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NEWS UPDATE: Is NAB trying to kill webcasting bill?

Posted on: 09/26/2008

A respected Congressional news blog is reporting this afternoon that NAB lobbyists are trying to block the passage of the legislation that would help resolve the Internet radio royalty crisis and that the House is scheduled to vote on later this evening.

Astounding though this seems, RAIN‘s sources among Congressional staffs confirm that the NAB is perceived to be trying to block the bill’s passage. This is despite the fact that the bill, which is scheduled to come up for a House vote later this evening, does nothing more than permit negotiated deals to take effect — including any deal that might be negotiated between NAB members and SoundExchange.

According to the Tech Daily Dose blog (here ), “A source close to the issue told Tech Daily Dose that lobbyists for AM and FM radio are worried about competition from webcasters [—] and extinguishing the bill would throw a wrench into the royalty talks.”

The article continues, “’[NAB] is calling members and they’re hitting the Energy and Commerce Committee hard,’ Pandora founder Tim Westergren told Tech Daily Dose… He characterized the alleged lobbying blitz as a ‘full court press’ and if broadcasters are successful, ‘the clock will run out on Web radio.’ Westergren said the alleged activity is ‘outrageous’ and said NAB is ‘interfering in our business. They’re trying to cross over industry and kill a competitor.’

NAB spokesman Dennis Wharton said…that his trade group has ‘concerns related to Congress attempting to fast-track a bill introduced less than 24 hours ago that could have serious implications for broadcasters, webcasters, and consumers of music… NAB spent more than a year trying to work out an equitable agreement on webcasting rates, only to be stonewalled by SoundExchange and the record labels. We will continue to work with policymakers on a solution that is fair to all parties.’”

H.R. 7084 is #17 of 27 different bills that Congress is going to try to quickly get through this evening under “suspension” (i.e., fast track, limited debate) rules.

RAIN ANALYSIS: This is ludicrous! And it totally violates the spirit of what NAB CEO David Rehr said last week at the NAB Radio Show — e.g., “NAB has been working to address the outrageous Copyright Royalty Board decision that dramatically increases streaming rates.”

The NAB has previously claimed support for the Internet Radio Equality Act (which would change the standard by which CRB judges make their decisions, temporarily setting the SX royalty rate at 7.5% of revenues), but that support has always appeared tepid. Nonetheless, trying to block this bill is a slap in the fact to all NAB members who believe that streaming is an important part of radio’s future.

Let me propose a possible solution

The only legitimate reason for the NAB to try to block this bill might be a fear that SoundExchange will negotiate a favorable rate for DiMA members but will not offer a comparable rate to NAB members.

Imagine a scenario in which SX offers DiMA members (i.e., Internet-only streamers like Pandora) a royalty rate of 12% of revenues but refuses to budget on the CRB rate of $.0018 per performance (in 2009) for broadcast simulcasts. (Depending on how well local advertisers embrace buying spots within streams, that might in some cases be over 100% of revenues). Admittedly, such an outcome would put broadcasters at an unfair disadvantage to DiMA members.

So, my proposed solution: DiMA should engage the support of the NAB by vowing that they will not agree to such an outcome — that any negotiated deal they agree to will include provisions that extend the same rate to all webcasters who desire it, specifically including simulcasters. (I think this is similar to the rumored “favored nations” clauses in Shatner and Nimoy’s contracts — what one got, the other did too.)

My question for NAB members: Good enough?

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  1. May I suggest another solution over the air radio are fighting against any royalty. something we have had in the UK for sometime. a percentage of revinue is paid. However if the station streams they DONT pay extra.Streaming is free! which would be fine if web only broadcasters paid the same percentage of revenue.

    mike allen · Sep 27, 07:45 AM · #

  2. To be fair, any deal must also include the NAB and terrestial streamers.

    Mark Pfeifer · Sep 28, 05:13 AM · #

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