NAB Royalty Proposal

[TheBigA]

One point he made, which I think is a good one, is that it basically pulls the rug out from under the 261 Congressmen and 27 Senators who signed on to fight the PRA.

That is a non-binding resolution, and doesn't carry any weight. It's not much of a commitment.

The story that Jerry ignores is that almost all who have signed that resolution are encouraging radio to at least negotiate with the RIAA. A lot of folks in Congress don't want to create a law, but they empathize with the situation in the music industry. The GAO report that came out on Friday doesn't help the radio cause. And refusing to negotiate doesn't play well in Washington. Radio comes off as obstinate, and it's hard to get support when you're obstinate. Now that this proposal is out, it's the music industry that's on the defensive, and we'll see how they react.

Then we have an interesting objection from a record label that objects to the agreement because it fails to provide an "opt-out clause to allow radio stations to play the music of new and independent labels without additional payment to musicians and record labels."

Everyone knows the PRA is being promoted by the major labels, so no surprise there.

The Future of Music Coalition has not presented its response to the NAB proposal, and they support independent labels. For some reason, they have been in favor of the PRA since its inception, and maintain it will be good for indie music. So this one label differs. I've been told a lot of small indie labels want the opt out.

The funny part is that back in 1946 one indie label, Capitol Records, broke with the industry to send free promo copies of their music to radio, derailing the first attempt at a PRA. It'll be interesting to see if this chink in the armor has the same effect more than 60 years later.

 

[TheBigA]

Jerry Del Colliano in his blog today (8/9) spoke out against this agreement. He provides some interesting back room details about how it all came about.

One other thing about the NAB proposal is it attempts to resolve a lot of issues that are important to broadcasters. The AFTRA talent issue for example. AFTRA is part of MusicFirst. They're also preventing broadcasters from airing agency spots on radio streams. That issue needs to be resolved, and this is one way to do it. The streaming rates are too high. That needs to be resolved. The Copyright Royalty Board is living in the 19th century. Their rates have killed the growth of music services on the internet. That needs to be resolved. The FM chip is a nice thing to have. It would be unnecessary if streaming rates were reasonable. So it's a laundry list of issues related to MusicFirst above and beyond their stupid royalty. So you take the good with the bad. That's what negotiation is about. The bad news is that if they get their law, all of our issues go unresolved, and we get hit with a 15% royalty.

 

[bossbill]

No. They won't get 15% royalty from me. You can't get blood out of a turnip. It may be time to sell everything and find an island somewhere in the Pacific.

 

[Carmine5]

Everyone knows the PRA is being promoted by the major labels, so no surprise there.

The Future of Music Coalition has not presented its response to the NAB proposal, and they support independent labels. For some reason, they have been in favor of the PRA since its inception, and maintain it will be good for indie music. So this one label differs. I've been told a lot of small indie labels want the opt out.

The funny part is that back in 1946 one indie label, Capitol Records, broke with the industry to send free promo copies of their music to radio, derailing the first attempt at a PRA. It'll be interesting to see if this chink in the armor has the same effect more than 60 years later.

You missed the point. This particular record company was siding with radio and did not want a royalty payment, preferring instead that their artists get regular and frequent airplay. And this is another problem with the PRA, there is no opt-out provision so that small, indie labels can exchange payments for more airplay.

 

[TheBigA]

You missed the point.

No I got the point. Dave's career was made through radio, and he knows it. Several other artist-owned indies agree with him. But the bigger picture is that the indie community, especially on the Americana and alternative rock side, supports the PRA.

As I said, the PRA is being promoted by big corporate record labels, who have somehow bamboozled everyone to goosestep along with them. For the most part, no one is breaking ranks. Even the songwriters, who are pissed about this, are keeping quiet. The deal was to give a piece to everyone in exchange for their support.

But yes, it's a one-size-fits-all approach, with not a lot of options, and a lot of people don't like it.

