From David Oxenford's Broadcast Law Blog: "On Friday, in a number of publications, a story was carried questioning the claims made by the NAB that the broadcast performance royalty being sought by the music industry could amount to 10-35% of the revenue of the radio industry [RAIN coverage here]... This is the royalty which would be paid to the copyright holders in the sound recording — and would be in addition to the royalties paid to ASCAP, BMI and SESAC for the composers of music...

Wired quoted a spokesman for the Music First Coalition (the music industry coalition seeking the performance royalty) claiming that the NAB's claims are overstated -- and that any broadcast royalty to be paid to sound recording copyright holders would be similar to those paid in Europe for the use of sound recordings, and similar to the amounts currently paid to ASCAP, BMI and SESAC for the use of the musical compositions, in the range of 3-5% of revenues...

History does not support
music industry's claims
"SoundExchange has consistently argued in connection with all of the other on-going royalty proceedings that the sound recording royalty is far more valuable than the composition royalty — asking for a royalty over 6 times the amount of the composition royalty — 30% of gross revenues. How can Music First now contend that the royalty will be only a few percent of revenue, when their representatives have consistently requested royalties many multiples of that amount?

"At the House Judiciary Committee hearing on the broadcast performance royalty [RAIN coverage here]... Marybeth Peters [pictured right], the Register of Copyrights, suggested that it could a simple matter of applying the 'willing buyer, willing seller' criteria of Section 114 of the Copyright Act to broadcasting.

"That standard is exactly the same one that led to the current Internet radio royalties which have been so controversial. In that proceeding, SoundExchange had asked for royalties of the greater of the per performance royalty that the Copyright Royalty Board imposed or 30% of gross revenue... Most observers have estimated that the per performance royalty exceeds 100% of revenue of the small commercial webcasters, and are close to 100% of revenue even for the Internet radio services provided by the major Internet content companies.

"In making their offer of a 'special deal' to Small Commercial Webcasters on May 23, with royalties between 10 and 12% of gross revenue, SoundExchange specifically stated that it thought that the 10-12% rate was 'a below-market rate...' While 10% is suggested to be a 'below market' rate in an immature industry still struggling to find a business model, the Music First Coalition now suggests that a royalty less than half that amount is what they would request for broadcast radio.

Labels consistently request royalties
in "30% of revenue" range
"The proposals made for royalties in other digital services echo the proposals made for Internet radio. For instance, in the current proceeding for royalties for satellite radio and the 'pre-existing subscriptions services' (e.g. digital cable music services), the royalties requests were much the same as for Internet radio... SoundExchange... suggest(s) a royalty of 10% of satellite radio's gross revenue for 2007, rising to 23% of the satellite radio services' gross revenue for 2012... For cable radio, SoundExchange proposes a royalty beginning at 15% of revenue for 2008 and increasing to 30% of cable radio's gross revenue for 2013...

"The Copyright Royalty Board is also hearing a case for the royalties that apply to 'new subscription services' including music services to be provided by XM and Sirius to Echostar and DirectTV. In those services, too, SoundExchange has also requested a royalty of 30% of revenues...

"Thus, SoundExchange, a member of the Music First coalition and the principal agent for the collection of performance royalties for sound recordings, has consistently requested royalties in the range of 30% of gross revenues — far in excess of the 3 to 5% claimed by the Music First spokesman. Do actions speak louder than words?"

Read Oxenford's entire blog post here.

David Oxenford is a Washington, DC-based broadcast law attorney and a partner with the firm Davis Wright Tremaine. He represents the Small Commercial Webcaster group (which includes AccuRadio).

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From Greater Media's "From the Corner Office" by CEO Peter Smyth: "It seems these days that lots of people with personal agendas have decided to pick on American radio.

"Radio's ongoing symbiotic love/hate relationship with the music industry has turned confrontational. First, the CRB decision on internet royalty rates has provoked a face-off about the proper formula and dollar value of performance rights for internet streaming. Now, the Music First Coalition has raised the volume on their demand that radio pay a performance tax on every song we play on the air.

"Perhaps some folks are driven by a real concern for starving musicians, but the majority of the noise is coming from corporate coalitions of media companies whose size far outstrips even the biggest radio operators. Radio is simply the new fertile ground for profits, since the record industry, in its shortsightedness, totally misplayed the migration of music from CDs to digital...

"Who sent out the memo that webcasting was another target for riches and profits? The SoundExchange people somehow succeeded in convincing the Copyright Royalty Board that webcasters were on the verge of huge profitability between now and 2011, and that artists should have their very large piece of the pie. Sure, there's lots of buzz on webcasting and local radio contributes almost 40% of the total listening, but no one I know is making a substantial profit at it, and  those who are in the black are reinvesting back into the technology.

"This is an immature business with a number of impediments to success,...

"...[R]adio is also a business of small businesses, with resources that have to be prudently directed at areas of future growth. If we cannot even explore these future opportunities without someone having their hand out at every new headline, radio will not have much of a future.

"If we in radio stay on the sidelines and allow these burdens to be shifted to our local stations, I will make a sad prediction: Stations across the country will have no recourse but to shut down their webcasts, reduce their local staffs, and add more commercial load to their hours.

"Yes we will all hurt radio, but the American listener will be the real loser."

Read the entire column at the Greater Media, Inc. site.

From Radio Online: "Unique visitors to Internet Radio grew 4% in June, both sequentially and on a year-over-year basis, reports JPMorgan's Internet Radio Scorecard.

"Though the traditional broadcast radio experienced 1% sequential growth from May's levels, the improvement was largely driven by a 7% sequential growth for the Internet pure plays.

"According to the report, traditional radio drives year over year growth for total unique visitors with its online streaming. With growth of close to 27% year over year, the terrestrial group more than offset an 8% decline for the Internet pure plays (driven by tough comps) to drive a 4% year over year increase for all Internet radio...

"Overall, total unique visitors to Internet radio hit a new high, says JPMorgan. After a difficult stretch through the winter and early spring, unique visitors have grown more than 3% sequentially for the third straight month... The 64 million unique visitors to Internet radio represent the highest level since the investment firm has been following the metrics."

Read the entire article at Radio Online.

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