RAIN 8/24: NAB presents details of proposed royalty settlement to members
DEAL WOULD REDUCE CURRENT NAB STREAMING RATES 10%, TAKE CRB OUT OF PROCESSNAB board members discussed details of their performance royalty proposal yesterday in a “Virtual Town Hall” — including specifics about the streaming and on-air royalty rates. The NAB’s deal was unveiled two weeks ago (RAIN coverage here). According to Inside Radio, streaming royalty rates under the new proposal would be 10% less than the current deal with SoundExchange.
That agreement is in effect from 2006 to 2015 and calls for “per performance” rates — that is, broadcasters are charged a performance royalty per song per listener. The rates started at $0.0008 per-performance in 2006 and reach $0.0025 by 2015. You can find out more about the NAB’s current streaming deal with SoundExchange, and other royalty agreements, at RAIN’s royalty round-up here.
According to the new proposal, if the radio and music industries cannot agree on new rates after the current deal expires in 2015, rates would be decided by arbitration — but not by the Copyright Royalty Board.
“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,” said NAB Joint Board chair Steve Newberry.
Newberry also admitted that the NAB might have even been able to negotiate the streaming royalty rates down further, but “pushed harder for reduction in over-the-air fees.” Board members highlighted the fact that they were able to negotiate an on-the-air rate of up to 1% of annual revenue from musicFIRST’s opening salvo of 8%.
The NAB board members also stressed that they’re not actually to the point of signing a deal with the music industry, and that this is all simply a proposal at the moment. Certainly there are other conditions that will affect any final deal. For instance, there’s the NAB’s proposed legal mandate that cellphone makers include an FM chip in new devices.
Interestingly, the music industry first suggested in February that broadcasters pay rates for streaming similar to what Pandora pays. Pandora spent $30 million — 60% of their revenues — on royalties in 2009.
Pandora — and other large pureplay webcasters — pay the greater of 25% of total revenue or a per-performance rate that reaches $0.0014 by 2015. Register for Inside Radio to read their full coverage here.
RAIN Summit East is an official co-located event of the RAB/NAB Radio Show. The Summit will take place on Tuesday, September 28 in Washington, D.C. It will feature a packed afternoon of insightful speakers, entertaining and education panels and so much more. It’s sure to be even bigger and better than last year’s standing-room-only gathering in Philadelphia. Find out more about the Summit — and register — right here.
BORRELL: ONLINE ADS WILL OUTPACE OVERALL U.S. AD MARKET IN 2011Next year, online advertising will “continue to outpace the U.S. ad market as a whole,” according to a new projection from Borrell Associates. Local ad spending will gain 14% reaching $51.9 billion, while targeted display ads will grow 60%.
Email ad revenues will also grow (by 9%) but national paid-search ad spending will drop 11%. However, local paid-search ad revenue will increase 10%. MediaPost has more coverage here.
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