RADIO ROYALTIES

The monies generated from performances of songs is part of the thinking behind Futurehit.DNA. There is revenue already coming in from streaming sites, radio sites, etc. But traditional radio has not paid for performances in the US, and radio has been resistant to any suggestion of paying royalties. Until now.

Two weeks ago, the National Association of Broadcasters (NAB) met and realized that fighting the royalties is looking like a losing battle and that it would be better to reach a compromise than continue to fight. The royalty figures may not be super huge given the size of radio, but it’s a very solid first step. Since radio is now playing more hits that break online, Futurehit.DNA followers are well prepared to capitalize on this new revenue source once it is enabled.

However, what stuck in my head was the request from the NAB that should they agree to the royalty, that they should also agree to “inclusion of radio chips on all mobile phones”. Their hope was that if they satisfied the industry on royalties (specifically the MusicFirst lobbyists), they would support them in getting radio chips into mobile phones. Well, yesterday, in an article on Ars Technica, a rep from MusicFirst said, “musicFIRST, too, likes FM chips in cell phones, PDAs, etc.”

To which I say…huh?

I say this because I believe in radio paying royalties for a multitude of reasons. But now I fear that shifting the fight from labels vs. radio to “labels/radio” vs. mobile industry is just going to prolong the process even further as mobile fights this legislation. And with good reason. Radio should realize that most phones can ALREADY play radio, but it’s done thru web streaming. There are even apps that make it easy. Pandora experienced exponential growth largely thru mobile. Why couldn’t traditional radio streaming experience the same? That’s up to the radio stations, not the mobile carriers.

Radio has also been included, from time to time, in selected portable MP3 devices. The iPod, as an example, broke with tradition and added an FM Tuner to the Nano last year. And is it utilized? I can’t find surveys one way or the other, but I did find one that said people would like and use it with DVR-like functions of pausing, rewinding, and saving songs. If that what makes FM on phones palatable to consumers, I can’t imagine the music business favoring that.

Also, if its justified to put radio in phones, then why not OTA TV signals as well? And then, also, shouldn’t car radios then likewise be “mandated” to accept phone calls? Especially for safety reasons? As pointed out by the head of the Consumer Electronics Association, “Rather than adapt to the digital marketplace, NAB and RIAA act like buggy-whip industries that refuse to innovate and seek to impose penalties on those that do.”

I’ve led debates on this subject at conferences in years past, and I get both sides of the issue. Having radio and the music industry mandate a radio receiver in a mobile phone is like car manufacturers and gasoline companies mandating a gasoline station attached to every Starbucks. Never mind that gas stations are close by and easily accessible, everyone is using Starbucks now and gas companies can’t lose business.

I bring this up and get a bit off topic from my normal commentary only because getting to a broadcaster royalty is an important step for the business to get to. And anything to get there faster is A-OK in my book. Any business should make themselves as compelling as possible so everyone WANTS to do business with them. Focusing on mobile will only slow down the process for all.

3 Responses to “RADIO ROYALTIES”

  1. Tim Wood August 17, 2010 at 8:39 pm # Reply

    I agree that mandating broadcast detection in mobile phones is ham-handed, worse than the music CD-R and predecessor blank-tape taxes the record industry muscled through. However there is a good technical reason to adopt it volutarily: utilization of the existing (though declining?) terrestrial radio technical and legal infrastructure. Placing the whole bet on streaming penalizes those with lower data plans; and broadcast still offers a more predictable user experience than OTA streaming.

    • admin August 20, 2010 at 5:42 pm # Reply

      Fair point on penalizing users with data charges. But other side is forcing additional chip penalizes users to have to get heavier phones with potential larger battery drains. Encouraging manufacturers to add as an option is fine. But forcing anything is short-sighted.

  2. Colin September 6, 2010 at 9:43 pm # Reply

    A little late to the party here but radio should compete like everyone else – create a compelling app/service with the tech process already in motion. Agreeing to finally and fairly compensate artists, and have a cost of goods sold (like everyone else), should not be a horse trade. It kinda of comes down to something trite: lead, follow or get out of the way. And I like/listen to Radio and am a supporter. We need them.

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