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RAIN 10/27: NAB performance royalty proposal reaps icy reception

Posted on: 10/27/2010


The NAB’s new set of performance royalty proposals, approved yesterday by the Joint Board, has trigged a sweeping backlash of criticism.

The strongest perhaps comes from musicFirst — the organization which must approve the NAB’s proposal — which said it was “deeply troubled by the NAB’s rewrite of the hard-fought agreement musicFIRST struck with broadcaster negotiators this summer” (referring to the NAB’s August proposal, RAIN coverage here). The coalition argues that the new proposal “might even be worse for the music community than the status quo. Fortunately, Congress writes the laws, not trade associations.”

The NAB says musicFirst’s claims of a summer “agreement” are “demonstrably false.” There simply was no deal, said NAB president/CEO Gordon Smith. “If this were true,” he writes, “why would our two sides have continued with negotiations in August, September and October?”

While not an official rejection of the NAB’s proposal, musicFirst’s reaction is “a bad vibe for these negotiations,” writes Radio-Info‘s Tom Taylor. “It sends out a warning signal to NAB members who were already in the ‘Hell no’ camp about the trustworthiness of the negotiating partner.”

On the other hand, there are members of the musicFIRST coalition who may have the same “trustworthiness” concerns about the NAB, seeing as the term sheet the NAB Boards approved apparently differed materially from the term sheet that the two sides hammered out last summer.

Digital Music News, speaking to broadcasters, encountered resistance to the new NAB proposal (here). “Some station owners…hate the concept of a performance royalty on recordings with a passion — and are loathe to give even an inch.”


Many provisions in the NAB’s new proposal hinge upon Congressional action mandating FM receivers be installed in mobile devices. This requirement, as in August, drew fire from the Consumer Electronics Association (CEA).

Their response is mostly furious — “[The NAB’s] strategy of using us to kill [performance rights] legislation is failing,” — but ends with an invitation. “We suggest you delete the technology mandates and recognize the free market works. More, we are happy to work with you promoting FM and HD radio in the marketplace. Let’s work together.” Find the full letter here (PDF).

Business Insider met the idea with sarcasm: “Do you wish you could use your cutting-edge, Internet-enabled smartphone to receive FM radio broadcasts, like a transistor radio that you (or your parents) owned decades ago? Me neither. Well, shame on us for being so selfish and narrow-minded.” Find their article here.

Meanwhile, analyst Mark Ramsey argues radio is mortgaging its future on a bad bet. “Fundamentally, successful technologies are about solving consumer problems, present or future,” he writes (here). “‘I can’t hear my local radio station wherever I go’ is generally not one of them – that’s what the 800 million radios are for.”

Ramsey continues, “Does anyone wonder why Pandora isn’t lobbying Congress to install a ‘Pandora chip’ on mobile devices? Perhaps the answer is that Pandora is pulled by consumers, not pushed by an industry which too often ignores them.”


Barnes & Noble’s Kindle rival, the Nook, received an update yesterday. It now sports a color LCD touch-screen and, surprisingly, a pre-installed Pandora app.

Perhaps it’s not so surprising though. The Nook runs on Google’s Android operating system and the first-generation Nook (your humble journalist’s own device included), could be hacked to run Pandora as well (RAIN coverage here.

Pandora may be only the first of many Internet radio apps to be incldued on the Nook. Barnes & Noble also announced a Nook development program yesterday, in which developers can submit their Android apps to be included on the eBook device. The Wall Street Journal has more coverage here.

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