Monday, February 25, 2008


Two items have caught my attention.

First from R&R's website-posted this Monday evening:

musicFirst Fires On NAB For Fees

By Jeffrey Yorke

As some 500 local broadcasters collect in the nation’s capital for the NAB’s annual three-day State Leadership Conference in a swanky hotel adjacent to the FCC’s headquarters, musicFirst has welcomed the visitors with a poke in the eye -- or, as the broadcasters see it, a poke in the pocket -- by launching a three-day advertising campaign in a Capitol Hill newspaper that calls for performance fees to be levied on radio.

The lobby for recording artists, musicians and record labels doesn’t see this as an attack but a method of achieving balance. “It’s a fundamental fairness issue,” musicFirst spokesman Marty Machowsky tells R&R, noting that AM and FM broadcasters earn $16 billion annually in advertising revenue and pay nothing for the music they broadcast. “There is no question in our minds that music promotes radio. What we are seeking, and what is in place in most nations, is fair performance rights. No more, no less.” Machowsky adds that not only are performance rights fees in place throughout the world, but also in the U.S. for Sirius and XM, Internet radio, cable radio “and every other format where music is aired for profit.”

While Rep. Howard Berman (D-Calif.) has introduced a bill calling for the initiation of fees, there’s not been a groundswell of support nor has there been much real talk against it. Washington is focused on a presidential campaign and other pressing matters. While the NAB wants to the performers' and artists' pleas to get lost in the shuffle, musicFirst hopes to draw attention to their campaign and embarrass the out-of-towners. It’s running a full-page advertisement in Capitol Hill’s influential Roll Call newspaper that shows a sidewalk musician with a few bucks tossed into his open guitar case and the bold headline, “He Just Made More Money Than Any Recording Artist On The Radio.”

“Radio’s refusal to pay artists and musicians a fair performance royalty is indefensible; so they have apparently stopped trying to defend it, choosing instead to hide behind other business issues facing the music industry,” Machowsky tells R&R. “It’s time for the NAB and corporate radio to answer the tough questions about their refusal to pay artists and musicians,” said Doyle Bartlett, executive director of the musicFirst Coalition in a statement released by the group on Monday. “AM and FM music radio stations earn $16 billion each year in advertising revenue. But not a single penny goes to the artists and musicians whose creativity, whose heart, whose soul and whose passion bring to life the music that listeners tune in to hear.

“There are many questions that the NAB and corporate radio lobbyists cannot possibly answer with a clear conscience. How can you justify taking someone’s intellectual property and making $16 billion in annual advertising revenue off that property without compensating the creators and owners of the property? This runs against all basic notions of fairness and respect. You might expect this in places like Iran, North Korea and China, where there also is no performance right on radio, but not in the United States. “Why do you deserve a competitive advantage in the music marketplace? Artists and musicians are paid when their music is broadcast on satellite radio, Internet radio and digital music services delivered through satellite and cable television.”

And, in a particularly clear attempt to cause fissure inside the NAB, Bartlett asked, “Which of your leaders is right: David Rehr, president of the NAB, or W. Russell Withers, head of the Withers Broadcasting Group and chairman of the NAB Radio Board? Mr. Rehr calls paying artists for their work product a 'performance tax.' Really, the loophole in copyright law he is trying to salvage is merely an elaborate payment-avoidance scheme. On the other hand, when Mr. Withers was questioned before the Senate Commerce Committee during a hearing last year, he said, 'I disagree with "performance tax." It’s a performance fee.' What is wrong with paying a fee for product that makes you money?”

Mary Wilson, the longest member of Motown wondergroup the Supremes, last week canvassed Capitol Hill, and more artists are expected to meet with representatives this week. MusicFirst declined to unveil its visiting artists list but acknowledged they will be there.

The NAB quickly responded with a volley of its own on Monday (Feb. 25), saying that it understands that the RIAA and musicFirst “will parade a handful of artists through Congress this week in support of legislation that would result in as much as a $7 billion annual tax on local radio stations” and that it would defend itself. "We welcome the debate over which side has been more 'fair' to artists -- radio stations or RIAA-member companies,” NAB executive VP Dennis Wharton said. “America's hometown radio stations expose and promote musicians to 232 million listeners every week. Contrast that with decades-long exploitation of artists by foreign-owned record labels, demonstrated just this month in a $6 million lawsuit against Universal Music Group for 'cheating' artists like Count Basie and Benny Goodman out of royalties."

And then Cramer is back with a biting commentary on the role Congress and the NAB has played in trying to block the XM/Sirius merger--for more than 12 minutes tonight on CNBC's Mad Money.

On the one hand Congress appears to want to "help" terrestrial radio with its opposition to the SatRad merger, but on the other hand Congress seems to be perfectly content, to at least consider, what amounts to levying a music use tax on the radio business.

If both, the merger and the artist royalties, were to go through which would have a more detrimental effect on the radio business?

From my vantage point I believe that a freshly minted music tax could endanger music radio as we know it. Already weakened by a growing pull vs. push consumer mindset, one can only believe that radio (terrestrial and satellite) will have an even more difficult time competing in the future. Now, maybe that is the natural order of things. I would like to think that if we, the experts in audio entertainment for more than 80 years, can figure out new and creative ways to entertain listeners, including music programming, it might not be as severe. It seems to me that XM and Sirius are in the same boat as their terrestrial cousins.

I might be in the minority when I say let XM and Sirius merge. Right now, FM and AM radio is competing against two aggressive satellite radio companies. With the merger approved it will be just one and in theoretical terms that should be good for terrestrial radio-only one competitor vs. two.

All this competition is only the beginning. We have only begun to see the roll-out of personal audio devices, mobile and auto streaming, and technologies yet to be invented. I am not alone when I say content, content, content across multiple platforms--available anytime and anywhere.

At the end of the day these two pending issues will come down to politics. Who in Washington has the loudest voice AND the most money dedicated to the "education" of our lawmakers.

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