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Should local radio pay royalties?

Nab_logo_2 If you thought the battle over webcasting royalties was hard fought, just wait until the National Assn. of Broadcasters and the RIAA drop the gloves over the issue of performance royalties for over-the-air stations. Having gotten some of the preliminary sparring out of the way, the two behemoths face off Tuesday in D.C. in front of the House Judiciary Subcommittee on Courts, the Internet and Intellectual Property. Like the chairman of the full committee, Subcommittee Chairman Howard Berman (D-North Hollywood) is very protective of the entertainment industry. On the other hand, there aren't many lobbying groups in D.C. that can match the clout of the NAB, largely because of the role that TV and radio stations continue to play in lawmakers' re-election campaigns.

The title of the hearing suggests where Berman is leaning: it's dubbed "Ensuring Artists Fair Compensation: Update the Performance Right and Platform Parity for the 21st Century." I think it makes a lot of sense to have a common standard for royalty payments among broadcasters regardless of how their signal is delivered. Already, broadcasters of all stripes, whether they be terrestrial, satellite or Internet, pay similar percentage-of-revenue royalties to those who hold copyrights to the public performance of the songs. But the amounts paid to those who hold the recording copyrights are all over the map. At the high end, webcasters have to pay a fraction of a penny for each song streamed to each listener (although some small and non-commercial webcasters get a discount). At the low end, local radio stations pay nothing. XM, Sirius and cable-TV based services fall in between, paying a percentage of their revenues.

Fred von Lohmann of the Electronic Frontier Foundation has argued, in response to my previous post on this issue, that collecting more royalties wouldn't serve the basic purpose of copyright law. The point of copyrights is to provide an incentive for those who create music. With plenty of music being created, Fred says, there's no reason to obligate terrestrial broadcasters to provide more incentive by paying royalties. If anything, he said, the obligation should be dropped from webcasters so that they'll have parity with local stations.

That's a more persuasive argument than claiming that radio decreases music sales, which the industry lobbying group in favor of the new royalties contends. Geez, I thought it was piracy that was killing music. Or maybe home taping. Still, I think it's fair for record companies to ask Congress for a recalibration of the decades-old deal that allowed local stations to play music without paying for the rights to the recordings. There's no question that radio isn't driving the volume of sales that it used to generate -- nothing is in the file-sharing era. And just from a spectator's point of view, I love the idea of the RIAA and the NAB squaring off. Bring on the steel cage!

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Times editorial writer Jon Healey pens opinion pieces about a variety of business issues, and blogs about technologies that are changing the entertainment industry's business model.

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