As the annual network radio upfront negotiating season is just beginning, RBR/SmartMedia is providing a weekly progress update, based on conversations with buyers and sellers in the marketplace for our annual two-part print feature. This week, we look at excerpts: How might the new CRB Royalty rates foisted upon radio broadcasters that stream their signal change things for radio advertising? Rate deals were recently struck between SoundExchange and larger webcasters like AOL, Yahoo, Pandora and Live365-and 24 smaller ones. Still nothing yet for radio.
Patrick McNew, PHD EVP/Local Media Network (LMN) Director of Operations says if the CRB rates don’t get changed for everyone, many will have to shut their doors. "And we are concerned about the commercial load on those that do remain in business. One of the most attractive things about online radio is the low commercial load and the island advertising that is currently the norm. If internet broadcasters are forced to increase commercial loads they will start to sound like terrestrial stations and lose some of their appeal."
Rich Russo, JL Media’s SVP/Director of Broadcast Services, says the whole thing is a joke and is closing the barn door after the horses left. "They didn’t control this in the beginning when they should have regulated this like over the air, it turned into a land grab and anarchy. What will happen if the CRB fees happen is that the music sites will cut deals with unsigned artists at a lower fee to stay in business, since they get no airplay anyway, so they don’t care, they just want the exposure. The next killer app will be something that plays your iTunes library on your computer but ties into a site that every few songs mixes in one of these unsigned artists, this will effectively solve that problem. Greed will kill the big guy."
Agnes Lukasewych, VP, Account Director Radio Broadcast, MPG, expects free air play is becoming a thing of the past. "Nowadays technology has made it easier for consumers to access free music downloads and CD sales have seen a steady decline. Gone are the days when terrestrial radio could leverage the fact that they were the only accessible vehicle to increase visibility for artists. Yes, new royalty fees may put some smaller broadcast companies out of the online air play business and it might even homogenize content. But if, as a result there is too much "on-web audio clutter" by those broadcast companies that stay in the game, then we can expect to see a loss of listening appeal and an increase in popularity of subscriber paid commercial free sites."
Kim Vasey, Senior Partner/Director of Radio, mediaedge:cia, observes that overall, big or small-in order to generate the revenues necessary to sustain their stream, the rate structures on pricing will have to increase. "I think the larger ‘branded name’ broadcast groups or internet channels will be more successful in getting higher rates which will help sustain their business model."
