Why radio has to pay for streaming royalties?


Did radio miss a great opportunity to get a sweetheart deal on streaming audio royalties and DMCA fixes from the RIAA?  Based on conversations with several radio groups he works with [we saw the internal emails from one of the groups on this], consultant Randy Kabrich was told, "They had the RIAA willing to settle on sweetheart streaming rates and DMCA fixes for a trade off of industry support on DRM [Digital Rights Management] in HD Radios. The powers that be, including CBS, Clear Channel and iBiquity Digital (which was desperate to get some revenue flowing), were so determined to get HD rolled out they didn’t want to wait 18 months to give the Consumer Electronics Industry time to rethink HD and slow down (or bail out of) the rollout. So the RIAA offer fell by the wayside and because of that, that’s the only reason we’re facing this dramatic increase in streaming rights right now."

DRM technology would make it impossible to make a digital recording off of an HD Radio. Who would have wanted to record it anyway-it’s not CD quality.
iBiquity CEO Bob Struble, however, says he doesn’t recall any such deal on the table [and the company wasn’t mentioned in the internal email we saw]: "We’ve had discussions on and off with the RIAA-productive discussions-but we are completely unaware of any such offer."

Another broadcaster told us broadcasters only had proffered a settlement on the rates they would pay as one point of a larger negotiation to be undertaken when RIAA approached them. They indicated a willingness to discuss this and all issues as part of their HD concerns. There were many good faith discussions among RIAA and NAB around the technical issues involving DRM on HD.  When the parties couldn’t figure that out, things broke off and we are where things are now.
The broadcaster wondered if broadcasters had been more willing as an industry to use the leverage RIAA had presented in their interest in DRM for HD to a) negotiate a settlement on streaming rates (not eliminate them), b) minor DMCA fixes broadcasters have long sought (the restriction on number of plays by the same artist, album, etc. over specific time periods for example), c) get relief from onerous recordkeeping requirements and d) get a pledge to leave the terrestrial exemption alone, the industry may have been further ahead than it is now. 

RBR observation: Would DRM on HD be a minor price to pay? Talk about being between a rock and a hard place-broadcasters were under so much pressure to launch HD-and had to because they may have lost receiver manufacturer interest-that they may have had to give up a sweetheart deal that now looks like 20 cent a gallon gas . Now we’ve also got SoundExchange chiseling for all airplay.