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RAIN 3/2: Evaluating NAB/SoundEx deal: Good business, or disaster?

Posted on: 03/02/2009


The NAB and SoundExchange agreed to a webcasting settlement last month (RAIN coverage here) that discounts rates for commercial broadcasters for this year and next. The NAB will also avoid the legal fees associated with a settlement for the next term by agreeing to a rate hike for 2011-2015. And in a related settlement, the parties agreed compliant broadcasters would enjoy a significant relaxing of the “sound performance complement” of the DMCA that put restrictions on programming online. So, good idea, or disaster?

Industry expert Bob Bellin is not optimistic. He commented on RAIN’s coverage: “(Radio’s declining) audience nets way less revenue than it did when these rates (for 2006-2010) were established – meaning that webcasters must pay a much bigger percentage of their revenue to the the labels than what was the original calculus… If I were in radio I’d cancel my NAB subscription.” (Read his full comments here.)

Former Katz Net Radio Sales president Jennifer Lane, on her Audio4Cast blog, cuts the NAB a little slack. “Broadcasters have little leverage, high legal expenses, and no reason to think that the next CRB proceeding will produce more favorable rates for them. So they cut a deal that gives them a short term break, eliminates a huge legal bill for the next case, defines the landscape for business purposes in terms of rates, and gives them some programming advantages that enable them to more easily simulcast their broadcast content online,” she writes here.

It’s lots different in the eyes of former radio programmer and now an industry observer/blogger John Gorman. “Radio got screwed,” he writes. “The world is migrating to the Internet. Radio’s only rescue is to create content that will translate to on-line listening as we move toward this inevitable great convergence… but when you tack on this royalty charge, no chain or station will win. Radio will be held hostage by the labels and will end up like most hostages – dead.” Read Gorman here.


The Motley Fool reports the uSirius StarPlayr (read previous RAIN coverage here) — a third-party Sirius XM iPhone app — has not been approved by Apple for inclusion in the iPhone app store, and there’s no indication as to when (or if) it will be. It’s possible, of course, that it’s Sirius XM itself that’s holding up the process. “The company can milk its satellite radio model through automakers for a few more years, but in cyberspace, it’ll have to play by a different set of rules,” writes the Motley Fool. “Instead of a walled garden, Sirius XM should be building brand equity in its proprietary channels by inviting free exposure… And even if the company doesn’t want to spend time and effort on such a strategy, why not let third-party developers do the heavy lifting?” Read the Fool here.


Canadian broadcasters, including satellite broadcaster Sirius Canada, are required by the government there to support Canadian artists not only by playing a minimum percentage of Canadian content, but through financial contributions to a fund supporting Canadian artists. Sherry Kerr, VP and general counsel for Sirius Canada Inc., says ISPs and mobile carriers should do the same, since they profit from Internet radio. The CBC paraphrases Kerr: “Internet radio is a direct competitor and a serious threat to satellite radio, especially now that it is becoming increasingly available on portable wireless devices and even some devices that can be built into the dashboard of a car.” Kerr’s only support for the financial health of Net radio, apparently is “an increasing number of articles in the press opining that internet radio is a category killer and the category that it would kill would be ours.” She suggests that ISPs cut off Canadians’ access to webcasters that don’t adhere to Canadian content regulations. Read more in CBC.ca here.


The House Judiciary Committee has scheduled a hearing on the Performance Rights Act for Wednesday at 10am ET. The Performance Rights Act would require broadcasters to pay labels and performers a royalty for the use of music in over-the-air broadcasting. House Judiciary chairman John Conyers (D-MI) and Rep. Darrell Issa (R-CA) are the bill’s sponsors. A similar bill is backed in the Senate by Sens. Patrick Leahy (D-VT) and Orrin Hatch (R-UT).

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  1. The House Committee on the Judiciary has an uphill battle to establish parity between broadcasters and webcasters. Here is a background piece my organization put out on the issue

    Daniel Castro · Mar 4, 10:12 AM · #

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