If a label exchanges payment for airplay, isn't that payola?

 

[Carmine5]

If a label exchanges payment for airplay, isn't that payola?

It's payola if it's illegal. When it's government-sanctioned or passed into legislation than it's an acceptable business strategy.

At any rate, the NAB proposal is probably dead in the water. Not only are many broadcasters cool to it but the wireless industry has shown a renewed resistance to putting radio chips in cellphones, as today's Inside Radio points out. As the article says, according to broadcasters, "no phone, no deal." c5

 

[TheBigA]

It's payola if it's illegal. When it's government-sanctioned or passed into legislation than it's an acceptable business strategy.

My point is that there are aspects of this royalty that call into question the federal payola law. The government needs to discuss that. They're in such a rush to take care of artists that no one is looking at this, and the RIAA operates as though there are no payola laws.

At any rate, the NAB proposal is probably dead in the water.

We haven't heard from anyone in the music industry yet. The NAB put out a laundry list. I doubt it's carved in stone. The music industry can't deliver on the radio in phone point. It really doesn't belong in this proposal. Broadcasters also said they were opposed to any deal on the royalty. So I imagine everything is negotiable.

 

[wyattcox]

The bulk of the stations in our small group have already flipped to talk or sports. I suspect this will flip the rest....

 

[Gatekeeper007]

If all the radio stations that need to flip to talk/sports do so because of this ( of course there is a delayed reaction) then the radio industry will soon be dead or at least about as active as AM radio and the music industry will soon follow and there is no internet, ipod, cell phone, ect... that will save it for without free radio their promotion of music will be cut by 95%. Oh don't listen to me I don't know anything, just like I said gas prices would go to 4.00 and 5.00 dollars a gollan back in the 80's if the oil companies were allowed to charge what they wanted but oh no I was told I was crazy this could never happen people wouldn't be able to get to work, people would quit using gas, the country would go broke. Now that it has really happened where are the big shots that told me this could never happen, I haven't seen or heard from them in a long time. As for the radio and music industry yah I know this could never happen.

 

[bossbill]

Alrighty then.

I don't recall gas prices being $4-$5 a gallon in the 80s.

 

[local oscillator]

Switching to spoken-word programming is looking better by the minute: no RIAA over-the-air royalties, no RIAA streaming royalties, no ASCAP / BMI / SESAC royalties. Hmmm . . . You don't have to be a powerhouse in a big market with major syndicated shows and pro sports contracts to make this work, either. Good examples are WKXW and WNIR. If this royalty happens, many stations will make the change. I can understand why the songwriters aren't happy.

 

[Gatekeeper007]

Gas prices were not that high in the 80's, thats when we were talking about it back when the ceiling caps were put on prices before they were later removed and allowed to charge what the market will bear or in this case not bear. We all know the gas prices didn't shoot up until the afternoon just before hurricane Katrina came to shore. That is when the oil companies woke up and said hay the caps were removed 5 years ago we can charge whatever we want, and have ever since which as sucked all the money out of the economy and into oil companies bank accounts, and here we are today economy broke oil companies not. What I said back in the 80's was that without some sort of restriction in place on prices that this could happen but was told I was crazy and that it could never happen. I was comparing it to the Royalty Act and it's effect on the radio industry in the future but then again this could never happen, right?

 

[bossbill]

Oh, if it were only that simple. There are so many factors that go into the price of gas at the retail pump that it would make your head spin. If it were as simple as oil companies charging whatever they want, then we'd be paying $25.00 or more per gallon. Fact is, there really are supply/demand issues, refining capabilities, political stability in oil-rich countries, exploding oil rigs, etc.

The price we pay today is less than the price we paid 20 years ago, in adjusted dollars.

Price controls do not work. Never have, never will.

If your analysis of oil companies sucking the economy dry is correct, then let's hope you have oil stocks in your 401K plan, IRA, or retirement. Then you'll be the one to be the beneficiary of all that money.