Testimony on the Future of Audio


Seven individuals, including two broacasters, made statements and answered questions at the House Communications Subcommittee’s Future of Audio hearing. Here are summaries of their opening statements:

* Mr. Ben Allison, Bassist/Composer and Governor, New York Chapter, National Academy of Recording Arts and Sciences: 20K perfomers, studio professionals. Bonnaroo operating in conjunction with internet platforms, including special Bonnaroo Pandora channels. Concerned about sound quality. Creators need compensation from outlets using their work. “We’re told we benefit from promotion, but promotion should never be a substitute for compensation.” Spotify is low, radio is zero, wants that to change. Blames NAB for collapse of earlier deal. Congress needs to address PRA before looking at other issues. Without music, none of the other members of this panel would have a business. Therefore, musicians need to be compensated.

* Mr. David M. Israelite, President and CEO, National Music Publishers’ Association: Represents 2,800 companies. Two copyrights – songwriter’s, and the recording copyright. Treated differently. Three ways to monetize: mechanical reproduction; public performance; audio/visual synchronization. Each represents about a third of total income. writers/publishers do not have control over first two, do have some on the third. Intellectual property must be protected. Copyright licensing needs update. Third, business models need support song writer’s ability to earn a living.

* Mr. Cary Sherman, Chairman and CEO, Recording Industry Association of America: Record companies are evolving. Now primarily digital. CDs are no longer the primary format or source of revenue. Totally updated business model. 20M tracks available on some 500 platforms. Moving under the gun of rampant piracy. Since 1999, 41% fewer individuals identify themselves as musicians. Anti-piracy : innovation important, but so is enforcement. AM-FM needs to be treated the same as other platforms with it comes to performance royalties. Promo is not enough, hailed CC/BM deal.

* Mr. Jeff Smulyan, Chairman, President, and CEO, Emmis Communications: Promoting radio on cell phones. Radio chips, mini-receivers, are size of a tic tac and cost pennies. Nobody is pursuing a legislative mandate, but is pursuing education campaign to demonstrate the value of them and get existent-but-dormant chips activated. Radio chip picks up local radio off air without streaming fee, avoiding running into data caps. Music streaming is one of the reason broadband system is becoming more congested. Chip also uses less battery power. Most important, public safety benefit is key. Broadcasters use generators to stay on air, and citizens can get information. 90 character text message insufficient even if it gets through. US cell manufacturers simply are turning on chips even when they are existent — agree with CEA, let consumers decide – so turn on chip and let them decide. NAB provided a full summary of Smulyan’s testimony.

* Mr. Steven W. Newberry, President and CEO, Commonwealth Broadcasting Corp.: Rural Kentucky radio group, in biz since age14. 14K local radio stations, 270M listeners per week. Local programming is key. Part of the fabric of society. Key to the future is maintaining local presence. Pushing to get free signals on mobile for use in emergencies. Performance tax will be damaging, promotional value of airplay exceeds its value as entertainment. Works for performers, and Congress has agreed. 2010 compromise attempt was turned down by music industry, which has not since returned to the table. CC/BM deal covers broadcast and digital performance compensation, is a deal between two free entities, and does not change NAB position. Radio wants to take advantage of internet but digital royalties too high to make it practical. NAB provided a full summary of Newberry’s testimony.

* Mr. Tim Westergren, Chief Strategy Officer and Founder, Pandora: Married musicology with technology to form Pandora, helping consumers find musicians. Streams more music than YouTube streams video. 90K artists, 70% independent, 1M songs, 90% played monthly. Platform may eventually help create a musician’s middle class. 70% of Pandora listening is on platform other than computer. Royalties for Pandora at one point were 60%, Sirius/XM was 7.5%, radio was 0%. Piecemeal legislation has led to disparities, and punishes newer entrants. Time for Congress to level the playing field. Currently subsidizing traditional radio.

* Mr. Christopher Guttman-McCabe, Vice President, Regulatory Affairs, CTIA: Future of audio is mobile, it’s personal and it’s consumer-driven. Mobile provides compelling opportunity for artists and entrepreneurs. This will test existing businesses and force them to adapt. Mobile needs access to spectrum, light regulatory touch. Pushes back against radio’s desire for FM chip. 59 devices currently offer FM – it’s out there, it’s up to consumers to pick it or not, as they choose whether or not to include camera or internet connectivity on their phone. Government should not impose FM on mobile.
U.S. Congress
* Mr. Gary Shapiro, President and CEO, Consumer Electronics Association: 2,000 consumer electronics companies. Popularity of American culture is an American asset. Challenge of innovation is the threat it poses to incumbents, who naturally go to Washington to seek protection. CEA suggests all-of-the-above strategy, level playing field, no special protection for AM-FM radio. Music is hugely popular, continues to lead to innovation. Consumers and new businesses are winners. Troubled that we’re being asked to install old technology on new devices. Products that are already out there aren’t popular. And few radio stations are staffed 24/7 – invokes Minot disaster. Says there are other options during an emergency besides broadcast. Congress: ignore self-interested pleas from declining industries.