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More Friction Over Radio Royalties

On Monday, radio broadcasters agreed to support the idea of paying performers when their songs are played over the air — provided that a bill moving through Congress include a set of conditions.

The most controversial of these is one in which makers of mobile devices would be required to include radio chips in their products, which would be a boon to stations as it would give them a new platform for drawing listeners.

That mandate doesn’t sit too well with the Consumer Electronics Assn., which chimed in on Tuesday with a letter to leaders of the National Assn. of Broadcasters.

Gary Shapiro, president and CEO of the CEA, wrote in the letter, “Radio is a legacy horse and buggy industry trying to put limits on innovative new industries to preserve its former monopoly. The industry’s refusal to innovate to the benefit of consumers raises questions about the ongoing wisdom of broadcaster use of publicly owned spoectrum that could be better used for broadband services that serve the public interest.”

Harsh.

The rhetoric will get tougher when Congress returns for the lame-duck session, but more concerning (or perhaps disconcerting) is that broadcasters and the music business are not in sync on exactly what they agreed upon last summer. When the NAB’s radio board gave its approval to the compromise plan for radio royalties yesterday, the MusicFIRST Coalition, representing artists and record labels, expressed disappointment because they said that conditions were added to the deal.

But today, the NAB says that there never really was a “deal” in the first place.

Gordon Smith, the president of NAB, said, “We are disappointed by comments from our friends at MusicFIRST representing that there was a definitive July agreement or a handshake settlement with NAB on terms for resolving the performance royalty issue. This is demonstrably false. If this were true, why would our two sides have continued with negotiations in August, September and October?”

At the very least, however, the broadcasters for the first time are accepting the idea of a performance royalty, even if it may be far less than originally proposed.

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