The National Association of Broadcasters says that the royalty rates attached to streamed music have nothing to do with an open competitive market, and that rates within the realm of what a willing buyer and seller would agree to in open negotiation is what the CRB should strive for.
The current rates are completely out of whack, set so high that it is impossible for distribution platforms to make any money at all.
Argued NAB, “[Most broadcasters] cannot make money on streaming, despite having made significant efforts to do so. Some have reached a business decision to limit their streaming or not to stream at all, despite the potential to expand their listening audience. For all of these reasons, a significant rate reset is necessary so that streaming can be a viable business that will allow broadcasters to provide streaming services to the audiences that rely on them and benefit from them.”
NAB continued, “The CRB should also factor in broadcasters’ services to their listeners as well as record labels and artists when setting streaming rates. Broadcasters differentiate themselves from other streaming services by offering locally focused programming to attract listeners. This programming requires the devotion of resources towards elements such as the development of radio hosts with whom listeners can connect, production of non-music programming such as news and emergency information, and support for community services. Radio stations provide enormous promotional leverage for record labels and artists that supports album sales, concert attendance, and other revenue streams.”
“[L]abels and artists devote immense resources to securing spins on radio,” said NAB. “In addition, labels seek to harness the influence and relationships that radio stations and on-air personalities have built with their listeners and local communities in order to promote sound recordings.”
NAB also pointed out that weighing rates by market size is very important and an accurate reflection of market realities. It is impossible for most to attract enough advertising to even begin to defray current streaming royalty costs, and in their case, a flat rate makes sense.