Performance royalty battle may shift alliances


U.S. CongressThe uneven regimen of royalty requirements is complex, with separate rules for different distribution platforms. A Utah legislator has been working on a bill that would deal with the differences between satellite/cable and internet services, and at least one prominent internet operator favors a bill that ignores radio.

The bill is coming from Jason Chaffetz (R-UT), who believes that the wide gulf between the satellite and internet royalty requirements does not make sense and needs to be leveled.
While representatives of recording companies and artists have expressed the view that any attempt to take a crack at performance royalties should include AM-FM radio, the top executive on the internet radio side is happy with the Chaffetz approach.

According to National Journal, Pandora’s Tim Westergren would be very happy to see a performance royalty imposed on terrestrial radio. However, he also notes that the all-platform approach to royalties taken in other recent legislative attempts has consistently been bogged down, then shot down.

He said that the extremely high rates attached to internet need to be addressed, and he would like it to be addressed in such a way that the highly-contentious radio aspect is out of the debate.
Otherwise, nothing at all is accomplished and his side of the industry is still left with extremely high rates.

NAB told National Journal that it is paying close attention to the Chaffetz effort, and noted that it would be happy for relief from the rates imposed to internet spins.

But a radio respite if the Chaffetz bill advances may be short-lived. It may become a topic once again for the House Judiciary Committee during the next congress.

RBR-TVBR observation: We talk about zombie issues, and this is certainly one of them, and it always puts radio on the defense. It’s great that radio is not part of this particular bill, but if we game it out, here’s what where we think it might go.

First, we can’t see any major objection to a rate cut for internet from the satellite/cable side as long as satellite/cable rates are not jacked up.

Second, record companies and artists are already disappointed that Chaffetz isn’t including radio in his bill.

Third, if internet does get relief, and satellite/cable is not saddled with new burdens, they will be friends again.

Which will lead to recording companies, artists, satellite/cable radio and internet radio interests gleefully teaming up to come after radio again.

All of which means that the mere absence of radio in the Chaffetz bill is no reason for radio to let its guard down. The performance royalty issue is a zombie. It will be back.