (GAO) has completed a five-month review that was originally intended to provide some estimates for how much the radio industry would pay if the proposed Performance Royalty Act became law. Instead, the GAO may be further muddying the waters. GAO director of physical infrastructure issues Mark Goldstein says if the royalty bill is passed, it would change the way the Copyright Royalty Board judges determine how much of a fee is assessed. Goldstein writes that the standard by which the CRB has considered the “disruptive impact on the industries involved…would no longer be considered for setting any rates.” With what’s known as the Section 801(b)(1)(D) standard gone, the GAO report says the effect on future proceedings is “unclear.” Yet there’s evidence to suggest it would abolish a potentially potent weapon from broadcasters’ arsenal as they go before the Copyright Royalty Board. In the past, webcasters and satellite radio companies were able to use the provision to win reductions in their rate by showing the damage a high rate would do to their business. Radio wouldn’t be able to do that, and presumably would be slapped with a steeper rate. Like most legal matters, the issue isn’t black or white however. Some government experts tell the GAO that the standard ensures that an industry can survive after a royalty is imposed. But CRB Chief Judge Marybeth Peters insists it could go either way — higher or lower rates. Goldstein concludes, “It is unclear how the proposed removal…would impact future rate-setting proceedings.” Such added uncertainly may be enough for some broadcasters to opt in favor of going along with a settlement if reasonable terms can be agreed to. The release of the GAO report that’s been in the works since March as some broadcasters were flying to Washington may be more than just a coincidence. It was conducted at the request of Senator Arlen Specter (D-PA), who supports a performance royalty.